The main goal in forex trading is also to buy low and sell high. There are simply a few differences between the rules of the stock market and the rules of the forex.
However, I really did lose my entire first forex trading account. Totally. I blew it to bits, and it took me 12 months to achieve sane, profitable trading.
Nowadays, I trade for a living. I'm no Fairy God Trader, but I have been around the block, and I hope that I can help you become the trader that you know you can become.
1. Lack of Planning. This is simply an inability on your part to write a detailed trading plan. If you don't have a trading plan, then you should stop trading now and write one.
It can be as easy as writing out your current trading strategy, systems, and money management principles (if you are currently trading successfully), and as difficult as starting from scratch (if you're not).
2. Poor Execution. When you don't have a trading plan, then you are likely to make bad trades. You're going to trade on the basis of a spur-of-the-moment decision.
You're going to trade because you don't want to miss out. You are going to make trades here and there, possibly lots of trades -- and you'll have no set reason why you did any of it.
3. Escalation and Loss. Bad trades lead to losses. What's more -- many times, when you've got a bad trade going, you're possibly tempted to add to the trade. When you do that, you only escalate the damage.
Some traders believe that when you "average down" a trade, that you don't need it to turn around as much in order for you to break even or get a small profit. Obviously, this also amplifies the possible loss.
4. Emotion. Last of all, your emotions get the best of you. When you've lost again, and you realize that it's because you didn't know what you were doing, you get emotional.
And then you jump back into a state of mind that says that you can get the money back, if you only take another trade, and you just double the amount you trade next time.
The journey to the road of successful trading will make you confront your deepest fears. Your armor on this journey will be confidence, knowledge and believing that you can achieve your dreams.
Never, never equate your success or failure in the markets with who you are as a person!
