The Foreign Exchange Market
it is the largest currency market; it spans the globe as an interwoven and continuous market.
Many beginners in the Forex trading game think that taking risks in the Forex market is the only way to making big profits in a short period is to risk more of his trading capital. This is a myth; all the novice is doing is gambling and running the risk of losing it all in a short time.
The lure of gambling and taking higher risks is especially lethal when the novice trader hits a run of eight, maybe fifteen profitable trades in a row. If he keeps on risking large sums of money on every trade, he will be back to his starting point soon again for he may hit a run of bad trading that can last for twenty or more trades. Then the gambling gets desperate and the losses start piling up until his capital is exhausted. Forex trading is no different form any other form of trading; you have no guarantee that you will make money all the time, there will always be fluctuations.
For the Forex trader experience brings wisdom and they accept that not all trades are profitable, they weather the losses and balance them out with profitable trades. They keep to their strategies and they work to an exact plan to cope with these losses and in the long run they are successful traders showing a good profit even when the short term Forex market shows fluctuations. The disciplined novice will not gamble and keep on gambling, he will risk small percentages of his investment deposit on each trade and he will learn and gain experience.
For the disciplined trader who practices money management the short term profits will be smaller than for the aggressive trader, but when the inevitable down turn starts, the trader who practices disciplined money management will be able to weather the bad market and survive to keep on trader whereas the aggressive risk-taker will face financial ruin.
No trader can predict which trades will be profitable and which will bring a loss. If for example his first 30 trades all show a loss and the next 70 show profit. If he had gambled all his money on the first 30 trades, he will have no reserves left for when the next 70 profitable trades come in.
Discipline and money management means survival to a Forex trader. Gamblers do not last long in the trading business; they flash and burn out leaving only the ashes of their failure behind. Money making is a serious game and if you are not serious about wanting to make money and keep on making money even when trading starts tapering off or goes bad suddenly, then you must not take up a career as a trader.
The successful Forex trader plays the money game like a champion chess player. He uses his strategies to maneuver, he knows when to move forward boldly and he has learned when it is the best time to hang back and wait to see what the market will do.