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How To Not Lose Money in Forex

How To Not Lose Money in Forex

2 - 3 - minute read

2 - 3 - minute read

Losing money trading Forex is a problem as old as the forex market itself, but there is a solution. If we are looking to protect ourselves from losing money while we're trading currency markets, then the only reliable solution is never to place a trade.

If we never expose ourselves to the risk of losing, then we can never make any money.

Let's try and look at trading losses in a different light.

To not lose money in Forex, we need to define two types of entirely separate losses. 

On the one hand, we have overall losses and on the other, individual trade losses. Overall trade losses will, of course, see you eventually lose all your trading capital. However, trading losses are an essential aspect of trading. 

Every time we take a currency trade, we expose ourselves to the risk of winning and the risk of losing. It's how we manage these losses that are going to define whether you are a successful currency trader or a failing currency trader.

The first stage in learning how not to lose money in Forex trading is an acceptance (and this has to be a real acceptance) that losses on individual trades serve two purposes.

The first purpose is to let you know in no uncertain terms that your trading decision you have just taken was irreversibly wrong.

The second purpose is the most revealing and potentially our most significant point for profit. 

Amateur traders spend time licking their wounds after each losing trade, and in doing so, they miss incredible opportunities for profit.

Instead of focusing on how to not lose money in Forex. Successful traders are using that loss as an educator and an indicator. The education part of the loss educates the trader as to what might be relative to taking future trades. 

The indicator part of the losing trade should almost immediately reveal to the trader how he or she can make money from their next trade. This ability to quickly dispose of all aspects of the losing trade is a skill to cultivate. It will set you free to enter the market again but now as an informed trader. Do not try to avoid losing on every trade you take, instead act, adjust if need be and continue forward.

How to make money in Forex fast

  Trading is a profession, and it needs to be approached professionally.  

Run a quick analysis on many tasks you have completed, and many skills you have learned and you will discover that any success can be directly related back to time spent in practice.

For many people approaching trading for the first time, the notion of practising to gain a skill level seems highly undesirable. 

By asking and entertaining the question of how to make money in Forex fast,  you, or rather, your brain is trying to sidestep the required learning period to developing a skill. 

You can make money fast trading financial markets but only after you have put in the hours and the effort that it takes to learn how to do it. Don't try to sidestep what needs to be done to get good at something.

Expecting to step up to a trading screen and just extract money daily without any prior training is like planning to start learning a second language on Monday and being fluent by the afternoon. Nobody would entertain this as being a reasonable expectation at all.

 And yet, in many cases, new traders will grab some free trading software, log on to a few chat rooms and forums to see what others are doing and then almost immediately jump into the market and start trading.

Instead of cultivating enthusiasm on how to make money in Forex fast, traders should divert that enthusiasm into how to learn the business of trading fast. 

Once you have learned and fully understand how financial markets really work, then the rewards will come to you faster than you realise.

Why Forex traders lose money

 Forex traders lose money for a  whole host of reasons. Possibly the most critical and pervasive reason is the following of crowds. One only has to spend a short time on a traders forum or in a chat room to observe first-hand how the blind are leading the blind. 

An endless cycle of indicators are re-hashed over and over again to fit current market conditions. Flurry after a flurry of short-lived excitement occurs as one particular indicator predicts the latest move accurately. The forum and chat rooms light up with an increased discussion of having found the perfect indicator.

After a few days, the excitement fades as the perfect indicator goes through a losing cycle and the gains but had been made are dutifully handed back to the market. Chat room, forums and re-hashed trading indicators are probably the most critical reason why forex traders lose money over time.  

When you stop to examine this process, what you discover is a cycle. This cycle can be likened to playing the slots in Las Vegas. These slots are not designed to extract money from you without any reward continually. 

These slot machines are designed with keep playing rules. 

Most people use the term payout rules. The sole purpose of a payout on a Vegas slot machine is to keep you sitting at a machine. 

These payout rules are nothing more than keep playing rules. Or keep feeding the machine rules. Slot players dutifully absorb the keep playing rules and continue to feed the machine in expectation of the big win in much the same way as inexperienced traders do.

 If you have been trading for any period of time, it could be well worth your time to revisit your view of the Forex market in the light of keep playing rules.  It should not take you long to realise how easily you are manipulated into taking trading positions that are prompted by nothing more than a pattern you see a chart on your computer screen.

Is Forex a good way to make money

   Good question.  The short answer? It can be. 

It's possible to make money in pretty much anything these days. We only have to spend a short time on YouTube to see the most diverse and sometimes unbelievable reasons why people would hand over money to someone else.  But is money your end game?

