| There are 3 main reasons that Forex traders fail to | | | | seeking. Just as in all of life, a Forex trader constantly |
| make a consistent profit in the currency markets. | | | | must weigh risk (source of fear) with the rewards |
| One, they do not have a profitable trading system; | | | | sought. |
| two, they do not understand or apply sound money | | | | What does fear in online currency trading produce? |
| management to their trading; and three, their own | | | | Here are a few of the more devastating |
| emotions. In the area of a trader's emotions, the one | | | | consequences. |
| that can devastate a trading account faster than any | | | | 1. Fear causes you to not enter a good trade after |
| other is fear. | | | | suffering a loss. |
| What does fear have to do with making money | | | | 2. Fear causes you to enter a bad trade (against |
| trading Forex? In a nutshell, everything! But before | | | | your own trading rules) so you can "make back" the |
| we go any further, let's get a good working definition | | | | funds you just lost. |
| of fear (with regard to trading Forex). | | | | 3. Fear of losing profits on a trade that is going your |
| Fear is a negative emotion that comes from | | | | way causes you to close the trade too early so you |
| anticipation of an unpleasant event that we believe | | | | won't "give back" the profit you are showing, and |
| will happen. Let's bring it down to the context of | | | | therefore giving up further gains. |
| trading. What unpleasant event do we believe might | | | | 4. Fear causes you to stay in a losing trade too long, |
| happen? Losing some or all of our trading account is | | | | hoping and/or praying that the market will turn |
| the big one! That possibility we sometimes call risk. | | | | around and you will get out with a profit instead of |
| Risk is the probability of the unpleasant thing coming | | | | the loss. |
| to pass; you trade despite your fear (just as I do), | | | | How do you take on this "monster?" The simple, but |
| because we believe that the reward (profit) | | | | not always easy answer, is to trade with a proven |
| outweighs the risk (fear inducer). | | | | trading system, using sound money management and |
| When trading Forex you will hear a lot about a | | | | risk parameters, and understand that you will have |
| concept called "reward to risk ratio". This is the | | | | losing trades. |
| quantifiable idea of how much each trade can | | | | Your goal, and the results of a good system and |
| possibly make, verses how much each trade may | | | | trading plan, will be to make more money over time |
| possibly lose. We carry on with the risk (trade | | | | than you lose. Only experience and discipline will get |
| despite our fears) because of the rewards we are | | | | you to this point in your currency trading business. |