A guest post by ForexTraders
One of the major misconceptions about trading forex online is the belief that in order to be successful one must be focusing on profitability right from the beginning. The more aggressive and profit-oriented you are in this competitive market, the higher your chances of success, since you’re in a race with financial giants who have far greater resources at their disposal which they can use to acquire an unbeatable competitive edge against the average retail trader. One must compensate for this difficulty by pursuing well-developed strategies in an aggressive manner, and capitalize on opportunities that may arise, however small they might be, as soon as possible.
But this belief is misleading. First, there is no shortage of opportunities in the forex market. Every major or minor trend, on any timeframe can be used to trade profitably, provided that the trade can survive. Forex trading is indeed highly competitive, but the most important competition is in fact about survival, not profitability. And most importantly, the longer your account lives, the greater the number of chances you have for education. In a quest to get rich quick, many traders are depriving themselves of the chance to become proficient in the basics of this dynamic market.
So what should we do? We need to get used to the concept of losing money in forex. Even the iconic names of trading, like Warren Buffet, or George Soros are not immune to losses that are sometimes quite sizable and scary even for their enormous resources. Technical strategies, and even fundamental ones are going to be wrong, and not infrequently; there’s nothing extraordinary about that fact.
Getting used to losing in forex implies that we need to make losses an integral part of our trading strategy. That, after all, is how you let profits run, and cut losses short. If you aim at eliminating losses altogether, like many beginners do, by seeking secret strategies or top forex robots devised by geniuses, it is almost certain that what you’ll get in the end will be disappointment.
In short, money management, and not strategical or technical brilliancy is the most beneficial tool possessed by a forex trader. He must be alert and capable about arising technical opportunities, but none of that will ensure immunity against losses. Professional traders make regular losses every day, they differ from retail traders in that they can analyze the situation with greater objectivity, and do not get distracted from their overall vision if a few trades go wrong.
Practice makes perfect, and becoming a good loser, as well as a big winner is necessary for being successful in your relationship with online forex brokers. The task is not that hard, but it does require discipline and patience.