Most of the new traders that enter into the world of Forex do so on the premise that they are going to make a ton of money so they are freed from the chains of working a 9-5 job.
The marketing behind Forex increases the chance of traders losing because they see what trading can create.
You can't really help but be fixated on an industry that can make you "thousands" every day. Key wording such as "I made $500 in 10 minutes, why can't YOU?" or my favourite: I quit my Job and Now Trade Full Time and Make Thousands Every Day"
This is the problem: Forex is an industry where by the transfer of money leaves one account to another. Forex has been sold on the simplicity of that very nature. The problem we have is new traders are expecting that this transfer of money is a simple process. I go back to the most irritating slogan that successful people say (A Survey Statistic) "IF I CAN DO IT, SO CAN YOU"
Not to say that you cannot become successful in trading, However, if you set yourself up to be expecting success then you will most definitely experience the wrath of the markets, or in my opinion, be humbled by the market every time.
Let's talk about the one experience every new trader will encounter.
Losing It All...
I will admit it and I am not ashamed to say so. I have blown my Forex account many times. So many in fact that I was not able to pay my fuel for my car to get to work because I had put all my money into an account because I had expected, (after blowing the last account) I would recover. I eventually walked to work... and yes, I blew the account.
How do you blow your account? Look, every new trader enters into Forex with the best intentions. However, unfortunately, this is irrelevant in the market. Your feelings, your motives are not going to make a mark on the market. In the eyes of the market, you cease to exist.
There is a development of behaviour that flourishes which leads to the loss of all capital.
Below are examples of previous states of mind that I have experienced. Most of the time, new traders encounter these thoughts developing.
Key Mindsets That Set You Up For Failure.
1) Each day you decide to trade, you set yourself expectations to make money, You give yourself goals, financial goals.
2) You are feeling pressurised to trade. Previous days trading you lost money, so you want to recover the loss
3) You feel that there is a psychological wall on your account, you have been trading for a few weeks and still have yet to break past the initial deposit amount.
4) Your account balance is considered as small, so you take advantage of leverage. Great, you now have 1:1000 ratio. You have huge amounts of buying power.
5) You place a large trade, you are convinced it will go in your favour. You are aware that the leverage is huge, your account exposure to risk is high. You start to feel tense. But your focus is on the end prize.
6) Although your account balance is small, you take it for granted on the grounds that you can simply deposit again if you lose.
7) You have spent some money over the weekend, you know how easy it is to make money on the market, so you trade with the idea in your mind that you can quickly make back what you have spent.
8) You are convinced that your indicators and technical analysis are going to produce a profit. You stay married to your position, even though you are starting to feel tense because your account is in the negative.
To name a few, the above scenarios facilitate the development of trading with an irrational mind. There is nothing above that is further from the truth that having the above thoughts in your mind most definitely will help you blow your trading account. The above are emotional triggers that have been developed through ideologies of what to expect when you enter the game of Forex.
Become aware and mindful. The above scenarios do happen to most new traders, they do creep up on experienced traders also.
The only way to avoid the above from occurring is simple. You must completely change the way you perceive the market. Have no expectation regards to the outcome of any move. Have no expectation that just because your trading, then anything you do trading related will be in your favour because you are simply "trading". The Market does not care who or what you are.
Avoid falling for the marketing schemes that you can make huge sums of money in an instant. There are traders who do, however, they have trained their mind to manage the novelty of uncertainty and apply their trading in a systematic and objective way.
If I leave you with one thought it's this...Never take for granted the importance of dedication and hard work that is required to master any craft. You have to experience the worst of each craft before you are humbled enough to allow yourself to flow and apply your chosen craft flawlessly.