2Bull Forex Blog

Many traders think that accepting losses is hard but it’s not nearly as hard as accepting big profits. When you are engaged in forex money management your profits need to exceed your losses so you need to maximize them- so why do most traders have a problem surly we all want big gains? We do but:

Most traders have a psychological problem in running profits.

The typical forex trader gets a profit and feels pleased. The bigger it gets though, the more tempted he is to take it. Swings in price go back against his position and eats his open equity and this causes emotional problems.

The bigger the profit becomes the more tempted the trader is to take it. The trader ends up snatching the profit early, as open equity swings cause him to panic and he banks it and then what happens?

The trade continues the way he thought and goes on to pile up $10, 20 30,000 or more and he’s not in.

Its hard holding a profit in a long term trend and taking short term swings against you, by sometimes thousands a day - but if you want to catch and hold the long term trends that’s what you have to do.

It requires total understanding of your trading system and confidence in it - and this is why most traders can’t do it they are emotional “shoot from the hip” traders or following a guru.

A good forex trading system will normally win 30 - 50% of the time (forget the traders who claim 90% their lying) so your losers will be normally more or the at the same level as your profits. So you need to have a profit 3 - 5 times bigger than your loss to make good profits on your overall trading account.

Most traders simply don’t have the patience and discipline to follow long term trends but you must to win. However, look at the major forex trends and you will see they last for months or years and can make you rich - IF you can lock into and hold them.

Many forex traders simply can’t cope with trend following so they try day trading and vendors present it as way to scalp small profits and build them over time - good story, doesn’t work. Day trading is a loser’s game as all short term volatility is random.

If you find long term trend following to stressful, try forex swing trading as profits and loses come quickly and you don’t need to endure the open equity dips you do in trend following.

If you’re a novice cut your teeth on swing trading and build up your confidence and discipline to try long term trend following - if you can catch these trends, accept open equity dips and keep your eyes on the end prize, you could make huge profits.

Trend following is hard but very lucrative - if you have the mindset you can turn these trends into huge profits and understand forex money management is not just about taking losses its also about accepting big profits to.

Here we are going to look at currency trading basics and one specific question any novice forex trader must answer correctly, if they are going to win with their forex trading strategy, so here it is…

My trading edge over the 95% if traders who lose is (defined)

To win you need to have a trading edge - it’s as simple as that. Here are some answers the bulk of losers will give and they will all see you lose

- I intend to use a forex day trading or scalping method
- I am going to blindly trade a vendors system
- I like to take expert opinion and trade the news
- I have a forex trading system that can predict forex prices
- I believe the markets move to a scientific formula and will take advantage of one
- I have a complicated system that I have refined in back testing
- I am simply going to buy into support and sell into resistance

All the above do NOT constitute and edge and will see you fail at forex trading - keep in mind 95% of traders lose!

If you learn anything in your forex education it should be that forex trading is not as simple as it first appears and to learn currency trading correctly you must end up with an edge that you can define - no two peoples edges are identical but successful traders know what it is and why it gives them an advantage and they have the confidence to apply it with rigid discipline.

Lets first start with a fact - forex trading is an odds game not a game of certainties.

There is no scientific method to help you determine prices in advance.

If there was we would all know the price and there would be no market! Furthermore, if you try and predict forex prices, you will lose because you are simply hoping and guessing and you should really be trading the reality and confirming every trading signal before executing.

Forget complicated trading system!

Simple systems work best as they are more robust in the face of brutal ever changing market conditions and have fewer elements to break.

Forget the news its just stories.

The news reflects the emotions of the losing majority and if you get involved in trying to follow it, you will lose.

You need to trade the odds to enjoy currency trading success.

The best way is to use forex charts, where you can simply see the reality of price change and you can either forex swing trade or trend follow - but never day trade!

Day trading is the best way to lose money out and doesn’t work in the real world.

Forget all the gurus out there with their regular income systems and simulated track records; it’s a loser’s game.

Forex trading is a combination of a simple forex trading system; you totally understand this then allows you to execute it with discipline.

If you don’t have the confidence in your system you will never have the discipline to follow it and these traits come from understanding and knowing a trading edge.

So there you have it perhaps the most important point of currency trading basics to learn but if you do and apply what we have written you could enjoy huge forex success.