Simple mistakes can easily destroy your trading career. If you are not settled at the moment I suggest you do it now because today’s lesson is going to change the way you look at things and face the markets. Today you are going to figure out what is probably holding you back in the Forex Trading Arena and probably find the solutions to repair your broken journey.
Speaking of the term “MONEY”, has never been enough for the lower and middle class. There is some sort of greed that pops up when we talk about money whether you are in school, employed or a business person. Every one needs to make money and contribute to the life cycle. It is clear that if we remove money right now in the modern day and age, life would be impossible. In that case there is a little greed that is within humans when we speak of money, every one want to be paid more or squeeze to the last drop to their customers. Ever wondered why the banks raise their commissions and fees just to handle simple transactions? My point is every one in this competitive world has greed for money the only difference is we differ in the level of greed.
In most businesses, greed is an enemy and can lead to a downfall of a firm or a company. A study by Stewart Hamilton and Alicia Micklethwait “GREED AND CORPORATE FAILURE The Lessons from Recent Disasters” shows how major corporate lose business by being greed in terms of operations or the corporate leaders. Greed has never left anyone on a good slate. Today i will explain why Forex traders get kicked out of business because of Greed. Fear will be archived for the next lesson.
The Forex market has what we call leverage. Let me ask you this question? What if i tell you you can transact a million dollar just by using a $100 account and you have a chance of banking more that $10k/ trade. In a scale of 1-100, 90% of traders will be so happy and are ready to do it the next morning. But do you how much risk are you taking? Are odds with you? Will you survive the next morning? I have seen brokers providing leverage of up to 5000, Worst case i have seen is 1:Unlimited. See here
At this point any trader who dream of having a nice car or house will salivate on this type of deal not knowing he/she is in a business of loosing money. Leverage is a double edged sword, I have been coaching traders for years now and i know when is the suitable time to use leverage and when is not. Vast majority of traders use leverage at worst times and that is why you will see everywhere banners saying “90% of traders loose 90% of their capital in the first 90 days”. By far it’s not a mistake rather the reality.
Greed is killing Forex traders. Success rates of retail traders has been dropping year after year because of lack of knowledge and exposure about investing in financial markets. No one is preaching about capital preservation but the opposite which is going full margin and expect to ride your way up to riches.
As a trader you have to think within possibilities and probabilities and not luck.
How can i eliminate greed?
Bad news is, You really can’t. But you can control it to a minimal level that will safeguard you from the catastrophes of the financial markets that happen from time to time. We all dream to make enough money for ourselves and family which is a fantastic goal, but the problem is most of us in fact the vast majority of retail traders are day dreaming as to how they will achieve this. If you have a small stake then it’s okay to dream big but your goals should be realistic from time to time and its okay to cope up with the process.
There is no shortcut to success and you can never cheat the process. The outcome will always be same if you kept in some work or not. 10 years is very fast down the road. While smart investors are spending more time accumulating realistic returns the crazy investors will be busy gambling there hard earned income only to find themselves broke.
No Risk No Paycheck, nice word that can make you go full margin but in reality you need calculated risk. If you approach risk blindly you may end up loosing a fortune. Dozens of hedge funds have failed just because of ignoring the aspect of risk, now what will keep you safe? Don’t fool yourself you are no different from them and worst case is you are disadvantaged by lack of information flow and funds.
We all need to make enough money not a lot of money because the need to make a lot of money is more likely to trigger the aspect of greed in our brains. Greed is addictive and hard to control, majority of traders who fail to control always result to a failing trading career.
Start slowly by installing these simple habits
From my experience of coaching traders there are habits that tend to show up when a new trader is introduced in the financial markets, Most cases greed always outweigh the fear and its very easy to spot a new trader by the way he/she speaks about the market, how she/she approaches the markets, manage trades and so forth and so on. So stop doing this and you are one step away from eliminating greed.
- Stop adding up into winning positions.
- Stop risking everything in your account.
- Stop thinking about cars and mansions when you have a baby account. (You will frustrate yourself)
- Start where you are and love the process.
Just by tweaking this you will be in the one percent regardless of your trading account.
That’s all for today, the first trading quarter of 2020 is almost done, If you find yourself struggling trading wise i encourage you not to lose hope and keep working on your dreams in the smart way. Trading needs a calm minded person who is able to think smart and make split decisions with 0.05% chance of making error and the good news is you can train yourself to the same guy and make the most of out of it.
Let me know how did you find today’s lesson by joining the discussion thread on Tiger Network and i will be happy to respond.
Raymond is a professional currency trader with experience of 4 years trading the financial markets. Certified Risk Manager and Contributor at profxtigers.com
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