Category Archives: Forex Trading Mistakes

Trading Mistakes is Why im Broke! Read articles and learn to avoid Forex mistakes that might get you broke!

Trading Forex On Demo Could Get You Blind. Enlightening Opinion

Why does Trading on a Demo Account could get you Broke?

I think that every single trader started his journey in the Forex world with a demo account. I know I did. Practicing with virtual money before using your savings should help you know better the trading platform and the broker but mostly…the market. When you are a newbie, you think that the market is like a hot girl and you want her in your bed. However, being a “newbie” you have hard times trying to invite her over, so you go on “demo” using your thoughts, or your very own body parts. Boy, if you think that Forex trading is “demo” trading you are dead wrong. If you think that more demo trading will get you more experienced, you are wrong again. The question is: do you want to get laid or die trying?

 

How you can go Broke from Trading Forex on Demo Account?

Don’t get me wrong, I think trading on demo accounts is very useful and that you need some time to get used with this new “thing” named Forex, but I also think that masturbating is not the same as having sex (pardon my French). Well… you feel pleasure and reach climax on both case… However - and correct me if I’m wrong – the pleasure is far more intense when caused by a woman (sorry ladies, this is written by an ape… I meant a man) than by your very own hand. That the reason if you keep trading on demo for long time, you could get blind. Wait…that was for something else and it’s only a legend…they say. But I should ask Forexit – this is the nickname a trader uses on Babypips.com forum [1] – as he said he is doing it for more than 6 months and now he feels ready to get out there and grab a real woman – sorry, I wanted to say a real money account. And Forexit is not the only one in this situation as I keep seeing on various forums. Traders advising other traders to practice more on demo before going live or even to start with as little as 50$ - 200$ real accounts. But this is crazy. Even if someone advises you to go longer on demo, and even if that that person is an experienced trader, why should you follow him? As George Bernard Shaw (Irish dramatist and co-founder of London School of Economics) said, “why should we take advice on sex from the pope? Even if he knows everything about it, he shouldn’t.” The demo accounts are not offering EMOTIONS - greed, fear, hope and other feelings. They are pushing the traders to take irrational decisions, which could cause them losses, or booking only small profits while their initial take profit order was larger. Others might get broke, I’ve seen them going. The first few trades you’ll place on a real money account will make you sweat in the same way as “your first time with a woman” made you. And even the second time, with another one. Besides that, the demo account will never make you over-trade. How many times you happened to be over-confident after a series of good trades and instead of taking a break you go for another trade and another, and another one more time… the only difference is that this time you are losing money. You are losing the profits you just made a few hours earlier, or you’re losing everything you’ve got. This never happened when you were trading on demo, isn’t it?

 

 

Conclusion – Use Demo, Do NOT Over Abuse It.

All sex psychologists say that every person needs to know itself and to know his or her own body, and that masturbation is a good way to do. But do not abuse it. I think it works in the same way with the Forex demo accounts. Too much demo really sucks and will never prepare you for the real trading. Trading demo too much time won’t make you a better trader but a better loser. Once you know how to use the tools on your trading platform and you have the basis of the trading, close the demo and get on real money. You don’t need six months for that. Think it in this way: if an average human life is 70 years, no one needs more than one single year to learn how to walk. Here are a few tips for you:

  • Even if you are on real money now, you can still use the demo to test a new strategy (strongly recommend to be your own strategy and not someone else’s) or you can use the demo to test how a new instrument acts. For example when Bitcoin was launched, the demo account was a better choice than the real money account, to see how BTCUSD is trading.
  • If you like the automatic trading, you can use the demo to test the EA you just bought or maybe build one yourself.
  • When you start to trade on demo, at least ask your broker to make the demo as big as your future real money account. Is really useful to trade 50000$ on demo while you will only deposit 1000$ when opening the real account.
  • Even if you trade on a demo account, – meaning simulated market conditions – I suggest making realistic assumptions. Use a margin of one up to five pips when you place your entry, stop losses or take profit orders as in the real market conditions quite often happens to see them executed at a different value than what your set ups – especially for entry orders.
  • The simulated trading environment does provide a trader with the opportunity to get used to the software he will be using or with his broker’s trading conditions. Use the demo account only for this purpose and do not try to build a reputation by linking the account on websites as www.myfxbook.com or www.fxstats.com because no one cares how good you are on demo.
  • Least but not the last, try to avoid the demo accounts with unlimited use. If you can’t stop to trade on demo your broker will, by denying you the access to the demo and inviting you to open the real money account.

