Forex Trading: What Makes Most Amateur Traders Fail?

Method complexity syndrome is a chief culprit that strikes novice traders repeatedly. They investigate a trading method, make a purchase, and the second they get it in their hands, they fast-forward to where “the guts” of the method appear to be located. By going at it like that, they entirely disregard the other important parts of trading, like risk management, psychology, and discipline.

They dive into the “guts” of the method searching only for that huge, magical, eye-popping, thigh-slapping “secret” that will swiftly reveal the key to the Forex lockbox and enable them to become Master of the Universe in the Forex world. Again and again, they end up feeling entirely deceived or dismissing the “guts” as something familiar (but had never pursued further). Novice traders will then reject the system as “too easy”.

More often than not, the amateur trader gets hung up in searching for some secret complicated formula, or some arcane mixture of signs, signals and omens but what they usually get is nothing more than a set of basic indicators that come together in an unusual way, and they think, “Well what’s so special about that!” Then they get angry or become disillusioned, because in their heart of hearts they truly believe that any successful method HAS TO BE complicated; they won’t let themselves see that it really can be that SIMPLE! Therefore, they put aside the method or send it back and criticize it because it is “not as complicated” as it should be.

This is a dangerous error because the novice trader will then make this same mistake again and again, whatever the method, and they will fail to take the time to study and comprehend the whole process of trading.

Avoid making this mistake. You must comprehend that the majority of trading methods are pretty simple. They put together a smaller unit of rules in a simple way (sufficiently simple for any person to successfully use them) but apply them in a novel manner. Complicated methods are for computer gurus and major banks – how can you possibly use something if you cannot comprehend it?

Don’t jump ahead when learning a strong new technique for trading Forex. Be sure that you figure out the rules for getting setup, getting in, and getting out (these all should exist. Learn how to employ stops to protect your trade. Whatever your method, learn how to use it in a timely manner (whether it is by the hour, the week, the day, whatever) to make your method the most effective it can be. Learn how to make every aspect of your knowledge come together to improve your success as a trader.

Don’t Forget, Simple but Powerful – The trick to getting an upper hand in the markets is to use only a limited set of indicators or rules utilized in a non-textbook manner.

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