The 7 Deadly Pitfalls of an Aspiring Forex Trader

In my years of experience of trading and market exposure, there are so many lessons I learned that made me refine my approach in the markets. I had times of struggles and disappointments. I remember when the first time I blew-up my account, I convinced myself mentally and emotionally that Forex Trading is not for me. But on the other hand, the challenge remained in me and my dreams keep me going. This article serve as a glimpse on the lessons I learned along the way and how it can help you in your journey to the success in Forex trading and in life.

Forex Trading is more on an inner battle rather than an outside. When I meet a successful Forex trader, all I see is an emotionally and mentally tough and disciplined person. Why is that? Because you cannot cheat the markets. It is impossible to be successful in Forex Trading by cheating. The markets flow whatever direction it goes and nobody can stop it. So as a Forex trader, you have to get ready to face the reality that your result is not based on others but on your performance, self-control and discipline. Not all aspiring traders makes it to be a professional Forex trader. Most of them, blow-up their account in just a matter of month; and majority will quit. Whilst it is true that in every industry, only the 2% will make it to the top while the 90% will either fail or quit.

I listed 7 Pitfalls, or shall I say ‘deadly’ pitfalls of an aspiring trader.

1. Focusing too much on the reward – It is but a human nature to admire successful people with good results, that most of the time we tend to do what they do as if it will happen to us overnight. We base our business choice on the people we saw who earned a lot… or got rich in that particular business. However we fail to see the other side of the coin, that in every business, there are also lots of people who failed. We get too much excited on the earnings presented when we attend a business opportunity seminars, and the way we perceive it as if it is just easy. The main problem with focusing too much on the reward, is that it will develop a ‘bad habit’ which is deadly in the Forex trading industry- we call it ‘greed’. The moment you become greedy, there is a big tendency for you to over-trade or risk too much. Risking too much and over-trading are the shortcuts to failure in the markets.

2. Thinking this is “Get-Rich-Quick” – this second one is just related to the first. I have lots of friends who approach me and says they want to be a Forex trader. Well, I am open to teach everyone, but the moment I sense something in them that they only want to earn but not willing to undergo the process and not willing to pay the price of learning, I don’t invest my time either for the person. It is important that whenever you start something, you should be concerned with the process, always! Because the process is what makes you successful. Money are just results. They are fruits, not the root. So when you see an mango tree bearing lots of fruits, the quality of the fruit depends on the process on how was it farmed or cultivated.

There is no overnight success. If you think you will get it for the first time, you are dreaming. So here is the thing that I will set your mind into: when you open a live account, start small and it should be your most disposable money. What I mean is, the money that you can afford to lose and not your "hard-earned-emotionally-attached money" because there is always a price to pay in learning. I am not saying that you will surely lose, what I'm saying is, you need to anticipate a risk that may happen to protect you from trading with emotions and impulse. Never expect an amateur boxer will win the first time they engage in a fight for a world title –it’s not the way it works. You need to be knocked out, learn and try again, until you have all the wisdom, skills and confidence to finally beat the enemies and win the fights.

3. Laziness to Learn - In relation to the first and second, this one is very common. Let's say I have a friend who wants to start in

Forex, but when I told him to do this and do that, I heard no update from him. See how could Manny Pacquaio be a world champion boxer if he doesn’t

know the basics of boxing? In the arena of boxing, it is physical, emotional and mental skills that a boxer needs to develop and he needs to have a solid experience to be able to read the movements of the enemy. This is no different with Forex. You need to have a regular routine analyzing the markets, evaluating it and trade regularly based on your trade plan. A newbie trader must also look for a mentor. A good student is a good teacher as they say. When I started in Forex, I have my personal mentor before that I really put an effort to go to his place for me to learn. You need to knock for the door to be open, or if the door won’t open, destroy it! (chuckle). I learned the hard way as well since I blew-up my account, I lost my savings yet I manage to pick myself up and learn a strategy by myself. This is the hardest part for most, because it requires self motivation to get back your ass up and move on. Self-study and pursuit of knowledge even if nobody is instructing you to do so is one of the characteristics of successful traders.

4. Expecting to Win – I hate to used the term 'win' here because Forex is not about gambling, but this the easiest term to describe my point. While all of us wants to win the markets, it is one of the deadly pitfall if we set our mind that our trade will win. It is an irony but the reason is that we need to prevent emotion to take over and we must separate emotion with our trade. So when we expect to win, yet the trade did not turned out the way we expected, we will be affected emotionally and there might be a chance that we will feel like we want a revenge. The best way to start is to start with a disposable money, or a money that you think it is okay for you to lose. In this way, we will expect nothing and learn to trade not based on emotions but on a system or logic.

5. Too much Excitement to Live Trade – Just imagine a person who have just learned how to drive joining a professional drag race with a 1 million dollar price. What is his chance of winning? That is the exact comparison with most beginners. Because they are too much focused on the prize, they want to engage themselves immediately in the live markets without even familiarizing themselves by trading a Demo Account. In fact, a trader needs to stabilize first a strategy in a Demo account, apply a trading system and develop a good habit first before engaging in the markets. Just like a soldier, a Forex trader needs to be get used on war-games with no live bullet before engaging into a war with live bullets.

In my tutorial course, I will recommend at least 3 months of trading demo account before we will start small live account and program it to grow into a thousand dollar account. The problem is, most people have no patient to wait to earn big. They want to earn immediately or get-rich-quick in which it will only cause them harm than good in the markets.

6. Meddling the Trade – This is the very mistake I did when I was still a beginner. Because I have no deep understanding of the markets and I have no full confidence with my strategy, so whenever I enter the trade I am always anxious. So what I did was that I always check my set-up. So I became addicted of checking the trade in the chart and whenever the market goes to an unfavorable direction, I tend to meddle with my trade by adjusting my stop loss, or pre-maturely closing the trade and taking my small profit. The problem is, markets ebb and flow, so whenever I close a trade, market goes up again to my favorable direction and I become regretful. So it was a cycle of emotional trading that made me stressful and overthink.

7. Not having a Trade Plan or not following it if there is - Forex Trading is never a hobby nor a game. This is a business. If you will treat this as a hobby, then don't expect a business-like result. In a business, there is a long-term and short term plan. You need to make one to the point that you need to establish a MISSION and VISION statement for your business which act as the course or path of your business-growth. Capital preservation, risk-management and trade set-ups including your daily schedule in checking the markets and the likes. These are just an example of a trade plan that a Forex Trader needs to create before engaging into the real markets. Failure to establish this first will have a devastating effect of your trading account which may result for you to quit sooner if not later.

Conclusion

A newbie Forex trader must establish first a SOLID FOUNDATION before going to a real market trading. Just like a building or skyscraper, the higher is the pre-planned height of the building, the strong and deeper is the foundation they need to build. Never rush your success. Because success in all areas of life needs a process and there is always a gestation period, a time to harvest. Never envy those who have their results already, you never now how long did it take for that person to achieve that result. Focus on your own development, be teachable and commit to learn everyday.

In my ALPHA FOREX ONLINE COURSE, I will be teaching the members all the basics: from Jumpstarting Forex, Correct Mindset, Correct Money Management, Entry Points etc. This is going to be all Made-Easy and Simplified. My lifetime goal is to create successful people through my passion of Forex trading and help them to become financially free, to have time with their family and their passions in life.

Have an awesome trading journey!