Getting Through The Tough Patches On The Foreign Exchange Market
One of the defining features of the foreign exchange market is its volatility. Economies have continual fluctuations which contribute to this constant market volatility, and the forex traders ride the trading wave. When the tide is negotiated correctly the foreign exchange market can treat traders well, providing profitable trades. However, other times can see damaging losses for both beginner and experienced traders alike.
More often than not the losses are due to inexperience or faults in trading systems, but many times it may be due to unpredictability in the foreign exchange market itself. The foreign exchange market is incredibly volatile. In order to become an effective trader one must learn to adapt to the changes and work through the difficulties of the trading world. Truthfully, the manner in which one handles obstacles faced will determine whether or not the trader surfs or flounders in the waves.
The more common obstacles in the foreign exchange market
When entering the forex market one will notice some obvious obstacles to be overcome. These can include:
1. Wading out on your own.
The first year of trading is the most difficult for every new trader. During this period you will encounter a great deal of uncertainty and confusion to such an extent that you may consider quitting. It is only the strongest and most determined traders who will continue past their first year.
2. Enormous shifts in the market dynamic
The market can go through many cycles in a short period of time, and those who choose to trade throughout the changes can experience rough patches. This is due to the forced need to adapt to different market types ranging from volatile and up trending to sedate and down trending. In order to make it through this obstacle one must be open to new experiences and strategy enhancements at all times. Sometimes you have to just leave the market and wait for increased predictability in market conditions.
3. Technological changes in the forex industry
As technology continues to advance forex trading systems improve. One way the forex market differs from any other financial market is that it is online and can be accessed from any location. Traders must be prepared for new advancements in all technology and be willing to accept technological enhancements as part of their trading strategies, or risk becoming an obsolete and inefficienttrader.
Overcoming the different obstacles
The first step to overcoming an obstacle is identifying and accepting the existence of the barrier. Once you have acknowledged it, you can gain further insight into the problem and find steps to work through it. Often this may take a long time, but there are ways to speed up the recovery process.
1. Dealing with the start up difficulties
As a new trader you have many different things to learn and sometimes may feel highly frustrated and/or overwhelmed. It is at this point that traders should identify their emotions and work towards minimising negative thoughts though the creation of a trading plan. By setting goals and rationalising emotional thoughts, one can work through the problem in a step-by-step process.
2. Dealing with a shifting market
Although one cannot control market movement, one can control the emotions you feel when faced with this swing in direction. By accepting the changes and acknowledging that this will occur more often than one likes to imagine you are preparing yourself for the inevitable. Preparation, even psychological preparation, is the key to success.