I don’t know if you remember but a few years ago, I reached out to some real-life traders to talk about the most common problems for forex traders.
Not only have these guys shared their struggles, but they’ve also given their two cents on what you can do if you experience any of these issues.
So, which among these all-too-familiar trading struggles do you undergo?regularly and what do experienced forex traders recommend?
1. Staying patient
Whether it involves waiting for a good entry or holding on to winning positions, mustering enough patience can definitely be a challenge for most forex traders.
Most of the time, one’s trading bias is so strong that it can be tempting to just enter at market instead of waiting for a better price or for more confirmation. And when a trade is going your way, waiting for price to hit your profit target can be a test of patience, especially if the paper profits are piling up!
If you do find yourself becoming impatient, open a demo account and try scalping the shorter timeframes, or closing trades prematurely before they hit your profit target.
Burn yourself as much as you need to until you realise the folly of impatience. Visualise the money you could’ve saved (or made) if you only followed your rules. –?Kevin LaCoste
I would suggest that you concentrate on a certain aspect, let it be break outs, up/down trending, side trends etc. Then you master just that aspect.
Mastering doesn’t mean “yeah I know what it is”. Mastering it means you can identify right at the beginning and right at the end. You can grab everything in between and you even dream about it. Then when the market changes and you are no longer an expert on the same pair you wait until you are again. –?Drexta
2. Overcoming greed
One of the biggest emotions that every forex trader has to deal with on a regular basis is greed. Sometimes this can lead to poor trading decisions, such as adding to a position when a trend is already overextended or overtrading to make up for losses.
It’s just a?test of discipline. If you know it’s not a great trade, don’t get in. If you can’t help yourself, turn off the PC and walk away. Do something else that you enjoy to distract?yourself fora few hours until you are in the correct mindset again.” –?ivanyo
I found this hard myself. You can adjust your R:R ratio and lower your reward. This will increase your % chance of winning. You might up end up making less money than if your reward is higher, but if it’s psychologically optimal, then you might have to accept it.” –?Kevin LaCoste
3. Trading on demo
Forex newbies who are too eager to get their feet wet with a live account might find demo trading too boring.
Others who go back to demo trading to correct poor trading habits or to test a mechanical trading system often struggle to take advantage of this approach.
As long as you treat that demo money as real then it should be good. I guess all of us should go through demo. I trade demo even if I have a live account for a couple of years now! It helps me clear some doubts in my head and try out some new strategy that I wont dare make on live.” –?jingoy
“When it comes to this, it really depends on the individual. The majority favors using demo accounts, the small minority is against it. In the end, everyone needs to decide what they think is right.
Personally I am against demo accounts and always advised new traders against it if they asked me about my view on them. Using a mini-account makes more sense and it actually teaches you how to trade, but besides that those who are terrified of facing losses should not trade to begin with.” –?TheLastBear
4. Missing a good trade
Ahh, this one’s perhaps one of the most painful struggles forex traders go through. While there is no monetary loss in missing a good trade, it can hurt one’s ego to dwell on those could’ve-beens and it might wind up clouding your future trade decisions.
Experienced traders know that after missing a good trade another good trade will shows up eventually and for them it is not a big deal. That should be a part of any trading strategy; trading with no emotions.” –?Rambo35
Hindsight is 20-20 and thinking “Damn, I should have taken that trade” is one of the biggest mistakes you can make. It damages your confidence and messes with your ability to remain neutral while trading.?you need to almost be robotic.
If an instrument gives you a signal according to your appetite, then you need to trade it, every single time. This is what brings consistency. You need to manage your risk though alongside this notion.” –?FOREXunlimited
5. Hold or fold?
To keep a winning position open for much longer or to book profits early? This question pops up every now and then, particularly for swing traders who pursue longer-term trends.
Is a bird in hand really worth more than two in the bush? How can you decide if you should just take the money and run?
There aren’t any hard rules about it, and thats a tricky thing. Not only do you have the decision buy and sell, but you also need to know where you close which is not a two-dimensional thing.” –?goldenmember
Truth is, you’ll work?this out?as you continue?to trade.?Trade management is the HOLY GRAIL. And that has everything to do with self-knowledge and mental psychology (forged in the dirty, sweaty mold of continued trading over time).?There’s no formula for this, friend; it’s a personal walk.” –?dudest
How about you? What was your most memorable trading struggle and what can you recommend to newbies who are experiencing the same issue?