Over the years, the Forex market has grown in size and spread to more countries and time zones.
Brokerage houses have also changed, going online with powerful servers and complex software.
The Forex market is very different from what it used to be because economic indicators and technical analysis have become more complex.
But one thing has stayed the same: most traders still lose.
Even with all the changes in the Forex market, the number of winners is still low compared to the number of losers. Experts agree that the most optimistic number that can be given is 10%, which means that on any given day, 90% of traders will lose.
Experts also agree that most traders lose because they let their feelings get in the way of their decisions.
Most people make decisions based on hope and fear instead of facts. These people don't trade based on what the charts and indicators actually say. Instead, they trade based on what they want the charts and indicators to say. They stay in a trade that is losing money and watch the graph go down, hoping that the currency pair will change. Or, they get out of a trade too soon because they are afraid the trend won't last and are happy with pennies that even the best Forex money management can't make up for.
Others lose because they are too greedy and try to pick the highs and lows too well to make as much money as possible. Instead of waiting to trade until the indicators show that the market is moving, they jump in too early and are then disappointed when the expected break-out doesn't happen.
Remember that there is no magic software or trading plan that will always work. If you can't keep your feelings in check, you can't beat yourself and win. But you can do things to increase your chances of being a winner, and the most important is to follow these Forex trading rules:
Prepare a trading plan using good Forex money management skills and the trading strategy of your choice, and then trade your plan. If you don't see a good trade for a few days, don't change your plan or your criteria. Instead, wait until the market meets your needs before putting your money at risk. Remember the law of averages: the market will turn around sooner or later.
Use stops and, if possible, trailing stops to keep your losses in check and protect your profits. Make sure your stops are far enough away from your entry price so that normal market jitters don't close you out.
Use a demo account to trade on paper until you're good at it and feel comfortable in the market.
When you start trading with real money, it feels different than when you just practised with fake money. But you shouldn't change your plan now. Set a small, realistic goal as a starting point and trade until you reach it more often than not. This will keep your emotions from getting in the way. Use micro or mini accounts for small amounts of money. Try trading with bigger amounts of money only when you are ready to put your money at risk and sometimes lose it.
Look at your trading history and try to figure out why you lost. Simply put, learn from what you do wrong. Just doing that will put you ahead of most people.
