Understanding the Learning Curve
In the early stages, everything in Forex is new. The terms pip, leverage, spread, liquidity, lots – it takes time to understand. Forex is an open market that operates 24 hours. The price changes can be unpredictable. It seems like you have to be watching it all the time. It is hard to process so many factors in your brain.And as you study and watch, patterns emerge. The market structure becomes more defined. It becomes easier to identify support and resistance levels. The economic news begins to fall into a larger pattern. The randomness becomes a rhythm. The learning curve is steep, but this is a temporary condition.
Emotional Control Develops Over Time
One of the main reasons the foreign exchange market seems so difficult in the beginning is because of the emotional aspect of it all. The fear of losing money and the excitement of winning are very emotional highs and lows for people to go through, especially at the beginning of their Forex career. Many traders will get out of a trade too soon, hold a losing trade for too long, or over-trade after a winning trade because of emotion rather than reason.With time, feelings are not as strong. Losses are viewed as a learning process and not a personal disappointment. Traders are able to strictly adhere to risk guidelines. The levels of stop and take profit are carefully decided and not acted upon emotionally. It is easier to remain calm since you already know what is going to happen.
Risk Management Becomes Natural
Risk management might seem like a constraint at the beginning. Restricting the size of your position or cutting your losses might seem frustrating. As you get more experience, you realize that it is more important to be in the market than it is to have a particular result for each trade.As traders become more experienced, position sizing, effective use of leverage, and diversification become second nature to them. They begin to think in terms of probabilities and expectations instead of trying to get rich quickly through trading.
Strategy Brings Confidence
At the beginning, new traders may test different approaches, trade by different indicators, or work with different time frames. Such inconsistency causes a lot of confusion. Trading without a plan makes a trader feel uncertain for every trade.With experience, you tend to adopt a strategy that suits you and your personality and schedule. Regardless of whether you trade daily, swing trade, or trade for a longer period, a defined strategy eliminates decision fatigue. Your confidence increases as you trade not on gut feeling but on set rules.
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