Have you ever noticed that people struggle to develop realistic expectations in Forex? Currency trading is the largest financial sector in the world and if you look at the number of people quitting after the first few months, it is absurd. Perhaps, one of the reasons is all of them want to get rich quickly and cannot wait to get the money. Although Forex is the biggest market, this does not mean it will simply hand out money to people. Every person is here for himself and the professionals only make the competition tougher. There are events and news release that all make this sector even more complicated. In these circumstances, only a foolish person will dream of making money easily. Despite this being so, many people fail to develop practical expectations in regards to currency trading.
Do not get frustrated as we will not only talk about the problems but the potential solutions as well. The mind is the ultimate weapon of traders. Every strategy, every trick, every analysis is derived from our minds. If we can understand how to think properly, we can overcome the obstacles and challenges of the market.
Money influences the thinking
The first reason is the vast amount of wealth that is distributed here. There is money scattered everywhere and it drives investors crazy. Before they even realize it, they have placed 100 trades on the market trying to get wealthy. This is not a fishing competition where more baits increase the chance of catching more fish. Every order opened is a potential danger to your fund. They not only need to look out for the future volatilities but also make plans to exit if something goes wrong. In the demo account, this may not be visible as the winnings do not accumulate in the actual account.
Everything changes once a deposit has been made. It takes the sanity of a sage to remain calm and confident when there is a trend going against the investors in the forex. Most panic and close the orders instantly. They are so obsessed with the money they cannot even accept the natural volatility when it comes to price movement. If they see a negative figure and they freak out. This often results in an early exit.
Small investment
People always invest small amount of money to trade the major stocks. But the pro traders in Hong Kong know the importance of having a large amount of capital. They always invest big amount of money as it helps retail traders to make consistent profit without losing too much money. When you use a small account, you have to use leverage. This can eventually cause a big trouble and you might lose most of your money. So, be careful about your trade execution and trading the market with aggressive attitude.
Greed conquers everything
In the first few months, people are seen to perform well in Forex. However, the problem begins to show after a few months. Once they realize how much money can be made swiftly, they all quickly invest all their money and end up losing most of the remaining balance. This is purely driven by greed and has affected the professionals as well. Humans are inherently greedy and it only takes one good performance to awake instinct in yourself. In reality, a person who can make $50 every month will have more than $300 at the end of six months. It is more than enough but people will aim to make the same amount in a week. This is when the method begins to fall apart and the performance suffers. They wonder what went wrong and undertake even more perilous trades to recoup the lost investment and end up losing even more. It turns into a cycle until the account has been cleaned out.