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What Makes Trading Forex So Difficult?

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Happy Friday!

This week’s question comes from Sara, who asks:

What is it that makes trading Forex so difficult?

From an outside perspective, trading should be easy. After all, your only options are buy, sell, or do nothing.

That means you have a 50% chance of being right every time you act. At least that’s how the odds look on paper.

Perhaps that deception is part of what makes it so difficult. The market tricks you into believing that it’s easy when in reality it’s just the opposite.

You may be asking yourself, why do I want to read about this? How is reading about what makes trading difficult going to make it less so?

The bottom line is this…

The more you understand about what’s keeping you from getting where you want to be in your trading, the easier the process becomes.

You’ll also be able to achieve your goals that much faster. Who wouldn’t want that?

In this post, I’m sharing a few reasons why I believe trading is so difficult. By the time you finish reading, you’ll have a better understanding as to why you’ve been struggling and what to do about it.

Alright, let’s get started!

1. Lack of Education

Woman with school book on headIn this business, degrees don’t matter. Whether you hold a Bachelor, Master or even a PhD, I’m here to tell you that it won’t help you much as a Forex trader.

Society may consider you to be an educated person, but the market doesn’t care.

The truth is, I have no degree. I went to school long enough to get one, but I ended up bouncing between majors enough times that I never ended up getting one.

To be honest, I don’t spend one day regretting my decisions. I may get scolded by someone for saying that, but I believe there are many forms of education; school is just one path.

In the land of Forex, education comes from experience. There are no books or lessons that hold the secrets to consistent profits.

You can, of course, learn from books like Market Wizards. You can also study and learn about various candlestick and chart patterns on this website and others.

I even developed a member’s area in 2014 for Forex traders who are serious about taking their trading to the next level.

However, there is no substitute for experience. While that’s true for any profession, I believe that with trading, the market is your instructor.

So what’s the best way to learn how to trade?

Journaling. Maintaining a trading journal is a great way to educate yourself on the Forex market.

Use the journal to keep track of your observations each day. Did the market respect a support or resistance level that you marked? If yes, did it form a buy or sell signal? If not, should your level be repositioned or even removed?

You get the idea. By documenting your observations each day, you unknowingly train your subconscious.

After a few months of doing this, you will be able to recognize patterns with little effort. The moment you open a chart your subconscious will access its library of chart patterns and identify them for you.

It may sound too good to be true, but I can assure you that it works.

2. People Don't Like Randomness

Sign warning of uncertaintyI’ve never met someone who didn’t like to have control over a situation. Whether it’s deciding where to eat dinner or how much to spend on your next home, having control is preferable.

Nothing about the market is in your control. You can’t decide how far the EURUSD will drop, and you have no say over whether the AUDUSD will move higher or lower from today’s price.

That doesn’t sit well with most people.

So what do they do? They try to control it by staring at the chart hour after hour as if attempting to control the market by telekinesis.

I joke, but I also know that feeling of helplessness all too well.

When I first began trading more than a decade ago, I had a real problem letting go. I can remember countless nights going to bed well past midnight because I couldn’t stop watching my trades.

I knew I couldn’t control the markets, but for some reason I couldn’t stop staring. I was addicted to my trades, and not in a good way.

So you know what happened next?

I made some terrible decisions. It became clear to me that the longer I sat in front of my charts, the worse my trading got.

One of the most important lessons I’ve learned over the years is to embrace randomness. Whether we like it or not, the markets will always exhibit a degree of randomness.

That’s why planning for every outcome is essential. Even the best trade setups can and will fail. It’s up to you to be prepared.

To get a jump on the competition, be sure to check out the late great Mark Douglas’ book Trading in the Zone. I don’t get compensated for recommending it, only the satisfaction of knowing I’m vouching for a book that helped turn my trading career around many years ago.

3. No Boss, No Rules

Chalkboard with no rulesMost of you probably have jobs. Whether you sit behind a desk, walk around helping customers all day, or work under the hood of a car, chances are you have a boss.

You may even have multiple bosses. Why have one person telling you what to do when you can have two or three, right?

I know the feeling. I used to work behind a desk as an engineer.

On paper, I had three direct bosses. That meant three people I had to go to every time I wanted a vacation, a LOT of meetings, and a never ending flow of assignments.

Essentially, I had a ton of rules. After all, an assignment from your boss usually involves a list of rules to follow so the outcome is satisfactory.

Another way to put it is that I didn’t have much freedom. I arrived at work every day knowing what needed to get done and in what order.

So how does trading Forex compare? Do you have a boss or multiple bosses? Do you have to ask permission to raise your leverage or add capital to your balance?

Unless you’re working for a trading firm, the answer to every question is no.

That gives you a ton of freedom. You can trade whichever currency pairs you like, deposit as much money as you can, and increase your leverage to the max.

You can also risk as much as you want on any given trade. In many ways, it’s the opposite of working for someone else.