 

References

1 - http://forums.babypips.com/newbie-island/62101-how-long-have-you-been-trading.html

Lose Weight or Lose Money? Diet Plan and Forex Trading Plans are not that Different…

Why does your Trading Plan could get you Broke?

“Give me six hours to chop down a tree and I will spend the first four sharpening the axe.” Abraham Lincoln

While I was reading my favorite sports magazine (the online edition), I’ve noticed a shiny banner: “7 day diet meal plan to lose weight”. The slogan seemed very familiar to me but to be sure it’s not a coincidence I typed “plan to lose weight” on Google. To my surprise, the results all looked the same; everyone was offering plans to help you to lose weight. But every single plan had the same problem: it was limited. There was a 7 days plan, 1 month plan, a couple of weeks plan and so on. Seems like everyone has a plan to lose weight, but what happens when your plan expires and your goal was not yet accomplished? Interesting.

 

 

How you can go Broke from Following Other Traders Trading Plan?

I cannot stop thinking of this astounding analogy with the Forex trading plans. Let’s forget the fact that if you type “Forex winning plan” you are going to find thousands of suggestions but my question is: if you find a plan that really works and suits you, why dropping it after 7 days, 1 month, or whatever? I think this is one of the most common reasons why traders are losing money. I know it was for me when I started to trade Forex. Calvin Trillin (he is an American journalist) once said: “Health food makes me sick”. So is this the reason why we quit our trading plan? Are we afraid to get “sick”?

By “sick” I mean we are afraid of success.If you’re going to stick with your trading plan, the result will be, simply, getting sick. Getting broke. While the diet plans are limited by their designers, a trader’s plan – strangely – is limited by the trader himself. No matter which trading style you decide to pursue, you need an organized trading plan, or you won’t get very far. The difference between making money and losing money in the Forex market can be as simple as trading with a plan or trading without one. A trading plan is an organized approach to executing a trade strategy that you’ve developed based on your market analysis and outlook. No trader is right 100 percent of the time. Taking losses is as much a part of the routine as taking profits. You can still be successful over time with a solid trading plan. It took me a while to understand this, as the reason why I quit following my trading plan was because the losses I had. I didn’t realize then that losses are a part of the routine but I do know this now. The people with nice bodies tend to be hardworking and follow a gym schedule. Paradoxically, their goal is not to have a sculpted body but a healthy life. As for Forex traders, their goal should not be the money but to trade well. If they trade right, the money follows them almost afterthought.

 

Conclusion: Your Trading Plan is suited only for… You!

If you are thinking to start a diet, be sure you don’t cheat and follow your nutritionist’s plan. literally. It’s even harder when you’re a trader because you must also play the nutritionist role. Don’t look for other trader’s plan. What suits for them might not suit for you. Your new journey in the Forex world starts with a good personal trading plan. Here are a few tips for you:

  • Write on a paper sheet the reasons why you think you lose money when trading. Read that paper as many times as needed and on another paper write the tools that might help you to avoid those mistakes. That’s your “diet” or your trading plan.
  • Whatever happens in the market, stick to your “diet”. You might lose money sometimes but you will earn more on long term.
  • There is no perfect trading plan so adjust it (improve it) anytime you feel like but be sure you test it for a long time on a demo account. Only when you are satisfied and consider that cannot be better than that, move on real money account.
  • Be sure that your trading plan is realistic and that it fits your trading account size.
  • Do not look for approvals or other trader’s opinion on your trading plan. Keep it personal and private.
  • Remember that the market is always right and no trading plan works all the time in any circumstances. You have to identify the market conditions you need to apply your strategy.

 

The Never Ending Forex Temptation - Double Bottom Patterns Dreams

The Young and the Restless - Temptation Could Get you Broke!

“I generally avoid temptation unless I can’t resist it.” Mae West.

Temptation is the desire to perform an action that one may enjoy immediately or in the short term but will probably later regret it for various reasons. Try to remember how many times you fell in the “trap” of temptation in your life. I know I did. Joey Adams (an American comedian) once said: “Do not worry about avoiding temptation. As you grow older it will avoid you.” It’s time to wake up. Stop dreaming of Double Bottom patterns.

