We all know that the forex market is not easy to trade. Neither is a funded account! The fact that some people can’t trade it successfully doesn’t come as a surprise to anyone. The surprising thing is that most traders know how to become successful. They don’t want to. They want to do it the easy way – by gambling. That’s why they blow their funded accounts.
Why would anyone want to gamble with a funded account?
Well, first of all, let’s define what gambling is. Gambling is placing a bet (usually money) in hopes of winning something valuable in return. In short, it’s about taking chances and not caring about the result at all.
You might say: “Well, I’m not gambling; I’m trading.” Really?
If you’re looking for quick results and don’t care about the process, you’re a gambler! While trading takes a little while to figure out in most cases, there are some extremely common mistakes that new traders make. You can get a forex-funded account and lose it all within one week. It’s a mix of greed, excitement, euphoria, and impatience.
Over-trading is a typical mistake of new traders. It’s tempting to trade every move when you feel like you’re missing out on the action. But this means more risk and less focus on each trade. Trading more means that your risk per trade is smaller. But if you get a series of losses at some point, you’ll blow your account.
Trading less means that your risk per trade is bigger, and you have to choose the best trades to enter. If your trading method works, you’ll make more than enough money to offset the cost of a few bad trades.
You may feel like you can manage 10 or 15 open trades at a time, but the truth is that you probably can’t. Not if you want to make money anyway. In order to be successful as an active trader, you need to focus on finding quality setups and not just jumping into every trade that looks good on paper. Avoiding overtrading is developing a solid strategy and sticking to it. You should focus on gaining quality over quantity!
FOMO trading (fear of missing out)
FOMO is an acronym for fear of missing out. In this case, it’s the feeling that if you don’t trade now, you’ll miss out on a huge move and lose lots of money. This is especially true when trading forex because the moves can be huge (and fast!). When dealing with forex funded accounts, it’s common when traders don’t follow their trading plan and start chasing trades. This ends up in disaster, along with your funded account!
FOMO is one of the biggest psychological traps you can fall into as a trader. This feeling can be caused by seeing or hearing about someone else’s success, which leads the person to think that they need to replicate that success.
This is a human condition and is often found in trading, especially for new traders who haven’t been able to establish their style yet. When you see others making money, you can believe that you need to trade more to replicate their experience. This often leads traders to take unnecessary risks, increasing the size of their trades and putting more money at risk than they should.
The best way to avoid FOMO trading is to take some time off from trading whenever you feel like your emotions are getting out of control. It would help if you learned how to recognize when your emotions are going haywire to take time off from trading before these emotions lead to poor decision-making on your charts.
Another way to avoid this is by keeping detailed records of all the trades you have made in the past and looking at them now and then. When you do this, look at the reasons you took those trades and see if they were good or emotional reasons such as FOMO. This will help improve your discipline and avoid making the same mistakes again.
Greed driven trading
The term “greed” is a very negative one, and it is often associated with bad things. But to answer the question in the title, all you need is some greed. A funded forex account allows a trader to enter the world of forex trading with peace of mind. You have the capital you need, and the only thing required is to make money from it. So, what could go wrong?
Most new traders get excited and rush into trading their funded accounts as if someone will steal their money if they don’t act fast. They will trade every time there is a trading opportunity and most likely overtrade to compensate for fear of losing out on any trade. Greed can also be another factor in over-trading.
Greed is a good thing when it comes to making money, but greed can drive you to the ground when you are trying to recover from a loss. There’s nothing wrong with wanting more profits, but when you try to make extra profits beyond what you had originally planned, then that is where greed can do some harm.
If you are greedy, you may want to take trades without any profit target or stop loss. This is very risky. It is like playing roulette. If you place a trade without an exit plan, you might as well be gambling.
There are many ways to make big profits in the markets, and sometimes greed can be your worst enemy. You can take advantage of risk management tools like stop loss and take profit orders in order to manage your risk while maximizing your profit potential.
The goal is to keep more winning pips than losses on each trade which means that if you have three winning trades in a row, then one losing trade would not wipe out all of those profits because each of them would still net positive pips even though there was a loss on one trade.
Enjoyed this article? Be sure to check out How your forex profits can ruin you! next.