So you’ve got some hard-earned savings and want to put it to good use and probably double it in no time? Forex seems like a good idea, being the world’s biggest market with high liquidity. But is it suitable for a beginner?
Forex can be good for beginners and also benefit experienced traders. But it requires hours of training, self-discipline, analysis, and planning. If you’re risk-averse or can’t afford to lose money, Forex isn’t for you. Otherwise, plan your work, start learning, and stick to it until you succeed.
Keep reading to learn whether you fit the criteria to begin trading in Forex.
IMPORTANT SIDENOTE: I surveyed 1500+ traders to understand how social trading impacted their trading outcomes. The results shocked my belief system! Read my latest article: ‘Exploring Social Trading: Community, Profit, and Collaboration’ for my in-depth findings through the data collected from this survey!
Table of Contents
Is Forex Worth Entering for Beginners?
There’s no straightforward answer to this question. Forex is a highly profitable market with a vast potential that can benefit everyone. But like any profit-making venture, it has no place for impatience, greed, or envy. It takes time, self-discipline, and lots of analysis and reflection to become a successful Forex trader.
A typical Forex beginner will get excited upon discovering an easy way to make fast money. They jump into signing up with a broker and putting all they have in. They end up with crippling losses before they know it and start telling everyone Forex is a scam designed to steal your money.
Forex isn’t gambling or a get-rich-quick scheme, so don’t enter the market if your sole purpose is to make some quick cash. To further elaborate on this subject, let us discuss several circumstances under which Forex trading would not be an ideal move for you as a beginner.
7 Personality Traits That Result in Forex Trading Failures
You Can’t Afford to Lose Money
Trading isn’t easy and involves some inherent risk levels that all traders should consider when entering the market. It’s not easy to win your bets all the time, especially when you’re a beginner.
Forex also has specific risks that make earning money more difficult. Market volatility, high leverage, and margin trading are factors that can lead to significant losses if you don’t know how to manage them.
Although Forex doesn’t need much upfront investment, there’s always a risk of losing it all. Even seasoned Forex traders know they should be ready to experience some gains followed by several losses. So, if you can’t afford to lose money because your investment is all you have, maybe the Forex market isn’t your play.
You Don’t Have a Clear Plan
Although Forex doesn’t require you to be a genius, a basic understanding of the market risks, dynamics, and function is necessary.
You need a clear plan of what you want to do and achieve, know your trading style, and devise a trading strategy accordingly.
The biggest mistake a newbie can make is entering the market without knowing what it’s about and how everything works. Don’t start the business until you’ve learned the nuances of Forex trading through formal instructions or getting help from an experienced mentor.
You Can’t Stick to Your Plan
Having a plan is one thing, and sticking to it is another. Once you ensure your risk management and trading system suit your conditions, don’t change it. You can’t evaluate your performance if you don’t have a robust system in place. Discipline and consistency are essential to succeed over time.
Of course, every system might need improvements to match the fast-changing conditions. However, frequent tweaks result in a mess that doesn’t take you anywhere. Periodic reviews help you detect the shortcomings in your system.
You Can’t Accept Failure
Even if you’re experienced and knowledgeable, there’s still a chance of wrong trading decisions. Some factors that affect market forces are entirely unpredictable. So, don’t expect to be right all the time, and when you lose a trade, don’t get disheartened or take it personally. Instead, learn from your mistakes, and move on.
Try to close the losing trade quickly, or use different hedging strategies. As long as you gain more than you lose, you’re fine.
If you can’t manage losses effectively, you might get into the cognitive trap of revenge trading. Suppose you have an open position, but things aren’t going down the way you predicted. So, you decide to make up for it by opening another trade that doesn’t match your trading style and plan. That’s a classic case of revenge trading, which eventually hurts you.
Never let emotions impair your judgment. And don’t panic by seeing an imminent loss. Instead of giving in to revenge trading and ending up with two losses, think logically and see what you can do to minimize risk. Remember that you can’t be a successful trader if you can’t handle failure.
You Don’t Like Taking Risks
Suppose you’re so conservative that you avoid risks. In that case, you shouldn’t expect to make huge profits in Forex because this market is full of risks caused by high volatility, leverage, and different market conditions. Also, remember that having risk management plans and decision-making strategies aren’t the same as being risk-averse.
