In the Forex Market one of the problems that a new trader may encounter quickly is information overload. At first it seems like you can never get enough information. For this reason a new currency trader will often be signing up for every free program on the internet in an effort to get all the news he or she can. While many of the free e-books and reports are indeed helpful most just wind up filling up the spam box and sit unread. The reason is that most traders become more astute at moving through information. Quickly one begins to realize that the same information is hitting them over and over. Basic introduction to currency trading mini-papers seem to be everywhere. The meat and potatoes seem to be hard to find. Eventually a trader starts to know so much they start to think they have the wisdom to know where the euro will be in six weeks from today. This new found knowledge leads to larger and larger positions being held which go against the traders rules. The trader rationalizes that those rules were created before he or she got smart.
Then the losses start to come in. Excitement gives way to discouragement. The losses may have been large. Perhaps at this point this trader starts looking for the magic wand. She starts opening up the spam box. After signing up for all the freebies or checking out a variety of other retail brokers this new trader starts getting hit with all the exciting ways to trade “better”. All the systems of making money “easily” in the Forex market start to arrive in the inbox. Suddenly, once again the trader finds that he can’t find enough information. This time what he or she is looking for is something to fix the problem. It is as if those who are sending the information know that you are suffering and are here to help relieve you from your pain. How did they know? Simply because most traders really do fail.
One of the ways to avoid the burn out that comes from losing quickly is to adjust your tactics a bit before you dive back in to the battle. A good percentage of those who get into the market come in looking for a way to make a greater return on their money, as if they have found a new way of investing. They have read lots of warnings regarding the difference between investing and speculation but still proceed with the idea of putting their money somewhere and getting a better return than they could get from the bank or the stock market. The truth is that in the Forex market it may be better to think that you are creating money out of thin air. Does that sound crazy? Think about it. By pressing some buttons at the right time over the course of a few seconds or few minutes or longer, you now have more money. Yes, of course it is true that you can also end up with less money but if you begin with a very small amount and build your way to a substantial amount you have created money based solely upon your own skills as a trader. Not only has the size of your account grown substantially but so have your skills as a Forex Day Trader.
If for example you begin with less than $100.00 and work toward building that amount up to say $5,000.00 or $10,000.00 you will have a much greater appreciation for what you have accomplished and most importantly; for your own trading rules. If an account is opened on the other hand with a large sum of money by the inexperienced trader, what are you going to do now? Practice with all that money? Indeed, all of the trades you make, beginning with the first one, are building your skills in the same manner that as someone who is becoming better at shooting a game of pool. Now if you think that you went through that stage with a practice account think again; after all that wasn’t real money was it?
There is a different feel to trading with real money. Most practice accounts like to have you play with $50,000.00 or more. You accept some wild swings but still come out on top. This leads to some bad habits. Think smaller. The mechanics of making 10 pips on a $10,000.00 account are the same as making 10 pips on a $10,000.00 account, the difference is that with a $50.00 account – real money – you trade without fear and have the ability to trade many times in a day which is what you need to do as a day trader who is earning his living from his or her account. When that $50.00 finally does hit $10,000.00 it is because hundreds of trades have happened along the way. All for the same 5 or 10 pips over and over again. Losing has become as routine as winning but because you stick to the game plan and have the mind set of creating money from your efforts success happens. You have become someone who lives and breathes what you do and a certain fluency develops in your approach. Much different from someone who opens a big account and makes a trade once in awhile. They never really get that flow going.
Which leads me back to where we began. The ones who have just blown out that $10,000.00 account are the ones who may be most susceptible to buying “Easy 123 Trading programs” that claim to have a secret method that no one knows about. These players tout that they have found new ways to beat the market. You just have to push the green light when it is green and you make money. Sounds kind of like a slot machine doesn’t? The other route is to start buying trading signals, and finally let someone else trade your money for you who claims to be a superstar. All of these ideas are simply excuses that take you away from looking at the real center of the problem which is you.
So when the temptation to make “real big money” hits you because of a sense of shame from losing or whatever the reason may be, consider this: One must climb small hills before tackling Mt. Everest. Find someplace that allows you to trade whatever size trade you wish and open a small account. Try trading for 5 cents a pip. Then work that account every day until you no longer see anything but pips and are always working toward the same small goals on a routine basis. The account will grow. You will learn your indicators inside and out from working with them every day. Several ways of getting confirmation will be in your arsenal. You will learn how to spot trends from watching a screen constantly; even when you don’t have a trade on. Without hesitation you will exit a trade when you know it is against you and know exactly what you lost and move on to the next trade. Like a mechanic doing what comes as routine. No longer will you consider laying on big trades that cause you to forecast the future. If anyone ever asks you what your system is, you will realize that you just do your routine over and over and it seems to be working. You have become a true professional and have grown in skills along with the size of your account.
Source by Daniel Andrews