1. Trusting a Forex Robot with a Simulated Track Record
It has always amazed me traders fall for this one - they are presented with a track record that Warren Buffet would be proud of AND all for $100! The buyer never has to work again, plug the robot in and make money with no effort, for life. The problem of course is these Forex systems sometimes amusingly called expert advisors, have never made any real money.
All they have support there claims is a back test simulation, which is done knowing the closing prices. Well anyone can do that - but you don't get to know the price in advance when you trade. If you want to trust a paper back test you can - but don't be surprised if you get wiped out.
2. Day Trading
Trading in short time frames is popular - but doesn't work.
All volatility within a day is random - you can't get the odds on your side and can't win. All the systems sold that claim to make money, are like the Forex robots above - producing back tests and simulations on paper. Try day trading for real and it's a different story, regular profits actually turn into regular losses.
3. Believing You can Trade with Little or no drawdown
90% Accuracy, make a monthly income, make 20 pips a day etc great copy - but not based on reality. If you trade Forex you are going to face losses - sometimes for weeks or months. Your challenge is to trade through these periods with discipline, until you hit a home run and hit profits. Most traders can't do it and throw in the towel early.
Learn this - if you want to win in Forex trading, you need to learn to lose, take your loses and keep them small and stay on course.
4. To Win You Need to Predict
Not a good idea, as predication is hoping or guessing and you don't get rewarded for that, in any area of life. Most traders dive into soon and should have waited for confirmation of trend continuation or change and then traded but they dont jump to early and get stopped out.
If you want to win, forget prediction and trade the reality of price change.
Do not believe anyone who tells you there is some mathematical law of market movement - if there was they wouldn't tell you (they would be to busy making money) and also if there was, we would all know the price in advance and there would be no market. Markets move because prices are uncertain not certain!
5. You Need to work Hard and Be Clever
This is totally wrong and hard work and being clever, count for nothing in forex trading only being right with your trading signal and the money you make is how you are judged and the cleverest and hardest working people, don't always win at all.
You need to work smart not hard, get the right Forex education and then you need to keep it simple! The best Forex trading systems are simple - not complicated and a simple system has a huge advantage, as it's more robust, with fewer elements to break, than a complex one.
A simple system traded with discipline is the way to win and always has been.
How to Win
So there you have 5 common Forex trading errors - make any of them and you will join the vast majority of losers. If however you get the right Forex education, avoid the above mistakes and understand that a simple system, which trades the odds and applied with discipline is the key - you are on your way to Forex trading success
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