Below you will find the six common beliefs followed by the bulk of traders – and if you believe these myths as well, then they will restrict your chances of making significant currency trading profits.

Ninety percent of currency traders believe at least one or more of these myths – which explains why ninety percent of traders don’t make much profit by trading currencies!

1. You should always be in the Market in Case you Miss a Move

Traders love excitement, and their view is, if they are in the market they may catch the big move. Well they may – but chances are they won’t.

The big trends only come a few times a year in each currency – and you should stay out the market until they come, otherwise you will take losses, and run up commissions that will deplete your account.

Wait for the big trades – patience is a virtue in trading.

2. Diversification Reduces Risk, and Increases Profit Potential

Diversification simply dilutes your profits.

You hit a big move, and your other trades that lose, or give you only marginal profits, eat up all your currency-trading profits.

You need to have confidence to go for the big moves, when they occur, and load up these trades.

Currency trading is about calculated risks – if the trade looks good, hit it hard for big profits.

3. Day Trading is Better than Long Term Trend Following, as it’s Less Risky.

Many brokers spread this myth – and why not? – They make more commission if you believe it!

You will end up having more losses than profits in your trading. You will never make enough money in a day to cover your inevitable losses. When you add in commission and slippage, it’s inevitable that you will lose.

You need to hold longer-term trends, as these yield the big profits to cover your smaller losses.

4. Timing the Market is the Correct Way to Make Profits

Timing the market means you are trying to PREDICT where prices are going to top and bottom – this is not a good way to trade and the odds are against you.

A better way to trade is to wait for the market to CONFIRM a trend is under way, and jump on board. You may not buy the bottom or sell the high, but you can catch the major chunk in between – and with currency trends lasting for many months or years, you can still get plenty of profits from the trend.

5. Markets are the Same Today as they Were Hundreds of Years Ago

Rubbish! Trends now are much more volatile than they were even 50 years ago. Why? Today, with the Internet, price information reaches every corner of the globe in a split second. This increases volatility as everyone has the same information at once – and everyone tries to enter the market at the same time.

This was not the case even 50 years ago – the trends are still there, but volatility is much higher – traders get the direction of the trend right, but they find themselves stopped out by the volatility. How often has this happened to you? – It happens to all traders. Look at using options to give you staying power.

6. You can use a Black Box System to Make Money

You can buy a system from a vendor for a few thousand dollars – and it can make 50 to 100% profit per annum.

These systems normally have a hypothetical track record – and use price information where the results are already known, and of course, the logic of the system remains hidden from you – as it’s unlikely to have a sound basis.

Have you ever wondered why these vendors sell systems, when they could simply get a bank loan and trade their own systems?

Enough said on this one!

How about some Positive Advice?

If you want to make big currency trading profits, you need to do it for yourself.

Get a plan you have confidence in, and execute the plan with discipline – and have the courage to trade for large gains when they occur.

Good luck!

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The first point to keep in mind, is there is no way to predict the market in advance and traders who try and apply science or complicated systems, see them fail because Forex trading is all about trading the odds and simple systems work best and always have. You can learn a simple system in a few weeks and then you face the major hurdle that all traders do and that’s to get the right mindset to make it work.

We just said that 95% of traders lose money and this percentage has remained the same as 50 years ago and this may seem odd to many traders because in this period, we have seen huge advances in technology and forecasting but the reason the number of losers has not improved is – as we said in the last paragraph, there is no way to beat the market or gain an edge with technology and the other reason, the percentage of losers remains constant is human nature is constant and the emotions of greed and fear cause the majority to lose their account equity.

Human nature causes losses because most traders lack discipline.

The typical losing trader always wants to be right so he runs his losses, deviated from his trading system, engages in revenge trading on the market to recover losses or continually changes systems in search of the perfect system which doesn’t exist.

The smart trader, has a simple robust system that trades the odds and he applies it with rigorous discipline and knows that while he cant ever reach perfection, he can make a lot of money by keeping his losses small and running his profits.

If you want to know one of the biggest groups of winning traders it’s not scientists, its ex professional poker players and maybe, their not the best educated but they know how to play the odds and and that’s what making currency trading profits is all about.

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One of the most common, and perhaps most often sought after by first time Forex traders, is the scalper. The scalper’s goal is to open and close each trade within just a few minutes to take advantage of the smallest fluctuations in price using tons of leverage. This trading system relies heavily on quick action based on the most insignificant of changes in the foreign exchange market. The upside to this trading strategy is that the profits (or losses) you make will happen fast, the bad news is that it requires a significant amount of capital and risk, associated with the amount of leverage required to make a profit.

At first glance one would think that a long term currency trading system would be the simplest and most profitable, since that’s true of most any other financial transactions. However, trading Forex is different in this regard.

Long term currency exchange trading requires a great deal of knowledge because long term traders hold their positions for months, sometimes years waiting on hard and fast factors that are fundamental to the foreign exchange market. This trading strategy is more reliable in the long run simply because it’s based on reliable Forex indicators, rather than insincere market changes.

Like scalping, long term trading requires a large amount of capital to cover any unpredictable changes against your open positions, which may remain open for a very long time.

If you’re looking for more stable rewards in the foreign exchange market, consider mid-term trading, which allows a trader to hold positions for at least one day and take advantage of opportunities that may arise due to technicalities, such as a delay in trading at the beginning or end of a trading day.

A Forex trading strategy that focuses on medium term trading requires the lowest capital because you only need additional leverage to increase your profits. Unfortunately, as with all good things there is one minor drawback, the infrequent opportunities to implement any Forex trading system on account of medium term Forex trades being more difficult to locate and execute.

Just as with Goldilocks and those three bowls, you too will have to devise a Forex trading system that’s just right. Remember the reason you began trading was to make a profit, and that can only happen when you devise a strategy that fits with your financial goals and capabilities. If you don’t have a lot of capital to risk, because it is a risk, start with a medium term Forex trading strategy.

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