But here’s the deal…

That’s all the more reason for you to develop a set of rules to follow. The very lack of rules in the Forex market begs you to make poor decisions.

The bottom line is that most people need rules and a process to follow in order to succeed. That’s true whether you’re trading Forex, writing a book or training for a triathlon.

If you’re curious what some of your rules should include, just have a look around this website. Every lesson and article is full of ideas you can use to construct your own process and set of rules for trading the Forex market.

Here are a few from Ed Seykota to get you started.

4. Patience is a Virtue

Man with hands tiedIt also happens to be an incredibly powerful and lucrative quality for a trader.

The issue is that most people lack patience. Whether standing in line at the checkout counter or waiting for a package to arrive, people don’t like to wait.

The irony is that waiting is the foundation of good trading.

In fact, if you aren’t spending most of your time sitting and waiting, you’re doing something wrong. Most likely, that “something” is losing money on subpar trade setups.

Let’s take a step back for a moment and connect the dots.

I don’t think anyone will disagree that most people lack patience. Not all, but certainly most in my experience.

Similarly, most traders lose money. Again, not all, but most.

Is that a coincidence, or is there something more to it?

After more than a decade of experience, I can guarantee you that it is not a mere coincidence. The fact that most people lack patience and that most traders lose money is as direct a correlation as you’ll find in this business.

So what’s the solution?

Have more patience when trading, of course. That’s easier said than done though, right? If everyone could simply “have more patience” there would be a lot more profitable retail traders in the world.

The good news is that there are a few simple rules you can follow that will help.

Use the daily time frame

Doing so not only produces more reliable buy and sell signals, but it also slows things down.

Instead of frantically searching for your next setup this hour, the daily time frame allows you to wait several days.

That may sound like a bad thing until you recall that less is more when trading the Forex market.

Aim for one to two setups per week

Give yourself a weekly limit of one or (at most) two trades. If you reach that number on Tuesday, you’re done for the week.

It’s up to you to hold yourself accountable because as I mentioned above, you are the boss. Nobody else is going to slap your hand right before you’re about to enter your third trade of the week.

It’s up to you. Write your weekly trade limit down somewhere visible and do not deviate.

Follow this rule for at least a month and see if your results improve. I can all but guarantee that they will.

Stop trying so hard

Yes, you read that right. It’s easy to think that the harder we try, the better we’ll become and the more money we’ll make.

However, trading is different. While exerting more effort toward your goal to run a marathon might speed up the process, ‘trying harder’ as a Forex trader can be devastating.

It’s how accounts get wiped out. You experience a series of losses so what do you do? You try hard to make back the money you lost.

You know what happens next. You lose even more money, right?

If you’ve been trying hard and thinking about Forex day and night yet you’re still struggling, try to stop caring so much.

Give your trading goals some breathing room and let the process work for you.

Final Words

I could go on for days about why people aren’t wired to be great traders, at least not from birth. The markets are built to prey on our emotions, and they’re incredibly good at what they do.

That means you won’t be a great trader in the beginning. It’s important to accept that as fact and to embrace the process.

Yes, trading Forex successfully is insanely difficult—and not because it’s complicated or requires some form of advanced education.

It’s difficult because you make it difficult.

You may disagree with me, and that’s okay. I’m used to it. Heck, someone disagrees with me every time I buy or sell a market.

It’s true, though. You are your own worst enemy in this business. Whether you risk too much, trade too frequently, gamble on the news, or all the above, it’s all your choice.

You don’t develop a process and set of trading rules because the market is overly difficult to read. You create rules to protect yourself from your own impulses and emotions.

Keep that in mind as you navigate the market and I guarantee you’ll find the process more enjoyable.

Your Turn: Ask Justin Anything

I’d love for this weekly Q&A to be successful and provide an invaluable repository of answers to common Forex questions.

To do that, I need your help.

Here’s what you can do to get involved and have your question answered in next week’s post:

  1. Ask questions. Post them in the comments below or Tweet them to me @JustinBennettFX
  2. Help me answer questions. If I missed something or if you have something to add, don’t hesitate to leave a comment below.
  • Jeff says:

    Brilliant advice & very much appreciated.

  • Vusi says:

    Thanks Justin for this educative article and I relate a lot. I like it when you say plan for every outcome. You know I used to approach the market with a mentality that it has to behave based on my will or my analysis. Secondly, you used to say nobody knows the next move of the market , since I have adopted that, I have offloaded a lot of stress and as a result the market can invalidate a setup and I will accept that unlike before. My accounts have been wiped out several times, I look forward to be in your members area because my account has been profiting since I joined your community.

  • William Beverly says:

    For any one currency pair, you would think that when the buy trade accumulates a positive pip, then the opposing sell trade would accumulate a negative pip. To test this theory, I entered eight or nine opposing buy and sell trades without stop losses. Over several days, what happens is that both buy and sell trades for the same currency pair accumulate negative pips. This doesn’t make sense to me! I have tried this several times and it always happens. How can this be explained?

