Why most Traders Fail when Trading Forex

I originally started love-the-pips.com as I wanted a better connection to the trading community. Though my family and friends appreciated what I did for a living and were super supportive, they often didn't have a clue what I was talking about. Long, short, bullish, bearish, Forex, options, derivatives and other trading terminology was a foreign language to them! I was desperate to have some trading friends who I could converse with, hence love-the-pips.com.

Over the years I have had contact with many traders across the globe, unfortunately a common story is told by most... 'I have been trading an X amount of years. I know the technical side well but just can't seem to make money consistently'. Sometimes these stories also go on to say that they have lost hundreds and sometimes thousands of pounds or dollars. Just as these stories are all similar, the remedy for consistently losing to consistently winning is usually the same. In this post let me share with you why most traders fail...

If you Fail to Prepare, you Prepare to Fail

Too many traders don't have a trading plan... It's that simple! They may know about technical indicators, Fibonnacci, price action and a hundred other speculative price aids but they don't have a trading plan. A trading plan offers the trader clear instructions of when to open a position and when to close a position. It gives a transparent set of rules for the trader to follow day-in, day-out.

Going on from this, a reliable trading plan is one that through back-testing, has proven to be profitable. If you are day trading, I would suggest that your trading plan has been tested against the last 12 months of price data (at a minimum!). If you are swing trading, I would suggest the last 36 months (minimum!). Sounds like hard work? Just do it.

Fear, Greed & Boredom - The 3 Pitfalls

If you have a trading plan then you need to stick to it. Some traders have a trading plan but get fearful, get greedy or get bored, they let these emotions take control of their actions and divert them from the trading plan. The best advice I can give to anyone who often succumbs to these emotions is to realise that you will only be consistently profitable if you stick to the plan. Do you want to make money? Then stick to the rules!

Here are some other tips that may be helpful...

Overcoming Fear - Reduce your position size and trade what you truly feel comfortable losing. Adjust your trading plan so that you are taking less trades. Consider swing trading if you are currently day trading

Overcoming Greed - This is hard for me to comment on as I have never struggled with this emotion. As previously mentioned, realise that sticking to your planned set of rules is the way to make money

Overcoming Boredom - Do something else with your time while you wait for trading opportunities. My trading blog, YouTube, trading and other books and other business ventures take my time while I wait for trades. Boredom is never present as I have so much to be doing!

Learn from the Professionals

My intention is not state this so that you follow me... Learning from a professional trader, someone who is already successful can be a huge benefit for most seeking to profit from trading. What did you do when you wanted to learn to drive? Where did you go to when you needed an education? How did you learn to cook? The answer to all of these questions is that you learnt from someone else, someone who already knew how to do these things. Why is trading any different?

There is a lot of free trading material on YouTube and online. If you are still not profitable, commit the time and money to learn from these traders. How serious are you about trading? If it is truly important to you then you will commit the necessary funds and time to make your dream become a reality.

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