Forex Traders' Best Enemy

Successful Forex traders understand that their achievement comes from establishing a collection of trading rules and then following these to the end. It is possibly not surprising therefore to discover that the most frequently seen Forex trading mistake is that of traders violating their own trading rules.

The highest risk any foreign currency trader faces is that of emotion and trading rules are established to simply eliminate emotion from the trading equation.

Another risk for most traders is posed by greed. None of us like to think of ourselves as being greedy but this is a certain deadly sin that is always nearby and has a tendency of creeping up on us once we are not focused.

A successful trader can simply locate himself in a best track of trades earning perhaps $3,000 a day and consider to himself that, if he can obtain this kind of profit everyday, it has to be feasible to make $3,500 or $4,000 daily. However, in order to try out this concept the trader needs to drive himself by relaxing his trading rules so that they can attain up a few more trades each day.

With a bit of luck profits might well add over the next days, but how long is this going to last? The answer in most cases is not long enough and once again traders discover that any short term gains disappear. The consequence is all too frequently that they shift from being one of the indeed successful traders to being one of the 90% of traders who habitually lose money.

It is extremely easy to permit greed to entice you into violating your own trading rules and once afterward this strategy will demonstrate successful. However, you are now starting to trade on emotion and, as with a lot of things in life, having done it once it is much easier to do it again and again.

In the world of foreign currency trading your trading rules are your best friends and violating them will take you along a very slippery descent.