Why do we not Take Trading Forex Seriously?
Category likeness to » Forex articles. Added to Authentic Society 44 years ago.
It is likely that if you are a courageous person, you have lost your entire forex trading account before you started to show an interest in learning information about trading forex from books and tutorials on the Internet. One of such interesting books is Forex Patterns and Probabilities by Ed Ponsi from which I have learned quite a few things myself. But why did you fail the first time? This is an article about forex, but if instead of trading forex you were driving a car, would you, in the same way be so irresponsible? Would you allow an accident to happen? Reckless driving puts one or more human lives at risk. In forex, we only risk money, and when we enter a trade, we are unsure about the direction the market is going to take. It is perfectly acceptable to, at least in the beginning, fail more often at trading forex than driving a car. And most people do just that. We allow ourselves to fail at trading forex because we don't understand what we are risking. This kind of knowledge will only come to us with experience.
When we are driving a car, it is obvious that one or more human lives are at risk, if a small one, because the car makers produce cars that are very safe these days. Had we known what it is we are risking when we are trading forex, maybe we would be a little more concerned about it! When we drive, it is obvious because from an early age we have understood the importance of human life. But who will tell us what those important things are, in forex? Is it not the first time we hear about it for a few months, or even a year? Will we learn that knowledge from books? Internet forums or blogs? Or will we learn it from our own experience?
When going out for a drive to see a friends' new house for the first time, you can get lost only so many times by taking the wrong exit. As long as it is the same exit. Once you are more familiar with the area, you will not even take the wrong exit at any time in the future, because you will be familiar with it. Why then, when trading forex do we take the wrong exit so many times, and repeating the same mistake over and over again?
This may be because when we start trading forex, our imagination is at its best. We think it is easy to trade and make money and we are pretty excited about it. But with a little research we learn that one of the no-no's of forex trading is to base our trading decisions on emotion. Perhaps we have had a few positive trades, continued doing the same things in excitement, but then the market gods turned their back on us and we lost what we gained in 10 trades, with just 1. If you begin to understand the reasons for why this happened, you will be making your first step on your way to becoming a profitable forex trader. This information is necessary, and I will try my best to cover some of the most important subjects in this article.
Why do we take things other than forex seriously?
When you go to work and you don't want to show up late, do you know how to do it? You wake up early so you have enough time to shower and eat breakfast. Did you just hear that the traffic conditions for your communte are not ideal this morning? Should you come out of your house earlier than usual?
When you drive a car and you wish to switch lanes, do you know exactly how to do it? You check if there are cars in the blind spot or behind your car driving in the lane you want to switch to. If not, you turn on the signal and guide your car toward the parallel lane. You calibrate the car into the lane you want to be in and you continue driving straight. There was an extraordinary sense of comfort with knowing how to do all of those things. In fact, you were so comfortable doing that, that you almost didn't notice what it was that it took to accomplish it. It was nearly as effortless as blinking one's eye. Seconds later, mission accomplished - you are still safe in your car, and so are other people in theirs as there were no accidents, and you are in the exit lane now. Would it be possible to achieve this level of comfort trading forex? I think it is, by knowing exactly what it takes to make a consistent profit.
Driving and getting to work on time. These seem like trivial tasks to you now, but to learn how to do these things, and become comfortable doing them, you had to have an experience with them for a period of time. And that experience now reassures you that you are doing what is essentially the right thing. You have the evidence that it does work in a certain way and so, you choose to continue doing it.
In the same way, when you trade forex and you wish to consistently increase the amount of money in your account, do you know how to do it? If so, how come most of your trades are accidents? Moreover, why all of your trading experience eventually culminates with unpleasant results?
To answer these questions we must analyze the seriousness of our intentions and the importance of the result we desire when we do some of the similar things successfully:
Going to work makes us money, and we definitly know that in two weeks or one month we will get our paycheck. Would you continue going to work every day if you were uncertain whether you will get paid or not? Sounds familiar doesn't it? That's what it feels like to trade forex.
Driving a car and being able to properly switch lanes makes us more effective on the road. This means it keeps us from causing an accident. We avoid putting our safety on the line, and that of others'.
Caution: objects appear closer than they are in the mirror, and there are obstacles on every corner.
For going to work and for driving, you do have good reasons. But do you have a good reason for trading forex? The amount of earnings in each trade is uncertain and is potentially negative - you know that you can lose money as well as make more of it. Every time you enter a trade you instantaneously hold a position that works against the trade you enter - 2 or more pips are taken by the "dealer's desk" against the direction of your trade. When you enter a long position, you are 2 pips below of the price where you entered that trade. When you enter a short position, you are 2 pips above of where you entered the trade. This happens because the dealer's desk, or the people whose trading platform you use, generate commissions on every trade you place. And it is very important for them that they continue doing that. This is what allows their business model to successfully generate income for themselves, even when your income is not guaranteed. They will make money whether your trade succeeds or not! Not too shabby. But everything counts. And if you have entered 100 trades in a month, you have also lost approximately 200 pips to the rule-makers, the owners of the platform you are using to trade.
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