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Expectations and Realities in Forex Trading

Saturday, January 19, 2019


What is the first motivation to get you into the world of forex trading? Big profits in a short time? Can you make money just by relaxing at home? Become a billionaire in the easiest way? Having expectations is not wrong, provided you realize the reality behind it all. For this reason, this article will reveal what are the expectations and reality that are common in the world of forex trading, to help you develop realistic expectations in navigating the forex market as a retail trader.

Expectations and Realities in Forex Trading


1. Forex Trading Is A Fast Way to Get Rich

Expectations:

When you first try forex trading, you may hear a lot of bombastic offers. Can get $10000 per month, get rich only with capital of $1, are sentences that are commonly used to attract beginner traders. What's more, such offers are very facilitated by the ease of retail trading today, such as waiving opening accounts with only $1, bonuses without deposits, high leverage, and much more.

Ekspektasi 1 Trading Forex

Realities:

Unfortunately, forex products and services offered with bombastic promotions usually end in scam. Instead of getting $10000 per month as expected, your capital just doesn't run out.

According to Dale Woods of The Forex Guy, the phenomenon of promo deals that are too excessive starts from the main purpose of forex trading: to make a profit. Trading service providers who desire to attract clients as much as possible, will not hesitate to twist the facts to overestimate the potential profits that can be obtained from this field of work. If what makes a lot of people interested in getting into forex is to get a lot of profit in a short time, then that's the attraction that will be maximized in such a way.

In order not to get caught up in fraudulent schemes irresponsible parties who like to make promotions are tempting, so always keep this in mind:

Forex trading is no different than doing business. People who open a business never expect to be able to succeed overnight, so too does it by starting forex trading. There is a learning process and ups and downs that need to be lived before you really can be said to be a successful trader. Therefore, never go into the world of trading with the expectation of wanting to get rich quick. The result will be far worse than the loss of a beginner trader in general.

So does every broker or trading service provider who attracts clients with sweet promises is always a scam? In fact, the marketing strategy of every business actor is indeed that; so it is also less realistic if you are looking for a broker who immediately warns of trading risks without offering any benefits. To be able to sort out which brokers can be trusted or not, it's best to learn to recognize how to choose the ideal broker.

2. The More Frequent Trading, the Greater the Profit

Expectations:

A work done with time dedication will give satisfying results. This may apply in everyday life, but it cannot be applied in forex trading. For example, you might be able to expect a higher salary than longer working hours, such as taking overtime or entering on holidays. But in forex trading, the length of time watching the chart has absolutely no effect with the amount of profit.

Those who are still trapped in this expectation are always looking for trading opportunities from time to time, scavenging the opportunity for entry every day, hour, even minute. The hope? Of course so you can get bigger profits every day. For example, Budi just opened an account and made $10 profit from his first position. He then opened the position again that day, and was able to get the same profit, so the total profit on that day was $20. Budi then committed to opening positions 5 times per day, hoping to earn $50 a day.

Realita 2 Trading Forex

Realities:

What Budi got on his first trading day did not last in the following days. Instead of consistently getting $50 per day, Budi often loses because open positions are only to meet the target, not according to the opportunities in the market. As a result, Budi's capital was sold out on the fifth day of trading.

Comparison of expectations vs. reality in this case is very opposite, because the key to forex trading is not about how often you open a position or do analysis, but how smart you can recognize and take advantage of potential trading opportunities. If there are no good opportunities, don't enter.

In addition, forex trading also requires risk and reward adjustments. The number of unexpected factors that influence the forex market makes profit opportunities not 100% certain. Therefore, you must carefully manage risk management.

Short-term strategies with frequent frequencies do exist, but are not recommended for beginners, because they do not really understand if the core of being a Scalper or Day Trader is to get small profits but often, not to gain big profits every day.

3. Indicators Are The Most Effective Trading Instructions

Expectations:

Installing indicators is indeed very easy and is often considered profitable. Just put on the chart and follow the charts, then take the entry position. For example if you use an MA, then just wait until there is a crossing. Or if you use RSI, it's easy. Just take the opportunity when the price reaches level 30 or 70 to open a position.

Because each indicator has been set to smooth price movements and perform calculations based on historical price data, of course the signal is reliable. But is it true that each indicator signal can always be used as a benchmark for entry?

Realita Salah dalam Trading

Realities:

The answer is not too. Although the indicator is able to provide an up and down picture of prices with visually attractive and easy to digest, the signal tends to be lagging and is easily influenced by market noise in small time frames. In addition, the calculation of indicators does not take into account fundamental influences and market sentiment. The lagging nature of indicators often risks making late traders entry; the price may have been a long bullish reversal, the new indicator shows a buy signal.

In fact, an indicator is only a tool that displays visuals on a chart after calculating the previous price data. If you want technical analysis that is more reliable in terms of speed, then also use the Price Action analysis method and chart pattern. In this case, you really observe price movements as a basis for analysis, not just certain graphs that only respond to price movements.

4. Trading Robots Will Do Everything For You

Expectations:

Do not want to bother looking for opportunities in the chart or busy determining the position of Entry, Stop Loss and Take Profit manually? A trading robot (Expert Advisor or EA) can be an answer. Because of the sophistication of this tool, you don't even need to monitor the platform and let everything be executed automatically by the trading robot. In short, you just have to buy and install a robot, then let it work to collect profits for you. Besides being able to run automatically, the trading robot also avoids the influx of emotions in trading transactions.

Realita Trading 4

Realities:

Like a magical solution that can solve all trading problems, many robots are considered as tools that can do everything for traders. In fact, price movements in the forex market are constantly changing and are dynamic, while trading robots only work according to algorithms that are set with certain rules. That is, when there is an unexpected turmoil in the forex market, trading robots will find it difficult to adjust to the changes that occur.

This can result in large losses on trading positions that are automatically installed by trading robots. Remember, price movements in the forex market are not only influenced by technical decisions, but also impact news and market sentiment.

In addition, there are extra costs that must be incurred if you want to get the optimal benefits from using a trading robot, which is the cost used to rent VPS. Installing robots also requires knowledge (though not necessarily much) about the MQL4 programming language, because from there you can find out how the robot works and make adjustments if there are changes in market conditions. One more thing that makes expectations vs. reality of trading robots so contrast is: You also need to regularly monitor the performance of trading robots.

So basically, using a trading robot is actually almost as complex as trading itself. There are still jobs that you need to do regularly, even though trading robots do have the role of executing your transactions automatically. In addition, think about the additional costs that you need to prepare to buy a robot and rent a VPS. This also does not include preparation for learning to choose a reliable trading robot.

As information, the trading robot market is one of the most fulfilled by fraudsters with sky-high profit lure. So, it's best not to use a trading robot when you are a beginner and want to take it easy.

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