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Successful currency trading looks deceptively simple, yet few traders succeed - despite the fact that there is plenty of material around to show them how. So why is this? - The fact is, much of the conventional wisdom given about successful currency trading, actually leads to the opposite - it actually causes traders to fail.
So, let’s look at the conventional wisdom most traders follow, and why it actually causes them to fail - and how if you ignore the conventional wisdom, you can actually make big profits!
1. It’s Easy to Make Money!
Most currency traders are led to believe, that successful currency trading is easy - and there are plenty of vendors and brokers, who perpetrate this myth - as they make money from this myth.
As we all know in life making money in any area is not easy.
If you think successful currency trading is easy, you’re in for a reality check – successful trading isn’t easy.
2. Responsibility
This leads on from the above - if you want to make big profits, then you are responsible, and no one else.
The fact is, the majority of people in life can’t accept responsibility – and this means they will fail. They think someone else can give them success - and of course, they can’t. Many people rely on guru’s – who, if they could make money themselves, wouldn’t be selling their advice.
3. Methods Doomed to Failure
There are plenty of methods out there that are doomed to failure.
Let’s take day trading - as the biggest doomed method of all! How can you make profits in day, which are big enough to cover the losses on your losing days, cover large commission and slippage costs? You can’t - but brokers will tell you that you can, as they are making more commission!
There are many more examples - but this is the perfect example of how not to be successful in currency trading.
4. Money Management
We all know that money management is one of the keys to successful currency trading - but on small accounts, conventional wisdom states the risking of about 2% per trade! Well your risk on a 10,000 account is just $200. So what happens? - You take small risks and get stopped out most of the time - and never make any money.
If you aren’t going to take a risk - don’t trade currencies.
5. Market Timing is the Key to Success
No, it isn’t - this involves predicting the market. Many traders like to follow predictive theories such as Gann and Elliot Wave - that try to predict where you should enter the market in advance. These predictive theories don’t work.
You simply need to follow market action - and wait for confirmation. You may miss part of the trade, but your odds of making money are far higher.
Some Positive Advice
Successful currency trading depends on the following character traits:
1. Individual Responsibility – You and you alone are responsible - and you can’t follow, or blame anyone else.
People generally like to think other people can give them success, but life is simply not like that - it’s all down to you.
2. Confidence – To acquire this trait you need to do your own research, and come up with a trading method you are happy to follow.
3. Discipline – This follows on from confidence - if you have confidence, you can apply your method with the rigid discipline necessary, and achieve currency-trading success.
4. Method – Your method needs to be long term based and not predictive - simply follow market confirmations.
5. Risk – You need the courage to take calculated risks. If you have a small account forget 2% - 10% to 20% is a more realistic figure - which means you have to trade sparingly - and have the courage to hit the big trades hard.
The Big Secret
We can’t cover all the aspects of successful currency trading in a single article.
However, 90% of traders follow conventional wisdom - and 90% of traders lose money - which tells you, the biggest secret of currency trading success is not to follow conventional wisdom.
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