    • Pierre Mifsud says:

      That happens when the market is not trending anymore….This makes price action restricted into running sideways. This also means that both the sell and the buy ranges are limited in range

    • ERIC says:

      If you enter 2 opposing sides of the same pair you will be in negative for both sides due to the spread. If the price doesn’t change enough to cover the spread pips, you will stay in the negative area for your ASK and BID.

  • Baoo says:

    It’s brilliant and thank you so much.

    From Indonesian 😘

  • Howard says:

    My daily journal is absolutely essential for my continual improvement as a trader. I use an excel spreadsheet listing each trade with comments, & especially lessons learnt next to my bigger losses. The error may repeat a few times but will soon disappear as I apply the lesson consistently. The desire to face one’s losses and learn from them has been essential to my growth as a trader. This is actually a fun process if one sincerely wants to learn, and I suggest getting this process down while using a practice/demo account. If you can’t make money on demo you definitely won’t make money on a real account. So take your time & learn these lessons well.

  • Wahyu Ari says:

    how to keep profits in forex trading, thank you

  • martin franzen says:

    Thank you for your helpful article I have traded for a few years without much success I keep trying with small trades , I seemed to have turned the corner .since receiving your comments and have become a better trader!! I have started trading with usd as my guide !all currency s trading with usd ! seem to follow the same path usd goes down the currency eur/usd goes up that is reflected in most currency s trading with usd I would like to hear your comments please ?! thank you once again!

  • Ejay says:

    Justin,this is very revealing and very instructive.I really appreciate the quality of your write-ups.Your insights are amazing.Thank you for sharing them with others.

  • AMIN MALIK says:

    Mr. JUSTIN ! Thank you so much for write-up of such a valuable article. In a nutshell, it fully reflects all that I struggled and experienced over many years. I am sure, who ever would follow it seriously, will become a profitable TRADER in due course of time. With regards,
    AMIN MALIK from Pakistan

  • Ayoola Adekunle says:

    Thank you so much for your efforts to see us becoming a great and profitable trader, my questions is this, you talked about cutting losses early and riding the winner trade but won’t the early exit from the market negate your notion of being patient? Thank you so much looking forward to seeing your answer

  • Isah says:

    Thanks for your lessons on trading.
    You said one should use daily chart for his trading. Do you mean just for analysis ? On which time frame should one actually place trades? I have tried to place trades on daily time frame in obedience to lesson from you but it had given me a hard knock when the trade makes loss.
    How can one know the ideal stop loss when trading with daily time frame?
    Do we use weekly or monthly time frame for analysis at all?

  • Winiefred says:

    I like the part where you said gambling with the news, well I watched a video of a certain trader revealing his secret of trading news and he said he puts buy stops and sell stops just 5 minutes before a given news, because you can’t know which direction the news will take, I would like to know your opinion on this topic.

    • Leo says:

      like yesterday eurusd – us retail news….. it move so fast and a bull trap too ^^,) . So don’t forget to set SL too in my experience

      • Arome Samuel says:

        Thanks, but is it advisable to trade without putting stop loss?

        • leo says:

          I like to figure out this kind of setup and thought it is flawless , even though we put SLs – anything could happened and in some case the price could touch the SL before it bounce/turn back.
          It so volatile too fast and could end up buying a price that already Hegh (vice versa) if try to re entry.
          so Putting SL range is another challenge too ^^,)

  • shahadat says:

    Sir here you weekly limit of one or (at most) two trades.but you give me more signal,i mean one pair weekly can give u one or (at most) two trades,other Q BASIC pair trade good or corelationpair,or good signal is good trade which on is right, thinks that looking for trade signal opportunity ,thanks

  • Segun A. says:

    Nice one, hope for more tips on FX in future..
    Thanks

  • philip akinola says:

    You have stated the obvious when you said that in forex you buy ,sell or do nothing.Because of this your chances of winning or losing is 50% but this is not the case in reality. My question is that dont you think that the forex brokers are the one manipulating the market to their own advantage

  • Felix says:

    Hello Justin, do shed light on where and when to enter trade.

  • Milan G says:

    Hi Justin. You mention Ed Seykota who says “Cut your losses and ride your winners”. However, how often don’t we see a winning trade turn against you, giving up all your profits and then even hitting a stoploss. So at which stage do you decide to cut your losses in a situation like this without trailing your stoploss by too much? I find this to be one of the most difficult things about trading. Any advice please? Thanks for all your valuable work

  • Rasaq balogun says:

    I quite learnt a lot in the article. Thanks.

  • Henry osita says:

    What of, if one decide to trade with the help of a software? Can’t that reduces risk? Thank you.

  • Richard says:

    Fantastic- Your comments, advice, should be posted on every traders wall, wallet, computer, night table.
    True, as humans we are always are worst enemy.
    Thank You Jason Keep up your excellent work.

    Richard

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