Other Than money management, having a solid Forex Strategy is probably the most crucial factors of profitable trading. Most people come to Forex trading in search of easy money and an adrenalin rush. However, these fast money seekers are fooled by quick success that causes a form of cockiness. If they're truly unfortunate, their early forays into the Forex market are successful, so they in turn start out trading larger amounts of money, and then BAM! the market takes them for everything they've got. They are left wondering: What happened? This kind of misfortune often hits newbies who attempt to day trade without having a sound strategy, and it particularly wounds those lost souls who try to scalp the market without a realistic idea of what they are doing. Unfortunately, forex trading is really a zero sum game: Someone must lose money for somebody else to make money, and unfortunately it's new traders like you who are the losers. This article will show you why you must have a good Forex Strategy to survive the zero sum game of Forex.
What is your Forex Plan? Have you been merely guessing and making decisions on the fly OR do you have a system that lets you know when to enter trades? Discretionary trading just isn't fit for new forex traders simply because you do not have experience or know-how in making trading decisions on the fly. Even seasoned forex traders stay away from discretionary trading because they understand how difficult it is to make good decisions in the heat of the battles. The big investment banks that supply the majority of the liquidity in the Forex market, trade using automated computer tested trading strategies, still newbies think that they can trade without a Forex Strategy! On the fly trading results to a lot of emotional decisions, which usually lose money. Practices like placing stop orders, closing out orders and adding on to a position should not be done while you're in a trade -- These kinds of decisions should be formed way before you even initiatea trade. What do you do whenever a trade begins to go against you? Some newbie traders haven't a clue how to proceed; all their answers and on the fly decisions are based on both fear or greed. Yes, indeed!
The right way to trade Forex: The right way to trade Forex is to know in advance -- where you will set your stop loss, where you will set your take profit, the amount of money you'll trade, and why you are entering each trade. Newbies like the thrill of making these vital choices on the fly, and they eventually go bust. The reality is that most people lose money trading Forex, but you don't have to be one of the losers. Invest in some Forex education, and learn how to form a solid Forex Plan, so you can avoid many of the mistakes that new Forex traders make.