Forex Trading: The Major Barriers to A Forex Trader
Why so few traders succeed in the forex trading environment when the vast majority of them fail to succeed? Although there is no definitive answer to this question, there are few things that will put you one step away from this answer and will certainly put all other possibilities in your favor with it.
The main objective of this article is to guide you about some important aspects of trading forex, but in a different way. Instead of telling you what to do or the best way to do it, it will focus on what you should avoid. Sometimes it would be best to define the main obstacles precisely and then isolate them in a way that leads to you achieving the best results at a certain level of development.
Search for the Holy Grail
Most traders waste years and years trying to find the Holy Grail of the trade. What is meant by the index or a group of indicators that only a limited number of traders know that enables them to get rich in a short period of time.
Fact: Well, there is no magic indicator or that series of indicators that can enrich anyone in a short period of time. The main reason behind this is the market changes, as each moment is unique. Any Forex trading system will inevitably fail at one point or another. Thus, our goal will be to find a forex trading system that fits our personality as a trader, otherwise the trader will find it difficult to follow this system.
Searching for easy money
Unfortunately, most traders are drawn to the Forex market for this reason. This is mainly due to the fact that the advertisements always try to show or imply that trading and making money in Forex are easy things.
Truth: Indeed, trade in and of itself is very easy, anyone can do it. The matter is only as difficult as one click, but the second part of the trading process is not that easy. Earning money or achieving continuous profitable results is difficult as it requires a lot of learning, patience, discipline and commitment, and this list will continue with you indefinitely. In a few words, it can be said that it is possible to achieve continuous profitability results, but definitely, this is not easy at all.
Searching for excitement
Some Forex traders are drawn to the currency market or any other financial market because they believe that being a trader carries a degree of excitement.
Reality: Yes, Forex trading is exciting. But if this is your main goal in trading the forex market, then sooner or later you will discover the most costly risks in your life. Think a little bit about this.
Not using capital management rules.
Most traders ignore this important aspect of trading as they believe that you will not have to use capital management rules in order to achieve sustained profitability results. They completely forget the risky side of the trade.
Truth: Capital management allows for an orderly increase in your profits and also limits the risk you face in each trading position. Capital management tells you how much risk you can take on each individual trade. Using capital rules is essential if you want to achieve your business goals. By using the rules of capital management, you make sure that you can stay in the market for trading tomorrow, next week, next month, and even in the following years.
Not to be psychologically disciplined
This is one of the most overlooked or insufficiently important topics in forex trading. One of the most important principles that the financial market focuses on is that the price of any financial asset depends on the perception of all individuals participating in the market, or what is called “the herd.” In other words, the price of any financial asset is determined according to the factors of fear, greed and hope related to all traders.
Fact: Being aware of all the psychological factors influencing traders’ decisions will definitely put the trade prospects in your favor.
Lack of education
Just as with lawyers and doctors, just as they need many years of university study before obtaining their degree, Forex traders are also required to spend many years of study. It is recommended that you find someone with experience to guide you through the trading process because some information may take you unknowingly to the wrong path.
The Real: Forex will teach you valuable lessons with every trading position you take. The learning process for a forex trader continues with him indefinitely. It is true, we never stop learning. We must be humble before markets and knowledge; Otherwise, this market will later tell us that we are wrong.
There are a number of important barriers that all traders face as they attempt to trade successfully.
Trading successfully in the forex markets is a not easy task at all as it requires a lot of hard work, but with a good education, you will put yourself close to achieving your goals.
Bid / Ask spread – represents the difference between the bid price and the ask price in any price quote. The spread represents the fees charged by the forex broker and it varies from one broker to another.
Middleman – is the middleman between the seller and the buyer. Most Forex brokers are associated with major financial institutions and make money by setting the spread or the difference between the bid and ask prices.
Candlestick chart – is a type of chart used in technical analysis. Each time division on the chart is displayed as a candle — in the form of a red or green vertical bar with extensions above and below the body of the candle. The top of the extension displays the highest price, while the bottom of the extension displays the lowest price.