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Author: kelly Price Article source: http://www.articledeshboard.com/. Used with author's permission.
This may sound strange but it's true - most forex traders cannot accept big profits even when they are presented with them. Most forex traders fail because not because they can't restrict losses, but because they don't have the courage to accept profits.
Let's see why.
Fact: Currency trading is risky, yet most traders try so hard to restrict risk they give themselves no chance of making profits, so they do the following:
1. Day trade
They think this is a low risk of trading in fact it's the highest risk form of forex trading you can do because it guarantees a wipe out of equity.
Most traders think they will make money by having keeping risk low and having tight stops, but they get stopped out all the time, as daily support and resistance levels are meaningless and volatility is random.
They then feel good when they get a profit (even day trades are lucky) but their minor and they never pay for their huge amount of losses.
The result?
Complete equity wipe out.
2. Follow the trend
There are other traders who trend follow and aim to make a profit and yet, with all the indicators pointing to a continuation of the trend - they take profit or get stopped out.
They only bank a minor profit, when they could have had a huge profit.
When these forex traders get any profit on their forex trading system, they get excited and the bigger it gets the more they want to take it before it gets away.
As normal volatility eats into their open profit they panic and move their stop up or snatch the profit.
What happens next?
The currency goes on to trend the way they thought and piles up $10 or 20,000 more and their not in.
Most traders are so obsessed with keeping risk low they may as well not trade currencies at all, as they give themselves no chance of winning with their forex trading strategy.
Courage conviction and confidence
To follow and hold a long term trend when volatility eats into open equity is hard and you need confidence in your method and the courage and conviction to accept volatility eating into open equity as the trend takes its course. Believe me, this is hard even for experienced forex traders let alone novices, however you must have the discipline to do this, if you are going to make above average profits over time.
Accept the risk that currency trading presents in a positive frame of mind and take calculated risks at the right time.
In conclusion, this means having the courage and conviction to run profits and accept that you have to take risk to reach you main goal of above average profits over the long term.
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