There is a 90/90/90 rule in FX trading. According to this rule, 90 percent of all day traders will lose 90% of their funds in a matter of 90 days. Being a newbie in Forex trading, you will not easily realize that failure can come along the way as you become elated with those small wins. But soon, after a big blow on your account, you will realize that trading isn’t easy. That certain things separate successful traders from those on the losing end.
Certain misconceptions are attributed to the fall of 90% of these traders. These misconceptions are known to be the biggest trading errors. But knowing these misconceptions will help you avoid including yourself in this 90/90/90 rule.
Trading Misconception #1: Trading is Too Easy
You’ve heard that trading is easy in different advertisements online. Plus, they are claiming that there’s easy money here. Who wouldn’t like that? Without a doubt, aspiring traders would rush and invest their hard-earned cash without not much knowledge about the market.
There are advertisements that claim to make you a successful trader instantly. But unfortunately, these people just want to sell something to you. They are either selling expensive training courses, software, or whatever that looks appealing in the eyes of unsuspecting people. You are ultimately wrong if you are thinking that;
- Trading needs no education
- Trading needs no discovery or a trading system that’s proven and tested
- Trading needs no understanding of probability
- Trading needs no risk control
- Trading needs no caution when it comes to position sizing
Think twice or you might simply fall into the pit of failure.
Trading Misconception #2: Trading Brings Forth Fast Profits
Without a doubt, trading definitely provides big profits IF handled the right way. But you are wrong if you think that everything will go fast and easy. In order to obtain your desire of gaining big profits, two things could happen.
First, you need to make a huge risk that no sane person will ever dream of then you unexpectedly get lucky or you should;
- Learn how trading really works
- Understand the countless possibilities that could come along the way
- Find the best trading system that will surely work
- Know if it really works by proving it yourself
- Formulating a complete and viable trading plan
- Starting with small capital to test your trading system
- Planning on when to increase your trade size
- Planning on when to decrease your trade size
- Expecting that trading takes a lot of time.
The path to big profits requires a lot of learning and capabilities. There is no short-cut.
Trading Misconception #3: Trading Risk Don’t Have To Be Considered
Newbies in trading only see the huge profit ahead of them. They are blinded with anticipation that they forgot the risks involved in trading. But knowing and acknowledging the risks is another way to success. You need to have the exact position size, appropriate stop-loss that you should honor whenever it gets hit. These things are important in FX trading.