To Earn Money, You Need To Deal With Your Problems First

<WikiFX Malaysia Original: Editor – Fion>

1. Trying to catch every pip

This is one of the most common issues among retail traders and/or investors. They are so engrossed with the idea of taking as many trades as possible hoping to catch every pip move throughout the day. Oftentimes, they find themselves sitting in front of the screen all day long and making an amount of money that is not up to par with their effort. At this point, trading feels like hard labour that reaps no satisfying rewards.

2. Having zero knowledge about macroeconomics

If you are a technical trader, you certainly do not need to know all the ins and outs of macroeconomics like a professional economist. However, a certain level of knowledge in this field can boost your trading. Trading is a market with a low barrier to entry, so it is always beneficial to learn more than others to continuously sharpen our trading skills. A few crucial topics to learn are the economic cycles (boom, recession, depression, and recovery), effects of the tightening or easing of monetary policy, and any high-impact news or announcements. Having a better understanding of the big picture could help you make better decisions with greater confidence and peace of mind when placing a trade.

3. Comfortable with paper losses but uneasy with paper gains

This sounds counterproductive and counterintuitive, but this is a dark secret carried within many traders that they do not want to admit. These traders tend to cling to their position when they are in a drawdown, as they have this false belief of “it is not a loss as long as I am still holding it”. They could tolerate a massive drawdown but when a trade is running with an insignificant amount of profit (in comparison with their risk tolerance), they tend to close it off impatiently just so they could avoid being in a drawdown again. This is one of the biggest reasons why some traders wipe off all the years of hard work with just a single losing trade.

4. Keeping everything small (a little too small)

Contradicting point 3, this is a group of people that falls on the other side of the spectrum. These traders cut their losses quickly but at the same time, they also take their profits instantaneously thinking that they are accumulating and compounding their profits. Although this practice minimizes risk and protects one‘s trading capital, it is hard to difficult to grow one’s trading account. Some traders that fall into this category may even unknowingly take trades that are not worth the risk-reward-ratio. Constantly exiting trades pre-maturely just to secure small profits not only increases the cost of trading in terms of money, time, and effort, but it often causes a trader to miss out on a great opportunity before the strong impulsive momentum begins in the direction of his analysis.

<WikiFX Malaysia Original: Editor – Fion>