Do you want to know a few bitter but useful truths that can change the way you trade? Do you want to adopt a more realistic attitude than can help you grow your account and increase your profit in Forex trading?
After trading for a few years, many traders wish they knew these truths right from the beginning. If you are not getting what you expect in trading, it is possible that you do not know some or all of these five truths!
Usually, people do not tell you certain things which are uncomfortable to accept. It is not uncommon to see people lying and sugar coating things to avoid saying bitter truths.
Because the truth is always bitter. Because of this, many new traders get the impression that Forex is an easy way to make money. Nobody tells them the bitter truths about Forex trading.
In this post, we will look at 5 bitter truths about Forex trading in general. This is not to discourage new traders but to let them know the reality better.
Once you are aware of these things, you will have more ideas regarding how Forex trading works. You will have realistic expectations and will have a better picture.
1. You need money to make money
This may not be true in all cases but it is certainly true in Forex. Forex trading is a business. So you need to have money to make money.
All businesses require investment. How much money you can make depends on how much you invest.
So, the #1 bitter truth about Forex trading is that it won’t help you if you don’t have money to build sufficient capital. If your account is small, you will blow it up very quickly.
When you have more capital, you have the liberty to risk more and choose bigger trade volumes. That is when you can actually start making some reasonable profits.
Many brokers allow you to open accounts with deposits as low as $50. But such an account is as good as a demo account. To get a reasonable profit for every trade and to sustain your account, you need to have a good capital.
So, if you do not have sufficient capital, work on it first. And ideal capital would be about $10,000.
2. Trade when there is more action
Forex market is a 24-hour market. This means that you can trade whenever you want. You are not limited by time and space. Because you have the comfort to trade while on the go.
We understand that it is quite comfortable to trade in your own time. But the behavior of the market varies throughout the day. It is not the same always.
There are certain times of the day when there is more action in the market. If you really want to make money in Forex trading, then you have to trade when the market is more active. But this is one of the bitter truths about Forex trading that is rarely discussed or understood.
There are 4 major trading sessions in the Forex market. They are New York, London, Sydney, and Tokyo. The volatility is usually more during New York and London sessions. When these two sessions overlap, it is even better.
Usually, most economic reports are released during the start of the New York session. 85% of the total trades placed involve the US dollar.
So, any US economic data has good potential to cause movement in the market. Therefore, don’t trade when you are free, but trade when the market is active.
3. You cannot be right all the time
It is the nature of the mind to want to be right all the time. When your judgments and predictions end up as the right ones, it increases your self-esteem and makes you feel better.
When you are wrong, it usually hurts your ego. But in Forex trading, losing is a part of the game. You cannot be right at all times. So, be prepared to be wrong and don’t feel bad when you make wrong predictions.
There are some traders who don’t worry about losing money but worry about being wrong. If you are one of them, then your trading experience will be very frustrating.
Because the market is very unpredictable and unforgiving. You will be wrong many times, no matter how experienced you are.
People who are obsessed with being right all the time give up very quickly in trading. So, accept the fact that you cannot be right at all times. This will make sure that your trading experience is more peaceful.
4. There is no holy grail in trading
Are you looking for one method, indicator, strategy or system that will get you Forex trading profits 100% of the time? Are you searching for a magic tool that will do all the work and let you relax?
Here is one of the bitter truths about Forex trading that you need to remember for a lifetime. There is no holy grail in Forex.
Understanding this will save you a lot of time. Once you stop searching for the holy grail to do its magic, you will gain a more realistic view of the market.
Many new traders spend a lot of time shopping for that one tool which is going to change their lives magically. But that is never going to happen.
There are billions of factors that cause movement in the market and no one can be sure about all these factors. Because of this, there is no perfect trading system that works all the time.
So, quit looking for a holy grail. Holy grails and unicorns do not exist.
5. Trading is not a get rich quick scheme
This is probably one of the bitter truths about Forex trading that no newbie would want to hear.
For some reason, many new traders are under the impression that Forex trading is an easy and quick way to become rich. That is probably because of a lot of false advertisements and scams which are going on these days.
Forex trading is not going to work for you unless you are willing to put your time and effort. It takes a lot of patience and hard work to become a successful trader.
In fact, it may take years to start seeing significant growth in your account. In the initial period, many traders tend to blow their accounts and start over again.
That is why patience is stressed as an important quality to have for a trader. Becoming a successful trader takes time. It will not happen overnight.
So don’t have any unrealistic expectations when it comes to trading. Take one step at a time towards your road to success. If you keep these points in your mind and keep learning from mistakes, you will become a successful trader in the long run.