Guest Commentary: No Shortcuts in Forex Trading
Trying to find shortcuts in forex trading? You’re in the wrong place. It is certainly faster and more exciting than stock trading, but doesn’t provide the fast lane to retirement.
Making money is certainly feasible, but it requires taking no shortcuts. Here are things to avoid and to do.
Foreign exchange trading is not the place to get rich quick with a hit of a button. I hope that by now you know that and that flashy promises you’ve encountered are questionable to say the least.
Mirror mirror on the wall
But even if you don’t believe that you can buy some “product” that will shorten your path, don’t you still have the hidden (or not so hidden) belief that you will accelerate your profits exponentially in no time?
Just look at the mirror and say out loud: I am not going to get rich quick. It won’t make you feel better, but it will certainly help you get your feet on more solid ground.
A shortcut to success may short circuit your account!
In order not to get depressed, look again in the mirror and ask yourself: How am I going to enjoy realistic success in forex? The mirror can help you get your mind straight, but for drawing details, it’s better having a word processor or a piece of paper – whatever works for you.
The basic things to consider and some questions for long term trading are:
Education: How are you going to obtain it, how much time you’ll dedicate to it before you move on and how much time you’ll continue investing in it later, actually for all your life.
Demo trading: Are you going to back-test systems with a forex demo account, or just practice regular trading? Remember that back testing also has pitfalls. How long are you going to invest in it?
Real trading: How are you going to control your money management? How long will you stick with a system until looking for tweaks or for another system? Are you going to deal with controlling your emotions or are you cold enough?
Others: withdrawing money, trailing stop loss orders, monthly and yearly goals, level of reading every week, etc. Everything is worth considering. The more details you look into, the less scared or disappointed you’ll be.
Making extremely specific long term plans won’t necessary mean having instant success and doesn’t mean you can’t change your plan. Yet discussing more issues with yourself certainly helps eliminating part of the unknowns.
In any case, don’t look for shortcuts. There simply aren’t.
What do you think? Do you have a long term approach? Or only go with the flow?
Further reading: 5 Most Predictable Currency Pairs – Q2 2012
By Yohay Elam, Forex Crunch
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.