 

How you can go Broke from Tempting into Double Bottom Patterns?

Did it ever happen to you to go for a “sure” trade based on a perfect technical pattern and nevertheless to lose your money in that trade? It happened to me, unfortunately, more than once. The latest “temptation” was a perfect double bottom pattern for the Aud/Chf pair. According to two of the most known educational websites for the Forex traders – as DailyFx or Investopedia - the characteristics for the double bottom pattern are: The double-bottom pattern is found at the bottom of a downward trend and is a clear signal that the preceding downward trend is weakening and that sellers are losing interest. Upon completion of this pattern, the trend is considered to be reversed, and security is expected to move higher.

As you can see in my chart, this Aud/Chf trade had everything: had a downward trend, the second attempt to go lower failed and the rate action reversed, the buyers managed to break the “neck” of the pattern and the sellers seemed to lose their interest. All these were suggesting a clear signal that the trend was reversing and was expected to move higher. How can you resist to such a “goodie”? If you don’t trade these signals then what? Yet, I lost money in that trade, but at the same time, in thousands of many other situations, tempted by the same pattern, I made money. So you see…the technical patterns are like women: you can’t live with them, can’t live without them. After this I can’t help myself from asking you: how many times was a woman your temptation? Did you have regrets about falling in her “trap”? As far as I’m concerned I can say that many times I wanted her to set a trap so that I can fall in it. You see, if the Forex pairs’ movement in the market would not create these patterns or signals, it would be hundred times more difficult to make money, trading.

 

Bottom Line – Temptation is Irresistible, Learn to Acknowledge it

Getting back to Joey Adams, I can say that he is so right: “as you grow older it will avoid you”. I can say that as you earn more experience in the Forex trading, it will be clear to you that such signals are fake and will keep you away from them. If only I had paid attention to the other signs of that trade, it would have been another winning trade for me, but hey, even an 80 years old man is “tempted” by a 20 years old female. How can you resist it?

 

We All Make Mistakes. Are you Man Enough to Admit your Own Mistakes?

Learn from your Forex Trading Mistakes, or Else Go Broke!

A man must be big enough to admit his mistakes, smart enough to profit from them, and strong enough to correct them.” John C. Maxwell.

Maybe that’s why women are looking for men and not for boys J I remember having problems dating girls when I was a teenager because I didn’t know what to do…or better…how to do it J. More or less the same problems I had when I first start to trade Forex. Now I ask myself why I got married so early.

I am sure many of you had a crush on a classmate or even on one of your teachers and wanted to spend some time together but never had the gut to ask her. Was it because you were not enough cocky? Or just because you did not know how to do it?

 

How Can you Go Broke from NOT Learning from Mistakes?

When I first started “dating” the Forex market, I was acting as a teenager: I was on an unexplored field for me with so many unknown things – things seen only in magazines and on the internet. Something like knowing a woman from the Playboy magazine. Still I thrown myself into it thinking that if I know to read the magazine I also understand it. And this is how, after only a few weeks of trading I was sadly looking at my empty account. At that point I said I only have two options: either I quit and forget that the world if full of opportunities that could make my life much better either I invest more time and more energy to try even to understand what I read. So I started to pay attention to the details, to collect more information before I place a trade and mostly to have patience. There is a saying between traders: “being right but being early simply means that you are wrong”. Trading in the Forex Market is not only about being right but also to admit when you are wrong and to correct this. Let’s get back to the women analogy so you can understand me better: how many girls you lost because of some stupid teenager typical mistakes? Are you repeating the same mistakes now when you are trying to conquer a woman?  If you are - you are still a boy despite your age and remember that women are looking for men. Even if I consider myself a Casanova of the Forex Market J I am still making mistakes only that this time I am making them only once, and the second time I face the same scenario, I profit from them.

 

Conclusion: Think of Forex Trading in Terms of Risk Reward!

If you want to profit from Forex Trading you should think in terms of risk reward. What is the reward of trading? Money, wealthy, independence, not having a boss, not having a schedule to respect or taking your holidays whenever you want. What is the risk of looking for all this without owning the “know how”? Getting broke. Once you will minimize the risk you will obtain the reward.