The Challenges of Trading Forex

Filed under: Learn Forex Trading |

For today’s forex-related article, I would like to talk about some of the challenges that face us as traders of the foreign exchange market.

 

To begin with, one of the major obstacles for new traders is to find a good, reliable broker. There are so many brokers out there that we perhaps might be tempted just to go for the one with the lowest spreads. However, not all of them are good ones so it is prudent to be careful and do your research before signing up to any broker.

 

Once you have got a good broker, your next obstacle is… yourself! We are all our worst enemies when it comes to trading, and we must learn to manage our emotions and not trade with fear, greed, or ego. This might sound like an easy task, but it is not by any means. Mastering these emotions can take years and you might have to learn one or two painful lessons along the way before you completely get it. I myself have taken one or two painful hits before learning the lesson of not moving your stop losses when the trade moves against you. Moving your stop losses is one of the most common mistakes among new traders. We must learn to lose as a part of the process of trading. If you can have just a 50% success rate with a risk-reward ratio of 1:2, then you will be doing very well. But you still have to learn to cope with those losses.

 

There are many challenges facing forex traders, but the final one that I would like to mention today is that of time management. If you have a full time job, then finding the time to trade can be a challenge. However, the good thing about forex is that it’s a 24-hour market; so most people can manage to find one or two good trades every other day. Even if you are trading forex full-time, time management can still be a challenge, as you have to be extremely organized and motivated to look at your charts every hour or so throughout the day. There are many more challenges of course, and I’m sure you are well aware of what those challenges are if you have already started trading forex. It is a process and a steep learning curve, but the good thing is – the rewards are potentially immense.

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