I am hardly surprised when friends and clients tell me that they are not consistent in their winning trades in trading forex. Many times, friends relate their stories of making a giant win in the markets at one time, and then will continue to tell a sad story of losing it all in the next few trades. Worst, some have even lost their capital. It is when they are at the verge of abandoning the entire idea of making a career of being a professional trader and when their financial losses are really hurting them, that they seek for help.

I have identified 5 of the most common flaws of forex traders, and have helped many of them to rectify their trading problems. Let me share them with you.

1. The Most Common Flaw

I have often been presented with rather sophisticated trading systems by traders who come to seek help. Most of them have been attracted by the promise of multi indicators and sophistication in the use of these trading systems. Many of them appear to be a rehash of the principle of confluence. What this simply means is that if a multitude of technical indicators show the same signal to buy, sell or hold, then the pure sense of synergy occurring suggests that the signal generated is correct. This sounds good in theory, but in practise, not all the indicators agree at the same time.

For example, a trading system might have a moving average indicator with a positive crossover occuring when its Relative Strength Index or RSI is at the lower boundary or is oversold at the 30% band. These two indicators occurring together at the same time is a good enough indication that the correct signal is to buy. But what happens in real life is that the deriving the decision is not that simple.

Why is that so?

Many of these "confluence" systems throw in other indicators that depict the price movement and do not add any value in helping you to trade. As a result, you get a pot-purri of technical indicators comprising oversold and overbought indicators such as stochastics, stochastics-RSI, momentum indicators, bollinger band breakouts and candlestick chart pattern recognition, and even artificial intelligence systems such as neural networks.

The end result is that many of these losing traders are unable to make a decision as to the true direction of the market and either get into the market too late or too early or just remained paralysed from making a decision at all. It is therefore no wonder that they are losing money by the buckets.

So the most common flaw among forex traders is the use of an unsuitable trading system which does not serve its purpose as a tool to help them trade profitably but rather confusing and complicating forex trading until they become perpetual losers.

2. The Most Dangerous Flaw

An other flaw that I would classify as the most dangerous flaw of them all is that of greed and fear.

This is an emotional issue interwoven into the entire process of trading.

Giving friends and clients a listening ear, I have often heard how a profitable trade can lead to euphoria, and exuberance, and greed comes in and over-ride all aspects of risk management. The trader who is profitable at that stage will over-ride all his stop loss positions when prices fall back, believing without substance that the price will continue to go up many pips for a longer period of time. Risk-reward ratios are thrown to the wind. These traders see their winning trades ride up into huge profits, only to see them correct, pullback and crash down to earth. Worst, they are then paralysed by greed which tells them to wait a little longer for prices to recover, which they normally don't, but continue to pullback and consolidate and they have to take a loss at the worst possible time.

The trader is then struck by fear as he realises his position. When the next buying signal comes, he is paralysed by fear and unable to open any position. That is why when you override the emotional side of trading, the psychology of trading and the discipline of trading, you commit the most dangerous flaw in forex trading, with financial ruin facing the door.

3. The Flaw of The "Unconcerned Man"

The third important flaw I often encounter in my business of coaching and consulting with traders is what I call the flaw of the "Unconcerned Man." I know the term of being called unconcerned, or even lazy is anathema to many traders, but the truth is that many traders enter into trading without a driving need to become successful and profitable. They are into trading just because they have heard it is easy game - that making a killing from the markets is easy. They do not treat trading as a business that involves skill, preparation, trade management and re-investment. To them, it is a trading game of fun, where they can afford to lose. They become unconcerned about their trades which are still in an open position. They start off with the wrong footing or with the wrong purpose, and do not have that burning desire to be successful.

