Trading Forex Is Really Easy. Just Buy Low and Sell High, but not necessarily in that order.
Then why is it that most traders fail. After all there's nothing too hard about buying low and selling high. The answer lies in conquering our emotions.
You've probably heard the advice about cutting your losses and letting your winners ride. Right? When you trade emotionally it's very difficult to do. As soon as we have a small profit, our emotions tell us not to lose the profit so we exit early. We have a winning trade but it is very small. And we feel good.
Next, let's say that we enter a trade because we expect that a bottom is in place and the market is going up. But what happens is that instead of going up, the market goes down. Now the correct action would be to have a stop in place that would automatically get us out of the trade. The problem with getting out of the trade now is that then we would have a loss. Losses are bad. Real bad. So we continue in the trade, even deleting our stop, hoping that the market will go up and allow us to recover our loss and make a profit. But it doesn't happen. The market continues down until the loss becomes really large. Suddenly fear strikes the pit of the stomach like a knife and we exit the trade in a state of near panic. The resulting loss is scary. It's much more than we intended and we wonder if trading is really the way to make money.
Now we are trading emotionally with small gains and large losses. We are on the way to exhausting our account.
The above is just one example of how people let their emotions keep them from making money in forex.
The only way to defeat emotions is to have a rock solid, proven trading plan and sticking totally to the plan. No other solution exists.