I know that many of you come to this site in order to find some kind of magical solution to your trading woes. I also know that many of you will have fallen prey to other places that offer the promises of “easy” returns and huge profits. The truth is that the Forex markets are full of a lot of broken dreams, misguided enthusiasm, and many other misfortunes.
However, the fact is that the Forex markets really can be profitable. The biggest thing that people forget is that the returns from a managed account by “professionals” only gives back about 15% on a good year. However, many of you demand outrageous returns from yourselves. The truth is that this makes for reckless trading, and generally is one of the biggest causes for failure.
When avoiding the hype, you should also do the same when it comes to the actual trades as well. The biggest danger to a lot of traders is the average financial news channel or Forex news site. This is because so much is focused on the short-term, that it is sometimes “impossible to see the forest for the trees” to borrow an old expression. The EUR/USD is a perfect example of this at the moment.
The recent postings that I have been seeing confirms the most obvious trap out there: I keep seeing new traders going on and on about how the EUR/USD is going to snap back, and that the USD is doomed because the situation in the USA is much worse than in Europe, which of course is nonsense as the dollar isn’t threatened with dissolution like the euro is. However, in the big scheme of things, it is the chart that matters.
The chart is showing one thing only: a downtrend. Yet, there are people out there that are buying every minor piece of news that looks even remotely positive for the euro. The reality is that the larger trend is what traders SHOULD be focusing on, yet so many don’t. It’s really sad, because there are many new traders that fail to see that one of the biggest parts of becoming a profitable trader is to simply wait for the right conditions. In other words….
If a currency pair is falling over time – then WHY are you buying it?
The fact is far too many people worry about the next few minutes, and not what truly makes the largest amount of returns – the trend. I know it seems a bit cliche to bring this up – but it can never be said enough.