4. The Flaw of the "Inadequate Man"

Now, some of them start off with the best of purposes. Some of these losing traders were all fired up from the start. They did put some effort to learn to trade. Many of them do go for free introductory courses to learn "here a little, there a little", picking out some trading tips from chat rooms or forums. But the measly tips they obtain from these sites are insufficient to see them through the practical difficulties of trading the markets. Their knowledge could not see them through their desires, their direction, and they failed to attract the wealth that was possible through their trades. Inadequacies become their most potent flaw.

5. The Dogmatic Man and His Fatal Flaw

Trading signals you obtain are not engraved in stone. Trading is dynamic, as prices move and are affected by circumstances. The inability to accept losses, and profits as they present themselves have led to many a ruin in forex traders. When a trader becomes dogmatic, and inflexible, sticking to his own personal perception of a trading signal, despite all the factors telling him that the trade has gone wrong, he is going to lose more. This is particularly so in forex trading. In stocks, the buy and hold policy is more relevant if the stocks are fundamentally sound, as they can be cyclical and can rebound in prices. But in forex where the leverage is very high, your capital can be wiped off if you do not react to your signals promptly, and stubbornly maintain an unchanging personal opinion of "correctness".

In trading, you can be wrong in the market and still emerge a winner if you take prompt action to correct your position, but the dogmatic man continues in defiance of the true factors affecting his trade, and then loses a big part of his capital. When he loses all his capital, he is unable to trade another day and that is the fatal flaw.

Understanding these flaws, we will continue to discuss effective ways of overcoming them in Part #2 of this Article series, so that you can become a profitable and successful forex trader quickly.

We cannot say that it is very easy to make money in forex trading, but it isn’t really difficult also. It is the smart work that matters than hard work in trading currency market. Following are the essential tips on how to avoid usual pitfalls and start making more money in forex trading.

Trade in pairs not in currency- Like any relationship; you need to know both the sides. Success or failure in forex currency trading relies upon being right about both foreign currencies and how they contact each other, not just one.

Understand the basics - When you start to trading currency online, it is indispensable that you understand the basics of this particular market if you desire to make the most of your investments. The chief forex influencer is worldwide news and other related events. Most newcomers respond aggressively to news like this and close their positions and next miss out on some of the most excellent trading chances by waiting until the market goes down. The latent in the forex market is in the instability, not when it is clam.

Self-government - If in case you are fresher to forex, you would either choose to trade your own money or to have a forex broker trading it for you. It is good but your risk of losing augments tremendously if you either of these two things: you also need to interfere with what your forex broker do on your behalf; seek counsel from too many other sources - many input would only result in multiple losses. Take a location, ride with it and then analyze the result - by yourself, for yourself.

Small margins – Small margin trading is one of the leading benefits in trading forex as it permits you to do trading in the amounts far bigger than the total of your deposits. However, it could as well be risky to beginner traders as it could demand to the voracity factor, which wipes out many forex traders. The best guideline is to boost your leverage in line with your skill and success.

Trade during Off-Peak Hours - Professional FX traders, option traders, and other hedge funds mobs a wide benefit over small retail traders in off-peak hours (usually between 2200 CET and 1000 CET) as they could hedge their place and move them around when there is far tiny trade volume is going through (that simply means that their risk is smaller).

Trade on the news - Most of the actually big trade market moves arise around news time. Trading volume is lofty and the moves are very important; this means there is no superior time to trade than when news is actually released. This is when the big players alter their places and prices alter resulting in a somber currency flow.

Confidence - Confidence comes from winning forex trading. If you lose money early in your trading career it's extremely hard to gain it back; the ploy is not to go off half-cocked; study the forex business before you start to trade. Keep in mind, knowledge is power.

A quick definition futures day trading is actually pretty simple. Futures day trading is the type of futures trading which opens and closes a futures transaction within a single trading day.

Traders have become attracted to futures day trading for a variety of reasons. Some like the action level of an increased frequency of trades while others like the fact that futures day trading carries with it no overnight risk. In this way, no particular catastrophic political or business event, which may happen after the close of the futures contract will affect those who have already closed their contracts out during the day. The objective for traders here is to not allow any potentially adverse market movements to affect their equity.

