Trading The Forex Market - A Basic Fact Many Traders Prefer To Ignore
Trading the Forex market has the potential to make not just money, but true wealth! Hence the huge surge in popularity for people of all kinds and backgrounds to get their feet wet and jump into Forex trading.
Regretfully many new traders fail to study enough to understand the true nature of trading the Forex market being in too much of a rush to learn some 'system' or technical analysis tool that will give quick results.
The following characteristic of the Forex market may seem a little obvious but please don't dismiss it if it seems so. Careful thought and understanding of this key fact should mold and enhance every trade you take when trading the Forex market.
A Basic Unwelcome Truth
This simple, almost unwelcome truth is:
The Market Can Do Anything At Anytime!
Wow! Hardly earth shattering is it? Yet, many new traders, with a little knowledge and with a bunch of technical analysis tools will study their charts and then believe they know where the market is going next.
So into the trade they go and when price starts turning against their position their belief is challenged but still they hang on.
This leads to emotional reactions such as:
- Moving the stop back farther than originally calculated
- Coming out with a minimal profit and then watching price later resumes it's course
- Adding to the position thinking "it can't go any farther so I'll put in another position"
If a trader truly believes "The Market Can Do Anything At Anytime" then the trader realizes that all technical analysis and knowledge can do is give an edge, in other words a probability.
If all the indicators line up, then 'possibly' or 'probably' the market MIGHT move in that direction. On the other hand, it MIGHT NOT.
When this unpleasant truth really sinks into the trader's mind and heart it will be the day a major step forward is made in trading the Forex market.
Armed with this mental attitude, anything can happen at anytime, the trader will scrupulously calculate his stop and check his risk management. In his mind he will have written off this possible loss as if it has already happened. If the trade is successful he will unemotionally move on to looking for the next edge, or possibility, or probability.
The Forex market represents one of the most challenging environments you could ever find yourself working in. The amazing thing is, many newcomers to trading the Forex market think they than pick it up within a few months with minimal education and make a killing. How sad!
Forex As A Career
When you consider professional careers, whether it be in medicine, law, or sports, years of study and practice are involved before an individual reaches any level of expertise or success.
The challenges involved in trading the Forex market are in some ways even more daunting. The environment is forever changing. Everything is uncertain. Anything can happen at anytime.
Unless an individual is prepared to sink considerable time, effort and energy into learning how the Forex market works, and the mental and emotional skills needed to deal with a constantly changing, uncertain environment, the jump into Forex trading is likely to be a swift plummet to earth rather than a controlled parachute landing.
Free Forex
Source: http://ezinearticles.com/
Added: March 27, 2008
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