Forex Myths5 Myths Novice Traders Fall for and Lose

By: Kelly Price
Here we will outline some common forex myths that cause novice traders to lose. If you fall for any of them you will lose to and join the 95% of losing traders - lets take a look at them.

1. Forex Trading is Easy

It may look easy but it’s anything but 95% of traders lose! You wouldn’t think that from the amount of people who sell track records on the net promising you un-told riches if you follow their systems.

Many novice traders believe they can follow these systems blindly and win but lose.

Making money in anything requires effort and forex trading is no different – there is no free lunch in any form of making money and you wouldn’t expect their to be - but novice Forex traders fall for “its easy story" and lose quickly.

2. Day Trading Makes Money

More traders try forex day trading than any other form of trading despite the fact it simply doesn’t work.

All volatility in short term time frames is random so you can’t get the odds on your side – PERIOD

Making money forex day trading has been spread by vendors cashing in on traders naivety and greed – if you want to prove that it doesn’t make money simply ask for a track record of real profits.

You wont get one.

3. Not Understanding Volatility

If you don’t know what standard deviation of price is learn about it quickly or lose.

Most traders have no idea of the impact of volatility and over leverage.

They have stops placed incorrectly, that are taken out by normal volatility and the trader ends up with a loss.

Sure you can leverage 200:1 - but that means volatility will kill you.

Over leveraging is one of the commonest mistakes made by novice forex traders and simply ensures they lose.

4. Trading the News

Will Rodgers once said “I only believe what I read in the papers" now he was joking but huge numbers of novice traders try and trade news reports and events such as non-farm payroll.

They let their emotions come into play and fail to understand the fundamentals are discounted instantly, so their always playing catch up.

The news is clever, interesting, convincing and in most cases no use in helping you enter trades.

5. Not Being Able To Run Profits!

Most novice traders have less problem liquidating losers than they do in trying to run profits. Most traders get so excited they have a profit they get nervous and feel they need to snatch it before it gets away and that’s what they do.

In many instances these traders are right about the direction of a trade but get a mediocre or average profit when they could have had a huge one.

If you want to run profits you need courage and conviction and the ability to take dips in open equity.

GET the Basics RIGHT or lose

The above are 5 common errors made by novice forex traders and you need to avoid them at all costs. Most of them occur simply because forex traders are not concentrating on formulating their own forex trading strategy and trying to take short cuts.

Forex trading can and does produce huge profits for savvy traders but never underestimate its power to take your equity – do your homework if you want to win.

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