Forex trading is an actual job, most people go into trading thinking this is not the case. They draw some lines here and there and think they have what it takes to make money.This is a big mistake, trading is a real job and just like any other job you have to study for years in order to become good at it. And then you can still fail. Learning to trade is an ongoing process and not something you simply do on the side. In this article you will read more about the misconceptions Forex traders have about trading the Forex market.
Approaching forex trading the wrong way
Many people approach trading completely wrong. They draw some random lines on a chart and think that makes them a trader. Being a Forex trader is something people use to show off. Let’s be real. Anyone can draw a line on a chart, that doesn’t make you a trader. Trading is way more than technical analysis. Trading is about discipline, process, consistency, edge and psychology. There are even more things to it. Unfortunately, because of the online “fake gurus” people have massive misconceptions about Forex trading. These “gurus” usually only focus on teaching technical analysis. Why? Because that is the easiest to teach. Also, technical analysis is a visual thing, which makes it easier to sell to people.
The job, as a Forex trader, is to find setups with edge and execute those setups with edge without making mistakes over and over again. To do this you have to study and work on yourself and your trading for years. Are you ready for that?
Do you really want this career?
You have to ask yourself if you really want this career. Do you really want to be a Forex trader or do you just like the “get rich quick” marketing? Are you actually interested in the markets, or do you just want to make some quick money? Ask yourself these questions. You should only choose a career path if you like that career. If not, you will fail and feel miserable.
Just like any other career you choose it takes years to learn the appropriate information. Then, once you know the theory it takes years to put it into practice, this is the same with trading. So before you fall for those marketing scams, ask yourself if this is the job you want to do. If you just want to make some extra money, investing in a well-diversified portfolio might be better for you.
What is the goal of a career as a Forex trader and how do you achieve it?
The goal as a Forex trader is to consistently execute an edge in the market. By doing so you generate consistent returns and grow your capital.
That's it. That is what Forex trading is all about. How you get that edge and what kind of edge it is, is completely up to you. But please, don't think that drawing a line will make you profitable, there is so much more that goes into this, usually behind the screens.
Retail traders just draw some support and resistance lines, or maybe a supply zone and trade of off that, not knowing if it has an edge. They often don't even know what an edge is!
Let's be clear, if you don't know what an edge is you have no business trading at all. Get
back to the drawing board and study.
If you need help finding your edge in trading you might want to check out our 5 month 1-on-1 coaching program. During this program you will learn all the tools you need to become an independent and consistently profitable Forex trader.
Trading or investing?
People often start with Forex trading because they want to make some extra money. However, they usually don’t have what it takes to become a trader and therefore they start losing money instead of making money.
The truth is, most people are better off investing for the long term. They are not risk takers. They don't like the market, they just want to make money. If you are in the trading just for the money, forget it. You are better of investing in index funds. Forex trading is a job, a career. Don't do this for some "side income". Retail traders think this is possible but thinking like this is a massive mistake. If you want to make some extra money, invest for the long term in all country index funds. Only get into forex trading if you are really passionate about the markets and you like the game. If you do it for any other reason, you will not sustain the process and you will fail and lose your money. That's just how it is.
If you are interested in growing your money in a “safer” way without making trading your career, investing is for you. Investing, the passive way, doesn’t require a lot of effort. You simply need to know somethings. There are a lot of ways you can invest. If you have a long enough time horizon investing in 100% equity index funds is the way to go.
On our “long term wealth building” page you can find our mentorship that will help you get started with investing in a safe way. This mentorship doesn’t take as long as the one that teaches you how to trade Forex. Investing can be done next to your regular job. In our opinion, everyone should start investing. Money on the bank loses it’s value every single year. You want to grow your money, not lose it.
Psychology
People always say that Forex trading is 80% psychology. Yes psychology is important, but not 80% in most cases. It depends on the way you trade. If you are a mechanical trader you simply follow rules. If these rules don’t have edge your “good psychology” won’t fix that. But, if you are a discretionary trader it is important to focus on your mental health & psychology. So before you fall for this and think you need a psychology course, figure out what type of trader you are and how important psychology really is for that type of trading.
In general most psychological issues are created by lack of confidence. People start cutting winners and holding on to losers. They also start doubting themselfs when they take a few losing trades. If you have full confidence in what you are doing you won’t have these issues. The question is, how do you get that confidence? The same way as you gained the confidence to ride a bike. At first, riding a bike is scary and you suck, however, the more you practise the better you get. You get positive feedback from taking action and this gives you the confidence. Right now you probably ride a bike as if it is nothing, do the same with your Forex trading.
The point is, you need to gain confidence. You do that by knowing your strategy inside out. If you know exactly how your strategy or way of trading works, why it works, how the underlying concepts work and you have past data to back that up, you will have massive confidence. Do you think it’s a coincidence we at CDFX Trading focus so much on statistics? Of course not! Before we enter a trade we know the exact odds of it working out and the exact expectancy (based on past performance). We also know why our setup works and when it works best. We have a lot of Excel sheets filled with data to confirm an edge, but also build confidence. Over the past 6 months we have made 0 trading mistakes. This also means 0 psychological mistakes. We just had our edge and executed it again and again, without making mistakes. We did this, even when we went in a big drawdown for a few months.
Most people would already ditch a strategy once it hits a drawdown for a few months. We don’t. Why? Because our strategy has been tested over years and years of data. We know what types of drawdown we can expect. We also know that over the long run we make a steady return with our Forex trading strategy. So, we don’t freak out but we focus on following our plan. If we do this without making mistakes at the end of the day we will get on top off our drawdown and make those returns.
Drawdown is completely normal in Forex trading , unfortunately people on social media don’t tell you this. Build confidence, know your edge and you will be taking another step in the right direction of becoming a consistently profitable Forex trader.
This blog is not meant to discourage anyone about forex trading. We just want to paint a real picture. Most people think forex trading is something
they can just do on the side. Massive lie. Forex trading is a real job, and just like a regular job, only do it if you really like it. If you are serious and want help pursuing this career, check out our 1-on-1 coaching program.
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