As with all professions; with good, there has to come some bad. This post will take you through the far less glamorous side of Forex trading and the stress that comes with it! We will look at the main issues that traders face, including problems when trading your own personal account.
The short answer to the title question is that Forex trading can indeed make you a very successful living. However, the so-called "gurus" and coaches rarely mention the difficult side of the industry. Neither does the copious amounts of educational material on the internet.
Before we go into the details of the article, it is important to understand why we never hear or read about the stresses of Forex trading in forums and books and indeed courses that we may have purchased.
Why We Never Hear about the Stresses of Forex Trading
The reason is two-fold. Firstly, it doesn’t pay to put your customers off from buying your products. Secondly, most of those teaching have never actually traded in a professional capacity. I believe it is very important to understand every aspect of the business before fully committing yourself to it.
The most common dream of a new Forex trader is to go online, read a book and then become fully self-sufficient; to trade their own account and make a consistent living from home.
The reality is far different.
Imagine having guaranteed bills and obligations but no guaranteed income. This is the exact scenario that drives people into full-time employment in the first place. The risks associated with self-employment are the exact same risks that a Forex trader faces when going it alone.
The difference is that Forex trading is usually a completely new industry. And how much money you make from trading is completely out of your sphere of influence.
When this is circling around in the back of your mind and you have just had a few bad days trading, it can very quickly become extremely stressful. Because at the end of the month, you still have to pay your bills.
A common scenario is having a negative month trading; having to use some of your trading capital to survive and then having to take more risk on what is left to make money in the future. This is just one of many situations which will lead to even bigger losses.
This level of stress can wreck havoc with your life. It is not to be taken lightly and should be accounted for well in advance of quitting your job and trading full-time.
How to Avoid These Scenarios
First of all, NEVER just pluck profit forecasts out of thin air (it’s amazing how many traders do this). Only base your profit predictions on your past history that you have actually achieved on a trading account, by physically taking the trades.
Anything else, including back-testing, is absolute nonsense. It will hurt you in the long-run.
Secondly, ensure that you have a financial buffer in place that you can use to cover your costs without eating into your trading capital and without any draw-downs.
The minimum you need is enough to cover 6 months bills and living costs. The longer you can do without income the better.
Finally, work out how much capital you need based on your existing history. Do NOT use leverage to quickly grow your account!
Leverage (and the abuse of it) is one of the biggest killers of new traders. Avoid it
As a percentage, work out what your average profit is each month. Then, ensure you have enough capital to generate a figure that will support you without using leverage. The worst case scenario is that you will fail to make much and may even lose a bit instead. But with leverage, the worst case scenario is always so much worse.
These are simply ways to lessen the stress before you start, but if you find yourself in the saddle already and you are becoming more stressed, then take some time off. Get a change of scenery and stay away from your screens until you are yearning to get back and you are once again excited by the challenge.
Nothing is worth risking your health for, so make sure you follow the tips above to keep yourself as focused and stress-free as possible!
At no time should anyone view the information presented anywhere on this website as advice, recommendation or proven. Everything reflected is merely opinion and may not be accurate. The purpose of the site is to express the opinions and views of Jarratt Davis. There is no intention to offer specific help, advice or suggestions to anyone reading any of the content posted here.
Editors’ Picks
EUR/USD clings to small gains near 1.1750
Following a short-lasting correction in the early European session, EUR/USD regains its traction and clings to moderate gains at around 1.1750 on Monday. Nevertheless, the pair's volatility remains low, with investors awaiting this weeks key US data releases and the ECB policy announcements.
GBP/USD edges higher toward 1.3400 as traders await key data and BoE
GBP/USD reverses its direction and advances toward 1.3400 following a drop to the 1.3350 area earlier in the day. The US Dollar struggles to gather recovery momentum as markets await Tuesday's Nonfarm Payrolls data, while the Pound Sterling holds steady ahead of the BoE policy announcements later in the week.
Japanese Yen adds to strong gains and drags USD/JPY to 155.00 amid hawkish BoJ bets
The Japanese Yen extends its steady intraday ascent through the Asian session on Monday, dragging the USD/JPY pair to the 155.00 psychological mark in the last hour. Against the backdrop of the recent shift in rhetoric from Bank of Japan Governor Kazuo Ueda, an improvement in business confidence reaffirms market bets for an imminent rate hike this week.
Editors’ Picks
EUR/USD clings to small gains near 1.1750
Following a short-lasting correction in the early European session, EUR/USD regains its traction and clings to moderate gains at around 1.1750 on Monday. Nevertheless, the pair's volatility remains low, with investors awaiting this weeks key US data releases and the ECB policy announcements.
GBP/USD edges higher toward 1.3400 as traders await key data and BoE
GBP/USD reverses its direction and advances toward 1.3400 following a drop to the 1.3350 area earlier in the day. The US Dollar struggles to gather recovery momentum as markets await Tuesday's Nonfarm Payrolls data, while the Pound Sterling holds steady ahead of the BoE policy announcements later in the week.
Gold builds on previous week's gains, approaches $4,350
Gold preserves its bullish momentum after rising more than 2% last week and climbs toward $4,350 on Monday. The precious metal extends its upside as the US Dollar remains on the back foot on growing expectations for a dovish Fed policy outlook next year.
Solana consolidates as spot ETF inflows near $1 billion signal institutional dip-buying
Solana price hovers above $131 at the time of writing on Monday, nearing the upper boundary of a falling wedge pattern, awaiting a decisive breakout. On the institutional side, demand for spot Solana Exchange-Traded Funds remained firm, pushing total assets under management to nearly $1 billion since launch.
Big week ends with big doubts
The S&P 500 continued to push higher yesterday as the US 2-year yield wavered around the 3.50% mark following a Federal Reserve (Fed) rate cut earlier this week that was ultimately perceived as not that hawkish after all. The cut is especially boosting the non-tech pockets of the market.
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