 The truth is that most people don't actually want money. That may seem like a strange statement, but when you stop to think about it, we actually want what we perceive cash will give us.  What lifestyle it will allow us to live. Money is the means to obtain it's not of itself the end desired result.

 This is one of the problems when we ask the question is Forex a good way to make money because if we step up to our trading screen and focus solely on extracting dollars, we will quickly find ourselves in a Las Vegas type of environment. This type of setting causes us to focus on the spinning wheels and flashing lights, which in our case are symbolic of the charts and patterns that we see on our trading screens.

In order for Forex to be a good way to make money, one needs to metaphorically getup walk around the back of the screen and have a look at the inner workings.   Essentially, financial markets are a business that is designed just like the Vegas slot machine to separate the player in our case, the trader from his or her money. The first step in this is to start looking at all financial markets as a highly efficient market-makers business.

Does anyone make money trading Forex?

 Absolutely, Categorically yes.  Those that are guaranteed to make money trading Forex are the market-makers and the brokers.

Further down from the tip of the pyramid, which is a good distribution analogy of trading profits.  The bottom third of the pyramid is the churn and burned area. The churn and burn area of the masses of would-be traders and investors who are over time passing vast amounts of money over to those further up in the pyramid structure.

 Those that are consistently able to make money trading  Forex are those that understand how the business works as a profit producing entity for its controllers. Profitable traders are not superhuman or super intelligent. In fact, when you get to meet successful traders, you will discover all manners of people and personalities. But what you will find is a common thread, and that common thread is one of piggybacking on a particular aspect of market behaviour called the Profit release phase.

Is Forex trading profitable?

 Trading Forex can be an incredibly profitable experience.  In fact, once you start to compound profits back into the market and increase your dealing capital, you're leverage in terms of position sizing can exponentially grow.  Wealth creation, real wealth creation can occur over a relatively short time when compared with other professions.

  However, it is vitally important to keep in mind that those that make real money from Forex trading are those that have studied and learned all aspects of the business. Note that I said all aspects of the business and not all aspects of the market. Make no mistake, the markets are a fully fledged business insomuch as they have traditional profit-seeking objectives. Those profit-seeking objectives reached every day in all markets by following the age-old principle of accumulation followed by distribution.  This cycle of accumulation and distribution is what drives each and every market. Understanding this cycle and applying your trading to the cycle, the question is Forex trading profitable?  Can be categorically answered as a positive yes.

 

 

Losing money trading Forex is a problem as old as the forex market itself, but there is a solution. If we are looking to protect ourselves from losing money while we're trading currency markets, then the only reliable solution is never to place a trade.

If we never expose ourselves to the risk of losing, then we can never make any money.

Let's try and look at trading losses in a different light.

To not lose money in Forex, we need to define two types of entirely separate losses. 

On the one hand, we have overall losses and on the other, individual trade losses. Overall trade losses will, of course, see you eventually lose all your trading capital. However, trading losses are an essential aspect of trading. 

Every time we take a currency trade, we expose ourselves to the risk of winning and the risk of losing. It's how we manage these losses that are going to define whether you are a successful currency trader or a failing currency trader.

The first stage in learning how not to lose money in Forex trading is an acceptance (and this has to be a real acceptance) that losses on individual trades serve two purposes.

The first purpose is to let you know in no uncertain terms that your trading decision you have just taken was irreversibly wrong.

The second purpose is the most revealing and potentially our most significant point for profit. 

Amateur traders spend time licking their wounds after each losing trade, and in doing so, they miss incredible opportunities for profit.

Instead of focusing on how to not lose money in Forex. Successful traders are using that loss as an educator and an indicator. The education part of the loss educates the trader as to what might be relative to taking future trades. 

The indicator part of the losing trade should almost immediately reveal to the trader how he or she can make money from their next trade. This ability to quickly dispose of all aspects of the losing trade is a skill to cultivate. It will set you free to enter the market again but now as an informed trader. Do not try to avoid losing on every trade you take, instead act, adjust if need be and continue forward.

How to make money in Forex fast

  Trading is a profession, and it needs to be approached professionally.  

Run a quick analysis on many tasks you have completed, and many skills you have learned and you will discover that any success can be directly related back to time spent in practice.

For many people approaching trading for the first time, the notion of practising to gain a skill level seems highly undesirable. 

By asking and entertaining the question of how to make money in Forex fast,  you, or rather, your brain is trying to sidestep the required learning period to developing a skill. 

You can make money fast trading financial markets but only after you have put in the hours and the effort that it takes to learn how to do it. Don't try to sidestep what needs to be done to get good at something.

Expecting to step up to a trading screen and just extract money daily without any prior training is like planning to start learning a second language on Monday and being fluent by the afternoon. Nobody would entertain this as being a reasonable expectation at all.

