In terms of Forex trading success its a well known fact, you need to have the right mindset to win and its also a fact, that most traders fail to get the right mindset and lose. Most traders can't get the right mindset, due to information overload and also wanting to be social in their trading.
When I travel to work on the train, the majority of other travellers are on tablets, smart phones and laptops, either for leisure or work. No one speaks, everyone is focused on their devices. The rise of the internet and mobile devices means we can get news and information whenever we want and we can also share information and make friends online. The fact we can get so much information and also make social contacts online is seen by many people as good. All this information overload though is not a help in terms of trading currency markets and neither is the idea of being social and communicating or getting Forex advice from other traders.
We have got used to information overload in our lives – we can get any information on anything we want at the click of a mouse and when traders come to trade Forex, they bring the idea of more is better to trading currencies. They hunt the net for news and can get real time prices and consider this a huge advantage in terms of their Forex trading strategy but when trading currencies this volume of information and the fact it can be obtained instantly is NOT an advantage in terms of making profits and actually, helps traders to lose money.
Forex trading is a simple business and its a fact that, in terms of a trading method, the less inputs it has, the more successful its likely to be in terms of generating profits. Furthermore if you have to much information, you will tend to want to make a trading method complex and cumbersome. In addition, if you have instant news and price action, you will be tempted to trade to much and this will mean taking trades with a low chance of being profitable.
The fact is - most traders make to many trades. Forex markets, will not give you profits for the volume of trades you make and will actually punish you and give you losses. We have written about the dangers of over trading numerous times on this site but in summary – if you trade to much, you will not only take trades with low odds of success, your emotions will rule your trading. As you watch price action, your emotions will take over your trading and you will respond to every small random movement in price, take to many trading signals and lose your money.
Were used to thinking, that a huge volume of information we can get quickly is good and it is in many areas of our lives, from finding the nearest chemist or the latest traffic information. This information helps us and enriches and makes our lives easier. However In Forex markets, instant prices and news, don't increase the odds of success. All this volume of information does is to make a trader respond to his or her emotions in the short term and they lose.
To win at Forex trading, you need to be patient and stand back from the small moves in the market. If you want to be successful, you need to focus on the big picture and trade longer term moves which have high odds of success.
Its Good to Be Social in Life But not In Forex Trading
I am amazed at how popular social networks have become like Facebook and Twitter and personally I don't use them much but sure, I am in the minority! Traders want help from other people online and communicate with them and being social and getting the answer to everyday questions such as, how to fix computer problems and the best value smart phone is useful but taking advice from traders or following their trades is not a smart idea at all.
There are a huge number of Forex traders giving advice in forums and they also join Forex social networks, where you can follow their trades. Brokers make the service available where, you can see a traders track record and if you like it follow them with your trading account. These Forex social trading networks are hugely popular and have millions of traders on them but is it a good idea to take trading advice from others?
The answer is no. With such a small minority of traders who win the idea of following others is not going to help you win. The traders who are around forums or giving trades via tweets on Twitter are normally doing it for their own ego and are generally poor traders. In terms of the traders on social networks, the winners are normally shown for short periods of time and any trader can get lucky so you shouldn't follow them. These track records are normally a week or a month but to judge a traders performance, you should look at 2 years or more. Social trading networks are just put in place by brokers to get people to trade and promote it as an easy way to make money but few of the traders win long term.
Society teaches us to be social and seek advice from those who know better than us and this is fine in problems with set answers but not in terms of the currency markets, where there are no set answers to what will happen in the future. Trading Forex is a solitary business, where only a few succeed and if you start trading with the majority and taking advice from other traders you will lose money.
The Internet has changed our lives more than any other invention in history and the advances in mobile devices, has made the Internet impact on our lives more than ever. Today, we check what's going on in the world and communicate, in a way which has changed the very way we live forever but is it a good thing in the currency markets?
No its not and the reason is - people are trading Forex based on social advice, instant price action and a huge volume of news which simply sees them use these inputs and lose. Currency trading is a business which is one where less is more and one, where a simple trading strategy is best which is operated by a calm trader, who is not to close to the news, market action or other traders.