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If you want to win at Forex trading you need to avoid the mistakes the majority make and its a fact the huge number of retail Forex traders who lose money do so because they keep making the same mistakes. If you are making the mistake enclosed or you are looking to trade you need to avoid this error - let's take a look at it in more detail.
The reason most retail traders lose is there always trying to pick market tops and bottoms rather than follow the actual direction of the market. These traders are trading short term and think they can trade with small stop losses and by small, I mean within the noise of the market (10 - 30 pip stops for example are very common). Picking exact tops and bottoms is impossible but the typical retail Forex trader tries and loses. These losing traders never holds a trend and focus on short term profits, they buy in to support and sell into resistance and get steamrollered by the market.
How Professional Traders Make Money
Professional speculators, don't spend their time trying to pick tops and bottoms with 10 - 30 pip stops or small targets. They also don't try and trade small random moves, on 5 10 or 30-minute charts. The professional trader will be long term in nature, will focus on getting into trends and holding them. Trends persist because - the retail crowd pick tops and bottoms and give there money to these pro traders.
The Reason Trends Persist and How to Make Money
Retail traders are essentially gambling that because a price has risen it must come back down quickly and a look at any chart will show this is not true, trends persist and they last a lot longer than most people think.
As George Soros once said: 'For a market to trend it needs to deceive and shakeout the majority of traders'.
Markets do trend and its the huge number of top and bottom short term traders who feed money to the professional traders who simply follow and hold these trends.
The retail Forex trader believes that he can make money predicting with small stops because there is a huge industry telling him he can win this way. This advice is only given by sellers of systems and strategies, who make money promoting this myth.
How to be a Winner Trading Forex
If you want to win focus on trends and forget about trying to pick every top or bottom in the market. Cut leverage back and use stops which give the market room to breathe and have them behind the losing herd of traders who always get stopped out. The above is simple advice and its true and the only way you will win in Forex trading is to learn it and apply it in your trading strategy.
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