 And yet, in many cases, new traders will grab some free trading software, log on to a few chat rooms and forums to see what others are doing and then almost immediately jump into the market and start trading.

Instead of cultivating enthusiasm on how to make money in Forex fast, traders should divert that enthusiasm into how to learn the business of trading fast. 

Once you have learned and fully understand how financial markets really work, then the rewards will come to you faster than you realise.

Why Forex traders lose money

 Forex traders lose money for a  whole host of reasons. Possibly the most critical and pervasive reason is the following of crowds. One only has to spend a short time on a traders forum or in a chat room to observe first-hand how the blind are leading the blind. 

An endless cycle of indicators are re-hashed over and over again to fit current market conditions. Flurry after a flurry of short-lived excitement occurs as one particular indicator predicts the latest move accurately. The forum and chat rooms light up with an increased discussion of having found the perfect indicator.

After a few days, the excitement fades as the perfect indicator goes through a losing cycle and the gains but had been made are dutifully handed back to the market. Chat room, forums and re-hashed trading indicators are probably the most critical reason why forex traders lose money over time.  

When you stop to examine this process, what you discover is a cycle. This cycle can be likened to playing the slots in Las Vegas. These slots are not designed to extract money from you without any reward continually. 

These slot machines are designed with keep playing rules. 

Most people use the term payout rules. The sole purpose of a payout on a Vegas slot machine is to keep you sitting at a machine. 

These payout rules are nothing more than keep playing rules. Or keep feeding the machine rules. Slot players dutifully absorb the keep playing rules and continue to feed the machine in expectation of the big win in much the same way as inexperienced traders do.

 If you have been trading for any period of time, it could be well worth your time to revisit your view of the Forex market in the light of keep playing rules.  It should not take you long to realise how easily you are manipulated into taking trading positions that are prompted by nothing more than a pattern you see a chart on your computer screen.

Is Forex a good way to make money

   Good question.  The short answer? It can be. 

It's possible to make money in pretty much anything these days. We only have to spend a short time on YouTube to see the most diverse and sometimes unbelievable reasons why people would hand over money to someone else.  But is money your end game?

 The truth is that most people don't actually want money. That may seem like a strange statement, but when you stop to think about it, we actually want what we perceive cash will give us.  What lifestyle it will allow us to live. Money is the means to obtain it's not of itself the end desired result.

 This is one of the problems when we ask the question is Forex a good way to make money because if we step up to our trading screen and focus solely on extracting dollars, we will quickly find ourselves in a Las Vegas type of environment. This type of setting causes us to focus on the spinning wheels and flashing lights, which in our case are symbolic of the charts and patterns that we see on our trading screens.

In order for Forex to be a good way to make money, one needs to metaphorically getup walk around the back of the screen and have a look at the inner workings.   Essentially, financial markets are a business that is designed just like the Vegas slot machine to separate the player in our case, the trader from his or her money. The first step in this is to start looking at all financial markets as a highly efficient market-makers business.

Does anyone make money trading Forex?

 Absolutely, Categorically yes.  Those that are guaranteed to make money trading Forex are the market-makers and the brokers.

Further down from the tip of the pyramid, which is a good distribution analogy of trading profits.  The bottom third of the pyramid is the churn and burned area. The churn and burn area of the masses of would-be traders and investors who are over time passing vast amounts of money over to those further up in the pyramid structure.

 Those that are consistently able to make money trading  Forex are those that understand how the business works as a profit producing entity for its controllers. Profitable traders are not superhuman or super intelligent. In fact, when you get to meet successful traders, you will discover all manners of people and personalities. But what you will find is a common thread, and that common thread is one of piggybacking on a particular aspect of market behaviour called the Profit release phase.

Is Forex trading profitable?

 Trading Forex can be an incredibly profitable experience.  In fact, once you start to compound profits back into the market and increase your dealing capital, you're leverage in terms of position sizing can exponentially grow.  Wealth creation, real wealth creation can occur over a relatively short time when compared with other professions.

  However, it is vitally important to keep in mind that those that make real money from Forex trading are those that have studied and learned all aspects of the business. Note that I said all aspects of the business and not all aspects of the market. Make no mistake, the markets are a fully fledged business insomuch as they have traditional profit-seeking objectives. Those profit-seeking objectives reached every day in all markets by following the age-old principle of accumulation followed by distribution.  This cycle of accumulation and distribution is what drives each and every market. Understanding this cycle and applying your trading to the cycle, the question is Forex trading profitable?  Can be categorically answered as a positive yes.

 

 

How to not lose money trading forex

How to not lose money trading forex

Free Currency Trading Course

Free Currency Trading Course