All this is very attractive to many sorts of investors, speculators and also amateur people, especially online success chasers who imagine easy and fast profits. BUT it has its pitfalls and the Internet hype sellers and scammers make the situation even more dangerous.
Forex has enormous profit potential but since there is a substantial leverage involved working both ways, the same is the loss potential - the higher the profits, the higher the risk involved. And that is exactly the core of success in forex which is hidden from people seeking fast online profits.
People lacking basic character streaks like discipline, risk evaluation ability, experience and even basic information and training fall prey to false promises and start trading their last money on forex expecting quick riches.
It is necessary to be aware of the fact that trading currencies is not easy. If it was, no one would lose money and everyone would already be a millionaire. Many traders with years of experience still incur periodic losses. Everyone interested in trading forex must realize that trading takes time to master and there are absolutely no shortcuts to this process.
Yes, of course, it is possible to make it a long-term, profitable and sustainable source of high income and even a proper home business BUT the following are the basic rules for success in forex trading:
- Discipline: it seems easy but the lack of discipline is the profit killer no 1. It is important to set your own rules and goals and stick to them. Do not panic if not everything goes the way you imagine and strictly keep the rules. One of the basic situations is losses: If you know you can lose only $1000, the discipline will help you stop trading if it happens, and not borrow and go on and on... Also, it is the discipline which helps you avoid magic profit calculations.
- Responsible risk-taking and risk-evaluation ability: forex trading is an investment method not a casino. It is not possible to invest properly if you are not able to take up a calculated risk, if you are not able to calculate an acceptable risk, and if you are not able to even recognize a risk. The good news is that you can develop this ability.
- Spare money: never trade your last money, always invest either profit or a reasonable amount of money you can lose. Always behave responsibly and never borrow money to trade.
- Thorough education and training, include practical training: it is imperative that before you start trading live, you get proper education and training, that you acquire working knowledge and develop your own working system on which you can build your investment strategies, routines and practice.
- Never trade in a live-or-die situation or under any stress: many gurus say that you can make instant riches from forex investing your last money. It is one of the biggest lies I ever heard. Unless you feel absolutely comfortable, knowing what you are doing and why, enjoying the trading, you cannot trade successfully. Any stressed, unbalanced or anxious mind and brain is not able to evaluate situations correctly, react competently, and it is a paved road to failure and losses.
- Work Smart, not Hard: The amount of effort you put into currency trading has no influence on the amount of money you will make.
- Simple Systems are better than Complicated Ones!: Many traders think the more complex a system is the more likely it is to succeed, but the opposite is actually true.
- Patience: Many traders think they always need to be in the market to make money, but the opposite is true.
- Play Great Defense: All the great traders know that money management is one of the keys to trading success and they always protect their equity.
- Be Realistic: We have all read stories of traders turning small amounts of money into fortunes quickly. While some traders have been able to do this, the reality for most traders is not so easy.
- Always do your homework: another hype you can hear around says that everyone can trade just following someone else's advice and instructions. I can tell you only one word as an answer: rubbish. You must realize that you must be able to evaluate every situation, every trend, every forecast, create all the analysis, follow necessary trends, incl, of course, hearing specialized analysts BUT the decision and the money is yours only, so the responsibility is yours. The better your homework, the higher and more reliable your profits.
- Learn from your mistakes and remain flexible: you must know that you will make mistakes, you will even lose in some trades but you must be a great trader and you must know it. When you make a mistake you must analyze the situation, find out why it happened and see to it that you will not repeat the same mistake in the future. You must not despair and fall into depression. You must stay positive and simply do better next time.
- Know Yourself: By this, we mean you will know your strengths and weaknesses. By knowing yourself you will know what you are trying to achieve, how to do it and emerge a winner, which at the end of the day is what currency trading is all about.
- yet another risk is here: it is vital to choose the right market-maker, big enough to allow you to make full use of currency moves. I stress a market-maker and not a broker,
- avoid managed accounts.
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