Futures day trading falls into the category of short-term trading. As a general rule of thumb in trading, the shorter the period of the trading timeframe for smaller. The amount of profit per trade. Please keep in mind of course that this is a general rule of thumb, and does not apply to each and every case.

The frequency of futures day trading can go from relatively infrequently such as one trade per month or per every couple of months to many, many trades per day. It is the typical increased frequency of futures day trading, which daytraders must remain mindful of. The greater the frequency of trades, the greater the transaction costs become as well. The objective of course, of any futures daytrader is to turn a profit after all transaction costs have been factored in. I can't even begin to tell you how many futures day trading results I've looked at that looked absolutely fabulous at the outset. Unfortunately many failed miserably and lost money consistently once the transaction costs were figured in.

Futures day trading can be both rewarding and profitable. The key here is to have both a good futures day trading system and an excellent level of discipline to take action as needed.

What trader has not heard the phrase trading psychology? What trader has not viewed, or been told that their trading problems are the result of trading psychology?

What trader does not need trading psychology management, if they are to become a profitable trader? What an interesting combination of words: trading + psychology. When considered separately by definition, and especially by a ‘non-trader’, these words would appear to have nothing to do with each other. Trading is the buying and selling of an underlying contract through the execution and management of a trading method; psychology is the study of the brain and behavior, which is done in an attempt to help people understand why they feel and think the way they do, and/or help them make changes to their resulting behavior from these feelings and thoughts.

This list includes typically discussed trading psychology issues, but what do any of these have to do with trading by definition?

You don’t take a trade means you have a fear of losing.

You over trade means that you have a fear of missing something.

You don’t take a stop means that you won’t take responsibility.

You hesitate taking a trade means you have a fear of being wrong.

You trade with money that you can’t afford to lose – TILT.

The list comprises psychology issues, which then lead to an emotional response which occurs during trading; these issues do not have anything to do with trading method. These are fears and emotions, which would become a problem to the individual any time that they were 'tested' in a performance related activity.

Trading psychology management will involve the realization that any of the emotional problems that you have previously encountered in other stress related circumstances, will absolutely be an issue when trading, but that this is related to the 'emotional baggage' that you bring into trading, this is not isolated to trading.

Traders spend so much time searching for that perfect trading system, but they do so little to prepare mentally for trading - WHY is that the case? Two primary reasons for this would be awareness and avoidance.

Trading Psychology Management Awareness

Many people coming into trading have been very successful in past endeavors. If these experiences didn't involve dealing with stress in a way that the resulting emotions had to be controlled in order to succeed, they now have no reason to know that ultimately trading psychology management will be the determinant in their ability to now be a success at trading. This was my experience when I came into trading, a high performing scholar-athlete through school, and then successful at starting and running two profitable businesses; I just assumed that I would learn how to trade and be very good at it.

It is interesting just how unaware of the realities of emotional impact I actually was. I had only gotten involved in trading because I sold my businesses after my wife's mother and my father had passed away in a four month period, and I felt the 'need' to 'get away' and do something different. Coupled with these personal emotions was the 'influence' I was receiving from the person that I was learning from - paper trading was for 'pussies', just take your trades and manage them.

Absolutely, I was an emotional accident waiting to happen, and the wreck did occur. If you don't know me, or haven't heard the rest of my 'learning to trade' story before, ask me some time about how I had an office lease terminated because of my continual screaming-cussing outbursts - NOT one of the highlights of my life.

Trading Psychology Management Avoidance

People that have an avoidance issue with emotions, have either encountered them before in previous activities, or they are quickly impacted by them soon after they begin trading. However, they view psychology and emotion as personal weaknesses, therefore they won't accept that they exist; through avoidance, this group then believes that they have no need for trading psychology management. Avoidance is not a solution for anything.

