Why are there so few who succeed in Forex trading?
You may hear a variety of answers to this question. Someone will tell you that the Forex market is specially designed in such a way that traders constantly lose money. Or retail traders do not have the opportunity to consistently make money on Forex.
There may be some truth to this. It’s no secret that the odds in trading are far from in our favor. Otherwise, the percentage of profitable traders would be much greater. But on the other hand, these are all just excuses that can only give us some insight into why it is so difficult to achieve success in trading. They are not the real reason why most fail in the market.
Want to know why traders fail? They give up and quit trading! This is the main reason for failure.
My site is full of strategies, trading techniques, and helpful tips on how you can increase your chances of success in trading. But one of the main pieces of advice I can give is to try to distance yourself from the market and trade as little as possible.
Yes, you read that right. If you want to succeed as a trader, there needs to be some kind of barrier between you and the market. Otherwise, you risk getting over-traded and emotionally burnt out. Burnout is one of the reasons why so many newbies quit trading. They don’t understand when to stop and not trade.
Most traders achieve success only after they have learned to distance themselves from their trading and desire to succeed.
Don’t get too hung up on becoming a successful trader. It is not a fact that you will be able to earn a stable income next month or even next year.
There is a big difference between the desire to achieve a certain goal and the discipline required to achieve that goal. You have to know when to take your foot off the gas pedal and press the brake. This is what distinguishes successful traders. Always remember that trading is a marathon, not a sprint.
In today’s article, I will share with you several reasons why you need to distance yourself from the market, and also tell you how you can get rid of overtrading.
Why do you need to distance yourself from the market?
Some traders try for years to achieve success in forex trading, but still continue to lose money.
In most cases, there are always flaws in their trading system, but almost every one of them suffers from the same problem: overtrading. The desire to make a stable profit has become an obsession for them.
Instead of using calm and structured market analysis, they are consumed by the constant search for new trading opportunities and entry points.
There is a huge difference between loving something and having an uncontrollable passion that only causes trouble. Passion is only useful when it comes second to logic. This means that if the market conditions are not favorable today, you should not trade and return to the charts tomorrow, no matter how badly you want to take a profitable trade today.
Trying to trade when there are no good entry points in the market is a recipe for disaster.
Take a break from trading after a large profit or loss
You’ve probably heard the advice to take a break after a major loss or series of losses. However, it is also a good idea to take breaks after making big profits. The same applies to several consecutive profitable trades.
Just like after a string of losses, your emotions begin to escalate after a streak of victories. Your self-confidence grows, and this may cause you to take rash trades. Therefore, stop trading for a while. Take a break one day to collect your thoughts and calm down.
Don’t trade in unsuitable market conditions
Consolidation and jagged price movement go hand in hand. Whenever you see a sideways price movement in the market after the end of a trend, stop your trading.
Typically, the best trades are made during strong trends rather than consolidations. Therefore, it is best to identify key levels and then patiently wait for their breakdown.
Traders often misjudge the end of a consolidation. Usually the fear of missing out on a trading opportunity causes them to enter the market too early. Always expect the consolidation period to last longer than you expect. Don’t be afraid that the market will start moving without you. The price often returns to the broken levels to retest them.
5 ways to distance yourself from the market
Now that you know that one of the best ways to succeed in forex trading is to distance yourself from the market, let’s discuss a few ways you can do this.
Use daily time frames
This is by far the best way to learn how to trade less. When you start using daily time frames, everything slows down. You have more time to analyze your charts, allowing you to make better trading decisions. You no longer have to spend several hours in front of the computer looking for trading signals. Maximum simplicity is your key to success.
Find a hobby
It is important that you always have other activities in your life besides trading.
If you trade daily charts, you will have five to ten entry points each month. This means that you will have plenty of free time. This is the reason why many traders fail. Instead of finding something else to do, they force their trade and spend hours staring at the charts in hopes of opening a new trade.
Don’t fall into this trap. If you have nothing to do at the moment, find yourself a hobby. Trade only when the right conditions appear in the market.
Stop looking for entry points
If you look closely for entry points on your charts, you will most likely find them. After a while, your mind will convince you that good entry points are right in front of you. However, this would be self-deception.
There is an old saying:
If you go looking for trouble, you are sure to find it.
It is very easy for a trader to fall into this trap. After studying the charts for a long time, a trade setup that initially seemed unreliable turns out to be much better at second glance. This happens because you are trying to find an entry point.
In fact, if you have support and resistance levels drawn for each currency pair, finding trade setups should take approximately 10 minutes a day. If you don’t immediately find anything during this time, then you need to wait until tomorrow.
Get rid of the habit of constantly looking for entry points and keep your analytical sessions as short as possible. The more time you spend looking for trading opportunities, the more likely you are to find them. However, their quality will be questionable.
Temper your expectations
How long will it take to become a successful trader? How much do the most profitable traders earn each month? Most novice traders are looking for answers to these two questions.
The answer to both questions sounds something like this – it all depends on the situation. It is a mistake to think that exact numbers can be given here. However, I will say this: most people tend to be overly optimistic about their expectations for trading.
So how long will it take? My answer: years. Not days, weeks or even months.
How much do most successful traders earn on average each month? About 5% and certainly less than 10%.
If you’ve been trading for two years and still haven’t found success, don’t despair. It may take you three, four or even five years to achieve profitable trading. But as I said at the beginning of this article, the only way to fail is to give up and quit trading forever.
There are no quick ways to earn money consistently.
Save your capital
This is probably my favorite way to increase your profitability.
Sometimes I think there is an unspoken belief in the trading world that if a trader doesn’t trade, he’s losing money. However, this is as far from the truth as possible. The fact is that such beliefs will only lead you to losing your deposit. Think about it this way. To recover from a 50% loss, you will need to earn 100% of the profit to get your original capital back.
Therefore, trade as little as possible. Protecting your capital is much more important than increasing your account balance. Every dollar you save by avoiding losses is a dollar you don’t have to earn later.
