A few Forex trading myths; discussed and debunked - Part 2
Only a tiny percent of retail traders will ever make it
There’s lots of information, data and opinions on this subject, but none of it is conclusive or definitive. We read that 95% of traders fail, that only 1% of forex traders make a living trading and that the vast majority of traders give up after three months and an average €10k loss. These figures may be true, but they require further analysis before accepting them as truth.
For example; how many out of the 95% who supposedly fail are serious traders who are dedicating their time to the skill of trading?
How many find themselves in that perfect sweet spot, of having enough time, having the right mindset, have the necessary disposable income and savings, to take a considered view on risk vs. reward and are mature enough to cope with all the details? If you are dedicated, mature, well capitalized and seek out the best advice etc. then your chances of success will potentially rise.
Simple strategies are more profitable than complex
If it works, it works. The reason many experienced traders will choose simplicity over complication is because they’ll have experimented with just about every combination of technical indicators and strategies, then they’ll begin a process of de-cluttering their charts/time frames and method, to concentrate on what works for them.
However, there’s still experienced successful traders out there, who’ll use a combination of different: time frames, fractals, Fibonacci, pivot points and large moving averages to make their decisions. Now that reads like a complicated strategy but in reality it isn’t and on first inspection their charts will look vanilla. They’ll have absorbed by osmosis, during years of practice, many hidden skills, that aren’t necessarily evident on their charts.
Trading systems can work on any time frame
They most definitely can’t. A trading system/method that works for scalping, cannot be guaranteed to work for day/swing trading, or position trading. The skills and methods required from these distinct trading methods, are completely different. If you’re attempting to profit from short term movements, then it’s unlikely that you can operate a multi indicator strategy in order to make considered decisions from. You’re more likely to see a pattern developing on or around the daily pivot point levels and then make an immediate decision.
Trading is mainly psychological
Having the right mindset when trading is essential, however, the discussions/arguments have raged for many years regarding which of the 3Ms of; mind, money management and method rank highest.
Many traders would claim that money management/risk is the most important aspect of your trading, others would suggest that without the right method, your psychological approach is irrelevant. Trading is not mainly psychological, psychology is an important aspect, but can be completely overruled if one opts for using full automation for all the trading.