It does not matter what the problems are, or in what context that they are encountered, avoiding your problems will NOT make them go away. Ultimately, they are only going to continue to get worse, and IF an eventual solution is ever forthcoming, it will be so with more difficulty and pain than would have been necessary if it was dealt with 'from the beginning'.

Obviously, everyone would love to go through life, day-to-day and task-to-task, without being confronted with fears and emotions that undermine the ability to perform; it is enough of a challenge to learn the necessary skills without also having to deal with this 'extra crap'. BUT this is not personal weakness to avoid. The person who can accept the problems honestly, instead of with avoidance and denial, is the person with strength AND the person who has the ability to find solutions for these additional challenges.

Actually, it doesn't really matter how you 'feel' about emotions and what they represent. The reality is that if you are going to trade, you are going to be effected by 'your' psychology - this is the only guarantee from trading that anyone will ever receive; this must be understood and accepted from the beginning. Then approach trading with a dual concentration on both method and psychology, developing a trading psychology management plan that is intended to gain control over the emotions brought on by trading, in order to allow focus on trading method evaluation and trading performance.

Many novice traders try and make money by FOREX Technical analysis and most fail as they don’t understand its advantages or its limitations.

FOREX Technical analysis trading can be very lucrative if you follow some simple basic rules so here are some simple rules that could make you a lot of money.

Basic rules for technical analysis trading FOREX are:

1. Use a simple system

This means support and resistance and a few filters – We like stochastics and Relative strength Index (RSI) to time trade entry and Bollinger bands to project targets and isolate areas of value.

Don’t: Buy a system from a vendor - you can’t buy success.

In most cases if the vendor made money he would shut up and trade his own money.

Develop your own methodology, if everyone could buy success for a few hundred dollars then there would be a huge amount of winners in FOREX trading and there aren’t!

Only you can give yourself success you’re on your own and that’s the only place to be – All top FOREX traders rely on themselves.

Don’t: Assume the more rules you put in your system the better.

It’s a fact that most of the top systems are simple.

There is no correlation between complicated systems and success.

A simple system will be more robust and have fewer elements to break

2. Run profits and cut losses this way

It’s a fact you need to run your profits to cover your losses.

Your system can make money only 30% of the time and still make huge profits if losses are a lot smaller than profits.

The best way to achieve this is to trade significant breakouts (i.e strong support and resistance that is seen as critical by the market) stops are tight and profits from significant breakouts are normally huge.

Fact:

Most major currency trends develop from new market highs – so if you want to catch these trends, look up and research breakout methodology.

It’s simple to understand, works and will continue to work.

Don’t: Day trade FOREX! It will simply lose you your money quickly.

Volatility is random in daily periods, so technical analysis trading is a complete waste of time.

You will keep losses small and have plenty of them.

Of course, profits from winning trades (that’s if you get lucky) will never be enough to cover the losses you have taken!

Don’t: Trade to frequently.

Be patient and ONLY Trade low risk high reward set ups.

You don’t get more money for trading more frequently - you get your payout for being right.

3. Take Open Equity Losses to get long term currency profits

Currency trading is risky but most novice traders try and restrict risk so much they create it.

Here are some pointers

Stop levels if trading against support and resistance are obvious place them and forget about them.

The major error most traders make is moving them to quickly and getting stopped out by normal market volatility.

Leave the market room to breathe and don’t trail stops too quickly.

Its painful seeing dips in open equity in FX trading, but it’s a great way to make big money from the big trends.

Don’t: Forget to place stop on entry be disciplined! Never trade with a mental stop

Don’t: Trail stop to quickly have a profit target and then tighten stops – Until then leave them way back.

4. Look Then Confirm Then Enter

No FOREX trading method will work if you hope levels of support and resistance will hold.

Confirm that support or resistance will hold and don’t predict. That’s why you have other indicators to gauge price momentum.

Don’t: Simply buy or sell into support or resistance and hope, it’s the ultimate mugs way to trade.

The above 4 points are critical to currency trading success by technical analysis trading - so use them.