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Currency Lesson #3: Why Most Traders Lose

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Currency Lesson #3: Why Most Traders Lose

Friday, 19 October 2007

By Charles Delvalle
Last week, I received an e-mail from Jack S who asked: “How in the world could I expect to make any money trading currencies when professionals themselves do so poorly?”
Jack, a lot of people ask that same question. You have to realize that just because many professionals trade poorly doesn’t mean they all do.

In my experience, a trader who starts off trading short-term patterns in any market eventually gets badly burned. Usually they’re looking for the quick buck, have no control over their emotions, and don’t have a good risk management system.

If you have traded before, then you should know how to control your emotions. More importantly, you should have a good risk management system. (Click here to read what I wrote about risk in FOREX last week.)

My suggestion is to use various support and resistance points on the daily or weekly charts to guess where the currency pair will go next. Once you get fairly good at that (right 70 percent of the time), you can start working on choosing the right investments to take advantage of those moves.

During this time, don’t place any live trades. There’s no reason to pay a FOREX tuition.
By trading long term first, you trade in a way that reduces risk (short term is much riskier) and you gain invaluable experience into how the market works.
Source : Investors Daily Edge
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