1. Every forex trader, and we mean EVERY trader, loses money on some trades.
Ninety percent of traders lose money, owing primarily to a lack of planning, training, discipline, a lack of a trading edge, and inadequate money management principles.
If you despise losing or are a perfectionist, you’ll undoubtedly struggle to acclimate to trading because all traders lose trades at some point.
2. Forex trading is not for the unemployed, those on low salaries, those in credit card debt.
You should have a trading capital of at least $10,000 (in a micro account) that you can afford to lose.
Don’t anticipate to become a billionaire by opening an account with a few hundred dollars. Because of its large size, liquidity, and currency’s tendency to move in strong trends, the forex market is one of the most popular venues for speculation.
You’d think that traders all over the world would be making a fortune, yet success has been limited to a relatively small fraction of traders. The issue is that many traders arrive with the false expectation of making a fortune, but in reality, they lack the discipline required to truly learn the art of trading. Most people lack the discipline to follow a diet or go to the gym three times each week.
How do you expect to succeed in one of the most challenging, but financially rewarding, enterprises known to man if you can’t even accomplish that? Short-term trading is NOT for inexperienced traders, and it is rarely a way to “get wealthy quick.” You can’t achieve huge riches without taking huge risks.
A trading strategy that entails a high level of risk results in inconsistent trading performance and huge losses. A trader that does this most likely does not have a trading plan, unless you consider gambling to be a trading strategy!
3. Forex is NOT a get-rich-quick scheme.
Forex trading is a SKILL that requires TIME to master.
Skilled traders may and do profit in this market. Success, like any other occupation or vocation, does not happen suddenly. Forex trading is not for the faint of heart (as some people would like you to believe).
Consider this: if it were true, everyone trading would already be millionaires.
Even professional traders with years of expertise can suffer from periodic losses. Keep this in mind: there are NO shortcuts in FX trading.
To master, a great deal of PRACTICE and EXPERIENCE are required.
There is no alternative to diligence, hard work, and careful practice.
Practice trading on a DEMO ACCOUNT until you find a method that you understand completely and can execute objectively. Simply put, discover a method that works for you.
Next Lesson: Forex Trading Sessions