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The forex market is one of the most popular trading markets because of its particularly large capacity and liquidity along with a tendency to develop strong trends.
These characteristics certainly help all market participants achieve the greatest success possible.
Nevertheless, not everybody has the same level of success, usually for the following reasons:
Some traders have the wrong profit expectations or simply lack discipline. Short-term trading is not a game for amateurs and is also not usually a path to fast riches for beginners. The currency exchange markets also have to follow the rules of financial markets. As a trader you should never hope that taking extraordinary risks will bring extraordinary gains. A trading strategy that relies on a high degree of risk always results in inconsistent performance.
Of course, currency trading is also not easy to master. It is important to understand that successful trading requires endurance and it is not a quick journey.
Many investors are tempted by the high degree of leverage. Just because the lot for a currency pair with the default account only requires 50 euros of margin for the length of the trade, does not mean that traders with an account balance of 2,000 euros should trade with 10 lots, or even more, at one time. A lot equals 10,000 units of the base currency in the pair being traded and needs to be viewed as such, and not an investment of the 50 euros required to meet the lot margin requirement. Many traders analyse their charts correctly and make reasonable trades. However, some tend to over-leverage their accounts by entering into trades too large for their account balances. As a result they are then forced to close the position at the wrong time.
For example, a trade of 5 lots with a leverage of 200:1 and an account balance of 2,000 euros represents a significant risk based on trading volume in relation to the size of the account. Professional money managers are not permitted to make trades with ratios on this order of magnitude. Long-term success can only be achieved by trading at conservative volumes.




Trading Myths


