Documentation: The Lonely Journey of a Forex Trader

The Journey of the Average Forex Trader

The following is the journey of an average forex trader based on our trading experience in global markets.  It may not apply to all traders but we believe the majority have travelled through this treacherous journey while trading the markets.

Many forex traders are constantly exploring means to increase their wealth by investing in various projects such as real estate or trading in the leading financial markets, forex, stocks, commodities, bonds etc.

Due to the required capital for investing in stocks or bonds many individuals opt for forex trading as one may begin trading with as little as $100 in certain brokers. The beginner will often be advised to trade in a demo trading account where the statistics show the vast majority of demo traders are profitable.

After gaining false trading experience the beginner is likely to begin with a small capital in a real forex account. There is no trading plan, a superficial idea of risk management and flimsy trading strategies.  The minority will conduct a deeper research but the concept of risk management is only acquired through experience.

The Trading Begins

The beginner is likely to see some profits at the beginning of his journey, even with $100. The perception that he or she have conquered the market has penetrated into his or her mind, which leaves the beginner prone to many psychological obstacles.

The beginner is often oblivious to the leverage that is used, which will ultimately lead to the notorious margin call. Very few have escaped this route. The beginner will be reluctant to accept the loss (the first psychological obstacle) and will attempt to enter the market again with fresh capital.

This step may be repeated multiple times until the new trader admits his or her inability to succeed and begins examining what other tools may be used,

In the past it was various indicators, trading patterns, price action, scalping / swing trading etc. Nowadays however the first option that is likely to be suggested is social trading, copying / mirroring a trader that has a proven track record.

The new forex trader may first attempt the exercise technical indicators / price action strategies before diving into the social world of forex trading.  The new trader is likely to be unaware that most indicators function as expected in certain market conditions.

Once those conditions are not present the indicator will provide numerous false signals and entries. Losses are part of the learning process as long as they are contained via minimal leverage. The new trader however is unlikely to understand this concept for some time.

Social and Trading Signals: No Way Out

Social trading or mirror trading may appear at first as a brilliant mean of generating an income from trading. We have already posted several articles on social trading. To summarize,  the commission system for the signal providers in social trading platforms counters the ability of the trader that is preventing the signals to succeed over a substantial period of time. The new forex trader, unfortunately, is unlikely to be aware of this.

The next step if it was not tried before is trading signals. Many without too many exceptions first tempt free forex signals. After all, why pay if you can receive signals for free? Again, due to lack of experience the new forex trader will eliminate thought that nothing is provided for free.

The possibility that his or her personal information is sold as leads (email address or phone number) is dismissed or never thought of.  Add to that the numerous scammers that provide forex signals lessens the probability of the trader landing in a legitimate forex signal provider.

Alternatively or in addition, the new trader may experiment with Expert Advisors (EA’s) on the MetaTrader4 or MetaTrader5. Similar to various trading strategies, the EA’s only function under certain market conditions.

The average lifespan of an EA is 90 days but again, the new trader is unlikely to be aware of it. Just like forex signal scammers, some will tweak the EA to show profits in the back testing in an effort to lure traders to pay a certain amount of money for the EA.

The End of the Yellow Brick Road

The average lifespan of a forex trader is 180 days. It is a slow, lonely journey.  The cycle of life in the markets is likely to mutate with time, for the bad or for the worse. Some may ask what happens at the end of the 180 days. The trader may either determine it is not possible to succeed in the market or switch to a different financial product where the 180 days cycle may be repeated.

If you are new to the market our best suggestion is to study the price behavior. See how the currencies react to economic data / events in real time and how the indicators converge under such conditions. It may require a couple of years to comprehend the price behavior.

Study multiple strategies during the years and observe under what market conditions the trading techniques outperform. Aside the strategy the market requires a certain trading psychology. Each decision must be made without too many emotions. If you are a cold person by nature it may be easier. If you choose to trade in those years it may be wise to do so with real money rather than demo but using the minimum trade sizes, 1,000 units or 0.01 lots.

What we do at ddmarkets is provide all the tools that are required based on our experience to manage the risk in the market by using our forex trade alerts. We have many traders that are subscribed to us for over a year which places them above the average.

Part of our success in the past 2 years since we launched  is our ability to adjust to changing market conditions and accommodate our entries in accordance. What we believe is categorizing us amongst the top providers is our extreme transparency and trades’ documentation.

Last Updated on December 23, 2020