I don’t know many people who make consistent money by guessing what’s going to happen next. Don’t just think you know where the markets headed. Understand that we never know where the markets going next. We must look at the charts and follow our strategies. We can’t simply feel like GBPUSD (cable) is going up today and buy it with 1 lot. That’s a surefire route to failure. Focus on learning and practicing a price action Forex trading strategy that is proven to be successful.
It certainly seems like a lot of people get into Forex trading to make as much money as possible. There’s nothing wrong with that. When mastered, trading Forex can lead to exceptional returns way above the market average. The trouble is that sometimes newer traders win a few trades, think that they’re now the expert and decide to risk more money per trade. They go from risking 1-3% of their account per trade up to 5% or even 10% risk. Very quickly, all the money they had made disappears, as does their hard earned cash deposit. You can see that when you’re risking 5-10% of your account, you only need a few losing trades back to back and you’re in deep water. Don’t try to “get rich quick” by risking too much. Get rich easily and safely with smaller risk.
This is a really popular one, and is something that we’ve all fallen prey to at some point through our trading careers. It happens for different reasons. Some people are doing really well and try to force more and more trades as they think that they’re “god’s gift to Forex trading”. They soon realize they’re not when the money they had made starts to disappear. One thing’s for sure, it’s a lot easier and quicker to lose money than it is to make it.
The other scenario is that you’ve taken a string of losing trades and you’re desperate to claw back some or all of your money. You try to find even more trades, often with a combination of risking too much in order to regain your losses. Now you’re trading lower quality setups with additional risk, which now you look at it sounds like a sure fire way to disaster. However at the time, you convince yourself that it’s the most logical step to take, as you only need to win a few of these trades to get back to breakeven. Suddenly you’re looking at how much money you can make, rather than how much you stand to lose.
Gamblers look at how much money they can make, Traders look at what they stand to lose. Remember that one.