To be successful in Forex, you should be flexible and risk-taking. More often than not, you’ll adopt a strategy only to find it doesn’t fit conditions down the road. Being adaptive helps you quickly pivot and change the situation.
A conservative trader will be slow in reacting to new developments and information and will stick to base rates. You should always remain skeptical of your analysis and ready for change, especially if things don’t go the way you want.
You’re Too Busy to Learn
Forex trading is more than buying low and selling high. It’s a skill that takes time to perfect. So, if you don’t put enough time into learning and developing the right plan, you’ll set yourself up for failure.
First, you should learn different trading styles and adopt the best one that matches your personality and goals. For example, if you can’t tolerate having an open position when the market closes for the day, it’s better to follow day trading. But if you don’t mind waiting for months until your fund will gain appreciation, being a position trader is your thing.
You should also spend some time searching about brokers and their policies. Make sure they have the tools that fit your analysis. Plus, find a trading platform that matches the broker. Make sure both of them are the best you can find.
If you want to make a profit by investing your money, first you should invest in yourself.
You Act on Other People’s Recommendations
As a Forex newbie, you may rely on getting advice from experienced traders. That’s a mistake that could lead to your loss. Of course, it’s good to learn the basics and tidbits of Forex trading from an experienced mentor who shows you how the system works and how different market forces are related.
But that’s different from acting on other people’s suggestions for every trade. Not only could you get some bad advice, but you could also fall into scams. Scammers promise you that they’ll offer you signals with high accuracy if you join their paying services. But if their signals are so accurate, why wouldn’t they use it to get rich themselves?
If you get continuous recommendations from traders with different trading styles and goals, you’ll also risk losing your money. So, rely on your research and don’t treat signals as investment advice.
Author’s Recommendations: Top Trading and Investment Resources To Consider
Before concluding this article, I wanted to share few trading and investment resources that I have vetted, with the help of 50+ consistently profitable traders, for you. I am confident that you will greatly benefit in your trading journey by considering one or more of these resources.
- Roadmap to Becoming a Consistently Profitable Trader: I surveyed 5000+ traders (and interviewed 50+ profitable traders) to create the best possible step by step trading guide for you. Read my article: ‘7 Proven Steps To Profitable Trading’ to learn about my findings from surveying 5000+ traders, and to learn how these learnings can be leveraged to your advantage.
- Best Broker For Trading Success: I reviewed 15+ brokers and discussed my findings with 50+ consistently profitable traders. Post all that assessment, the best all round broker that our collective minds picked was M1 Finance. If you are looking to open a brokerage account, choose M1 Finance. You just cannot go wrong with it! Click Here To Sign Up for M1 Finance Today!
- Best Trading Courses You Can Take For Free (or at extremely low cost): I reviewed 30+ trading courses to recommend you the best resource, and found Trading Strategies in Emerging Markets Specialization on Coursera to beat every other course on the market. Plus, if you complete this course within 7 days, it will cost you nothing and will be absolutely free! Click Here To Sign Up Today! (If you don’t find this course valuable, you can cancel anytime within the 7 days trial period and pay nothing.)
- Best Passive Investment Platform For Exponential (Potentially) Returns: By enabling passive investments into a Bitcoin ETF, Acorns gives you the best opportunity to make exponential returns on your passive investments. Plus, Acorns is currently offering a $15 bonus for simply singing up to their platform – so that is one opportunity you don’t want to miss! (assuming you are interested in this platform). Click Here To Get $15 Bonus By Signing Up For Acorns Today! (It will take you less than 5 mins to sign up, and it is totally worth it.)
Conclusion
Forex is an excellent opportunity to make a profit and become a professional trader. But it’s not suitable for everyone, since it involves lots of uncertainty, risk, and volatility.
Although it needs low capital investment, you shouldn’t begin Forex trading if you’re going to invest all the money you have. The risk of losing your money always exists even if you’re 100% prepared.
Plus, you need to devise a robust plan, stick to it, periodically analyze and tweak it if necessary. Forex isn’t a profitable trading venture for people who aren’t willing to learn and can’t accept failure.
BEFORE YOU GO: Don’t forget to check out my latest article – ‘Exploring Social Trading: Community, Profit, and Collaboration’. I surveyed 1500+ traders to identify the impact social trading can have on your trading performance, and shared all my findings in this article. No matter where you are in your trading journey today, I am confident that you will find this article helpful!
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