Understand The Mystery of Forex Trading Part II

In the part one of the mystery of forex trading”, I listed the two prominent reasons why forex traders loss their money, they are – the placement of stop-loss and riding the trend.

In this part two, we will be discussing the other reasons, which are;

How long do you stay in the Market?

How long do you stay in the market? That’s a good question I love to ask Forex Traders. Unfortunately, I always get the “few minutes to few hours” answer.

Scalping has become one of the beloved trading method among Forex Traders nowadays. Out of 10 traders, 8 will agree that they have once or twice scalped and 7 will agree that their trading method is scalping or based on scalping.

Most people that teach this kind of trading method never tell you the level of risk associated with it, they always tell you how one can quickly double and sometimes triple their account capital in less than a month but the revise always happen.

READ: What Does EMA means in Forex Trading

Scalping is a trading method, where a trader enters into the market makes a few pips and is out. They usually target between 5 to 10 pips sometimes higher or lower. I have come to realized that the more one stays in the market and hold unto a trade for a longer period of time, the more confident in trading and lesser chance of becoming emotional when trading.

Once you get adapted to opening a trade and leaving it to run without interference, you will notice that you will start having enough time to carry out with your daily activities and you won’t be bothered while trading, so you technically just have a rest of mind.

I know of a guy called Leo though we haven’t physically met he was a friend of mine online, Leo turn a $1,000 into $6,730 in less than 4 days, that’s almost a 700% increment in his trading capital and lost everything the next week, well Leo was honest enough to admit his losses unlike others who will run into hiding. Leo contacted me two weeks later saying he funded his account with another $1,000 and said he had learned from his mistakes and was ready to trade. I did thought he was ready to trade the normal way but I never knew he meant “scalping” till today I haven’t heard from him I believed the market has humbled him once again.

News Trading

Scalping in a calm market is not a profitable way to scalpers, so in other to increase their winnings, they like to trading during the release of news, which is equivalent to “sailing your boat during a heavy storm”

CHECK OUT: Understand What Are Doji Candle Stick In Forex Trading

Scalping during news release especially high impact news with high lot-size is the quickest, surest and easiest way to kill your account. Leo traded with a lot size of 10.00 and without stop-loss, on the day he blew his account, there was a high impact news release or probably because his broker’s server was down for few seconds or maybe his internet connection was bad which resulted to a slippage of 50 pips or more, without a stop-loss in place and a massive lot size, his account couldn’t survive the storm and volatility and everything was wiped out.

In summary, Forex Trading might be a “good way to make money” but in reality more money are lost than earn from it especially by those who think this is a get-rich-quick scheme. T

The problem with Leo and some traders out there is when they make a few bucks from the market they develop this impression that they are “invincible in the market” and with that mind set, they start increasing their lot-size, removing stop-loss and start “news trading”.

ALSO VISIT: How to Ride the News in Forex Trading

Scalping is bad, but when done without risk or money management with comes very bad and often lead to trader’s down fall, remember that price don’t move in a straight line and during news release the movement becomes so rapid that most broker increase there spread, stops loss and take profit fails as brokers are unable to execute all orders at once.

If a trader fine himself in such, the chances of escaping are very slim even if one do escape, the penalties are always on the high side. To be safe, I always advise traders to “stay away from news trading and stay longer on a trade”.

Trading the higher time frame, make one to see a clearer picture of the activities in the market and give one a sound mind to make judgement concerning trading.

Please do share this article to your friends and comment I will love to hear from you.

2 Replies to “Understand The Mystery of Forex Trading Part II”

  1. sonrisefx

    Hi,
    you write up is nice but your lat paragraph seems contradictory.If we are to stay away from news trading then we must remember that news also occurs within the time we are to ‘stay long’ on a trade.

  2. Iyke

    hello sonrisefx,
    Understand that news are released everyday and there are high, low and medium impact news. I strongly advise traders NOT to “news trade” that is trading only when a high impact news is to be released.
    Traders should only trade when their trading strategy confirms the direction of the trade.

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