Forex trading can be a complicated business. More often than not we know what bad things can disrupt our trading. Greed, distraction, poor money management skills. We tend to think that if we can only eliminate these problems then forex success would be easy.
However, there is another problem, one that comes from having ‘too much of a good thing’.
These 5 events are undoubtedly positive, but they can often lead to the opposite.
However, there is another problem, one that comes from having ‘too much of a good thing’.
These 5 events are undoubtedly positive, but they can often lead to the opposite.
Making too much money early on
The best thing that can happen when trading is to make money and to make too much is even better. But if you make too much money too early, while you are only just getting started it can lead to overconfidence. That overconfidence can lead to complacency, and in turn that can lead to ruin.Hitting a lucky run
For exactly the same reason, being lucky in the market can be a big problem too. Striking lucky in the market feels great at the time but all too often it leads to greater risk-taking. You start to feel invincible and that you are a natural and that means you start seeing ‘bad luck’ all of a sudden.Finding an unexpected entry (without an exit)
Forex trading is about scouring the price charts looking for profitable patterns and setups. Sometimes you come upon a setup that you weren’t expecting, in a timeframe or market that you don’t normally trade. The setup is too good to pass up so you make the trade. However, by doing so you forget about important criteria such as your money management rules, your trading plan and your exit.Trading in a bubble
We’ve seen it happen so many times in the stock market but it happens in forex too. Traders getting on the right side of a bubble and riding it to the top. Problem is, those who are in the bubble often don’t know when to get out. They often end up staying in the bubble while it pops and then trying to get back in all the time the bubble collapses.When you move your stop and make a profit
Usually, it’s not wise to move your stop after your trade has been placed. Your trading plan should dictate where to place your stop according to your money management rules. Sometimes, if you move your stop, you end up making money, a lot of money. And if you had left it where it was you would have lost. The difficulty with this approach is that it’s down to luck and the reward that comes from making the mistake just reinforces bad behaviour.
Editors’ Picks
EUR/USD hits two-day highs near 1.1820
EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.
GBP/USD reclaims 1.3600 and above
GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.
USD/JPY drops back below 157.00, as focus shifts to Japan snap election
USD/JPY is back in the red below 157.00 in the Asian session on Friday. The Japanese Yen recovers ground against the US Dollar amid some profit-taking ahead of Japan's snap general election on Sunday. The preliminary reading of the Michigan Consumer Sentiment Index report for February will be released later on Friday.
Editors’ Picks
EUR/USD: US Dollar to remain pressured until uncertainty fog dissipates Premium
The EUR/USD pair lost additional ground in the first week of February, settling at around 1.1820. The reversal lost momentum after the pair peaked at 1.2082 in January, its highest since mid-2021.
Gold: Volatility persists in commodity space Premium
After losing more than 8% to end the previous week, Gold (XAU/USD) remained under heavy selling pressure on Monday and dropped toward $4,400. Although XAU/USD staged a decisive rebound afterward, it failed to stabilize above $5,000.
GBP/USD: Pound Sterling tests key support ahead of a big week Premium
The Pound Sterling (GBP) changed course against the US Dollar (USD), with GBP/USD giving up nearly 200 pips in a dramatic correction.
Bitcoin: The worst may be behind us
Bitcoin (BTC) price recovers slightly, trading at $65,000 at the time of writing on Friday, after reaching a low of $60,000 during the early Asian trading session. The Crypto King remained under pressure so far this week, posting three consecutive weeks of losses exceeding 30%.
Three scenarios for Japanese Yen ahead of snap election Premium
The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.
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