Looking for a list of most common problems in FX Trading

Hi Guys

I am looking into forex as a new venture for my trading habits and basically am firstly doing some research into what is the most common problems that FX traders encounter, this could cover issues such as:

the use of certain trading analysis techniques such as fibonnaci, RSI, Stochastics etc.

Trading physcology

Market selection inc. taking into consideration announcements/market news

And for beginners as we have all been there what issues did you encounter most when starting out, which trading platform, which techniques, how much to start with, what things are difficult to understand etc.

As always would be pleased to here all feedback from newbies through to FX vets, and no need to stick to what I listed above just chip in with your own issues/experiences if you want.

It would also be interesting to hear what you think is the biggest black art in FX trading, and what what area did you think there could have been more information about, especially when you were starting out.

Thank you very much

Andrew

Biggest issue is that it is not traded on an exchange and therefore brokers can use all sorts of deceit to rip you off. Google FXCM fine, Forex.com fine or Gain Capital fine. There is also a guy called ECNJesus who exposed metatrader, he has a thread here but all his videos were deleted.

Just forget about forex, you'll lose your money.

Hi


Thanks for that reply. I am still interested in hearing about people's experiences, as I find trading quite an interesting subject, despite whether I am going to actually trade or not.

Going on what you have said pboyles is there no one on here making any money from it or is it more a hobby and discussion less making cold hard readies from it?

I have read that fibonacci is one thing you must master to trade, not my opinion but it seems like the fundamental analysis to be using from what I have heard.

Thanks

Andrew

I wont waste my time listing the problems, but the underlying cause of most problems is due to people having completely unrealistic expectations. Ironically, expecting to get a meaningful answer to a question posted on a public trading forum is about as unrealistic as it gets.

The main problems you'll probably face will be a lack of a suitable role model, lack of interaction with anyone who can actually help you, exposure to mountains of advice that will actually harm you, and the inability to differentiate between good and bad advice. Once youve navigated through that lot, the issue that pboyles raises is the next obstacle !

A very few people make money, perhaps after 4 or 5 years of trying. If you think you can study fibs and start making money trading forex then you're in for a big disappointment, most likely scenario is you'll blow your account.

I've posted this reply elsewhere but it answers your question so I will replicate it here. It is about trading in general but is equally relevent to forex.

a. The sub culture that surrounds trading suggests that you can ' get rick quick ' and work ' just five minutes day ' etc. This is plainly false and very misleading. It causes many to follow these apparent shortcuts letting their hope / greed cloud their common sense. If it looks too good to be true - it usually is !

b. When they commence live trading - they simply don't know what it is they need to know and are distracted by false noises such as detailed in point a. above. They have no idea that actually trading isn't about getting involved in as many opportunities as possible - but about disregarding as many risks as possible to leave only the highest probability trading opportunities. This requires patience and discipline. It was Aristotle that said ' Patience is bitter - but it's fruit is sweet. '

The 1st goal of a trader should always be capital preservation, (Ie you have to be able to 'stay in the game ' through sensible and proven risk management techniques.) Only then can you achieve the 2nd goal which is to grow that capital. The 3rd task is to learn from every trade you place.

c. They are generally under funded and as a result of this (and greed) are over leveraged. Whilst the leveraging of margin can magnify gains it can magnify losses also. All too often they take advantage of the ridiculous levels of leverage willingly offered by the brokers and the result in more cases than not is that sooner or later they blow out their accounts and lose their trading margin.

d. They have no idea what a Trading Edge is, how to acquire one or what they then need to know about it in order to ensure that it throws up no surprises that can lead to problems, and a loss of trading margin.

e. They don't understand the psychological barriers that can prevent them from achieving their trading aims even with a proven Trading Edge. In his book Reminiscences Of A Stock Operator about the legendary Wall Street Trader Jesse Livermore, Edwin Lefevre suggests that one of the prime reasons most never make it is because;

i. When the natural human instinct is to hope - in trading you have to fear

ii. When the natural human instinct is to fear - in trading you have to hope

I.e: Most times the necessary cognitive responses required in trading run counter to the instinctive human ones. Furthermore when entering a market you have to be right at the right time, not right at the wrong time - because this is the same as being wrong. For example in a bullish market you have to know what the highest probability set-ups are to buy to profit from the rising price. If you buy in the wrong place and price corrects to the downside, even though it may resume it's rise you have been stopped out for a loss. You were right - the market was bullish - but you were right at the wrong time !

My experience is that developing the necessary 'trading psychology' can prove harder than mastering the technical stuff. Providing someone with a proven consistently profitable way to trade (ie a Trading Edge) that can be relied upon to produce a regular income is one thing, but as the excellent Mark Douglas (Trading in the Zone, The Disciplined Trader etc) points out - it is the destructive effects of the human emotions connected with any discretionary trading that can lead to the ' Profit Gap, ' ie the difference between having a proven trading edge and actually being able to make a reliable and consistent income from it yourself. Of course the first step is to actually acquire a proven consistently profitable trading edge, but even given this and learning how to use it - some never close this 'profit gap.'

G/L

it is very easy to make a million in forex!

just start to trade having two.........