Are you still on track to achieve your trading goals? Are your trading systems up to their back- and front-testing capabilities?
If you feel frustrated with your performance, don't worry. You may have forgotten some basic facts about trading.
Let's take a realistic look at some facts that not many traders will tell you but will help you on your trading journey:
1. It takes money to make money.
While many traders have had success starting out with small businesses, they have also had to deal with the risks involved in trading small accounts.
For example, trading large, leveraged positions presents greater margin call risk.
Overinvesting in the profit/loss of each of your trades can also cause you to make more mistakes in trading psychology than if you had a larger account that you could afford to lose.
Don't get me wrong, you can certainly start trading with a small amount of money. Bad traders can blow up a large account as quickly as they can blow up a small account.
But trading is not a hobby. It's a business. Like most businesses, it requires capital to earn a significant amount of profits. Don't expect to earn hundreds of dollars a week with your $50 account.
2. You have to be where the action is.
One of the most common trading tips is to maximize opportunities during the time you are available to trade.
This strategy is good. If you are a beginner looking to get your feet wet.
If you are serious about developing your trading skills and confidence, you should trade when the market gives you the most opportunities. For most traders, this usually means trading in the London and New York sessions.
Just as a doctor sees a wider range of ailments in a tropical third-world country than in a first-world suburb, traders who trade in more active trading sessions will likely sharpen their skills faster than if they trade in quieter trading sessions.
3. You'd be wrong. a lot.
Because no single system can remain profitable in all trading conditions, even your tried and tested mechanical systems will often be wrong.
So, how do you stay profitable even when you're wrong?
Remember, a trader does not have to have a high win rate to be profitable. Some traders can make profits with low win rates if their average win is high enough.
Instead of focusing on winning, focus on learning the art of “feeling” the market.
A trader who can quickly recognize changing market conditions and who can manage his or her risk exposure while doing so is a trader who can remain consistently profitable.
4. There is no holy grail in trading.
In case you missed the 57,219 notes we shared, let me repeat it for you:
There is no single “holy grail”, indicator, method, strategy or system that will get you profits from forex trading 100% of the time.
Now write it or type it on a t-shirt!
Just because there is no Holy Grail doesn't mean you can't make a profit. Many traders are already trading full time, and even more are content to make consistent profits.
The key is to control your risks. Since you cannot eliminate it, the least you can do is control it through proper risk management.
5. Trading is not for everyone.
There are many reasons why 95% of new traders eventually fail.
For one thing, it takes time, effort, and a lot of patience to become consistently profitable. Those who cannot or do not want to provide these three items will likely find themselves among the 95% before the year is out.
It is also possible that the person is not qualified to trade. This does not count against the person or industry. You wouldn't force someone to join the army or play the piano if they weren't interested in it or weren't a good fit for it, right?
However, you won't know if trading is right for you until you try long enough and put in enough effort to try to make a profit consistently.
Are you looking for your own place to record your market observations and trading statistics? If so, check out TRADEZELLA! It's easy to use
A blogging tool that can lead to valuable insights about performance and strategy! You can easily add your thoughts, plans and track your psychological state with each trade. Click here to see if this is right for you!Disclaimer: Babypips.com earns a commission from any signups through our affiliate link. When you subscribe using our affiliate links, it helps us maintain and improve our content, much of which is free and available to everyone – including Pipsology School! We appreciate your support and hope you find our content and services useful. Thank you!
