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Forex Trading Is A Tough Business

Author : Alex Harper

It's widely know that over 90% of new forex traders will lose money and give up within 2 years. There are tons of strategies and systems available for trading forex but few of them actually work consistently year after year in all the different types of markets.

Another huge factor is that most traders don't take a disciplined approach and excercise patience, waiting for all of the conditions in their system to line up before getting into a trade.

Another reason why a forex trader may lose is that they do not spend enough time testing their system. It is a smart idea to go backwards in time to see how your system would have performed over the last 5 years. You should also consider the time of day that you trade. We can only trade a certain amount of hours per day. If you want to get consistent results then you should trade during the same times each day and backtest your system during these times as well.

Many traders will use a backtesting software to test their trading systems going back several years, however sometimes the data they are using is not accurate or cannot adjust for times when the market moves so fast you would not be able to enter the trade, or if your broker has increased the spreads due to a news release. There are many factors to consider when evaluating a forex trading system.
It is easy to get results that are not accurate, therefore it is always a good idea to trade your system with a demo account for 3 months before playing with your hard earned money.

It is mentally frustrating to know that there are only 2 directions that you can choose when trading and if you just pick one right you will make money. How hard can it be to pick one direction? Well, after you have traded unsuccessfully for any length of time you will see that it is very challenging indeed.

When you do decide to trade with real money, managing your equity is extremely important. Most experts agree that you should never risk more than 2% of your trading capital on one trade. If you start risking 5% for example, a few bad trades will really hurt your account and before long even if you double your money you will be back where you started. Keep in mind that every time you make a trade you have to pay your broker, this puts the odds against you.

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Tags:   forex training, currency trading course, learn forex trading, forex course, forex scalping, forex coaching, free forex training

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Submitted : 2010-11-23    Word Count : 441    Times Viewed: 523