Jack is really a specialist trader. He makes all of his money trading the Forex store. He’s been trading for five decades. He could be patient, educated and, from his trading, he’s daring.
Tom is an newbie. He scarcely manages to breakeven with his own trading. He’s been trading for 6 months. Tom takes unnecessary threats because he could be undisciplined, and he worries if he chooses a trade.
Let’s imagine we’ve a brilliant profitable process. On newspaper, traded automatically, this technique features a mean of seven wins out of ten trades. Let ‘s imagine we provide both Jack and Tom this technique plus so they trade it.
What can you imagine can happen?
Jack can choose the device, choose the trades, and also earn a great deal of pips. Actually, Jack will most likely enhance the efficacy of this machine and bump this as much as eight winners out often.
Tom can choose the device, choose the trades, and also pretty a lot of twist up it. As I said, trading it automatically provides Tom a mean of seven out of ten winners. But, Tom is going to be blessed to obtain five out of ten winners.
Why does it work in this way?
It comes down to a couple of things; experience and psychology.
There isn’t a lot of you can do about experience. However, as I mentioned in my last article, you can do something about psychology. So let’s take a look at some of the dangerous psychological pitfalls. Hopefully, after reading this, you will be able to see them coming and stop them, before they destroy your account.
4 Psychological Pitfalls
1. The Desire to be Rich
The desire to be rich manifests itself in many ways. The main ways are fear and greed and they inevitably lead to other problems. If you think about it the majority of the issues newbie’s have stem from the desire to be rich. Things such as:
- Over trading
- Poor money management by risking too a lot of
Forex will not make you rich in the short term. It will likely take years before you’re trading well enough to leave your day job. Forex is a career and in the long run, if you’re successful, it can give you a very relaxed life. However, if you started trading last week and you plan to quit your job in six months, because you anticipate being rich enough to purchase a Ferrari, you are delusional.
This is a career, not a obtain rich quick scheme. If you want to be rich quick hit the casinos. You have a better chance of winning there.
2. Fear of Losing
From a young age, we are taught that money is important. That without money you have no real value. We are conditioned into believing, that to be successful when we grow up, we must have lots of money. This in turn causes people to be afraid of losing money. This is because the reverse is also true. If you lost money then you are a failure as it is the opposite of making money. This in turn leads to some newbie traders being afraid to pull the trigger and actually taking a trade.
Some newbie’s trade demo accounts for two years, never summoning the courage to open a live account. Some newbie traders with live accounts panic whenever they enter a trade and, in turn, make rash decisions.
Take a look at people like Richard Branson, Donald Trump, Alan Sugar and Warren Buffet. These guys are all billionaires (or close enough to it) and each of them has failed many times. Richard Branson has spearheaded many failed ventures. Did those failures set him back though? Hell no! The man is going to start flying people to space at $200k per head, next year, with Virgin Galactic.
I think losing some money to the stores is actually beneficial. It teaches you some very important lessons. What is damaging is the fear of losing money. The fact that you think about it puts you at a lot of greater risk of it actually happening. You have to trade with a positive attitude. So obtain rid of those fears and worries, they will not do you any good.
The truth is you are going to lose money to the stores, it’s unavoidable. Every professional trader has lost money. Not every trade will be profitable. The store simply doesn’t work in your favor, also solutions, notably as a newcomer, that you’ll probably be stung. In the event you wind up blowing off your before all else live accounts… in order. Provided that you find yourself up and decide to try again, you are going to be considered a superior trader because of it. I got two balances until I started trading .
3. The Need to be Right
This really is an excellent one. Tom opens his stage also enters a dumb, baselesslong trade. He aims 100 pips and it has a 50 pip stop loss. The trade goes immediately.
It extends , before all else ten pips, twenty pips, and afterward half an pips. If it reaches forty pips, Tom decides he doesn’t want to lose another trade and moves his stop-loss down.
The cost keeps falling and Tom continues to move his stop.
Eventually Tom closes out his trade and he has lost a huge portion of his account.
Tom was not able to accept that he has taken a losing trade. He kept pushing the stop down in the hope that it would eventually turn around. The need to be right is an account killer.
4. Being Undisciplined
I saved this one for last because, even though it is one of the most common and dangerous pitfalls, it is rarely discussed. A trader who lacks discipline can never make it in this business. Many traders are guilty of lacking discipline for many different reasons.
The main culprits are what I like to call ‘System Jumpers’. These are traders that are constantly tweaking and changing their trading methods. These traders do not realize that learning to trade a system efficiently takes time.
System Jumpers are traders who lack the discipline to stick to, and learn how to trade, a system. They try it for a week and when it doesn’t work that they jump into another location system or procedure.
Another frequent activity of an foreign exchange trader is left a totally great trading procedure. Every trading system contains phases by that it works underneath average. My trading system averages 80% winning trades nevertheless a few months it drops right down to 60 percent. That is only because store requirements vary. However versatile a procedure is it can’t function, at peak efficacy in every store situations.