Challenges are expected in forex trading, but have any of these become big enough to turn into major obstacles for you?
Here are some of the typical barriers to profitability and how you can overcome them.
1. Insufficient capital
One of the first barriers to trading for many is the lack of financial capital to put in a live account.
While some have a good amount of savings and a steady stream of income, this does not always guarantee enough capital for trading.After all, you should only trade money that you can afford to lose while at the same time not be so undercapitalized that your account barely survives drawdowns.
With insufficient capital, you might be prone to overleveraging and overtrading just to get sizeable returns. You might also wind up more emotionally affected by market fluctuations.
If you don’t have enough capital ready to trade yet, you can always start with a demo account while you accumulate enough funds.
If you’re planning on trading full-time, make sure you have at least a couple years’ worth of living expenses saved up just in case things turn south.
Of course it would also help to keep your cost of living low, allocate a part of your regular income to build up your trading account, or even take a side hustle that could ease any financial pressure.
Still not sure how much to put in your trading account? Here’s a guide that might help.
2. Inability to let go of biases
Another common roadblock to trading success is the difficulty of working around biases.
Having a bias isn’t necessarily a bad thing, but being unaware of these could wind up impairing your ability to read the markets and make good trading decisions.
Among these are recency bias, confirmation bias, herding bias, and attribution bias, and addiction bias. It’s a lot, I know!
One way to fast track your progress is to read up on trading books that cover historical market ups and downs, including major shifts and even black swan events.
3. Lack of focus
As with most endeavors, not having the right amount of focus could be a huge barrier to achieving success.
Trading is a marathon and not a sprint, which means that you need to set your mind to dedicate time and energy to learn and improve.
Contrary to what most TikTok investors put out there, trading is not all glitz and glamor. Traders don’t just wake up in their yacht, power up their laptop, drink champagne, and watch their accounts double.It involves a lot of chart time, gathering data, making plenty of market observations to catch patterns, journaling your trading decisions, and tracking your metrics.
That’s on top of learning the basics, understanding different markets, and testing out different strategies. Trading requires commitment y’all!
If the lack of focus is something you struggle with, try starting with the small things first and keeping it simple.
Pick one strategy or indicator that you’ll be working with and keep testing it for at least 30 trades before making any adjustments. Make two or three rules to follow and track the results. Concentrate on one market first before trying it out on others.
Any other obstacles that you feel are keeping you from being successful in trading?