Six Reasons Why You Need a Day Trading System
Every day more than 5 billion dollars change hands in the forex market The EUR/USD is the most traded currency pair. As a retail trader, you can win or lose thousands of dollars in a few minutes; the Forex market can make you rich just in a few weeks or months. Or, the Forex market can or wipe out your life savings in a matter of minutes.
If you want to compete in the largest market in the world, then you need to be prepared. There are too many gamblers with high expectations but without any plan or strategy. They are completely unprepared, and that’s why they will lose. Trading Forex with a system will dramatically increase your chances of success because it eliminates five of the top six reasons why unprepared traders fail.
Here are the top six reasons why Forex traders crash and burn, and how a trading system can eliminate them.
Here are the main reasons why Forex traders lose money:
- Do not have a good trading plan
- Have a lack of discipline to and do not follow the trading plan
- Do not control their emotions
- Do not accept and limit losses
- They have a lack of commitment
- They are over-trading
If you want to profit, you need to avoid these mistakes. Here’s how a trading system helps to eliminate the top reasons why traders fail
Have a trading plan
If you have a Forex trading system, that means you have a predefined set of rules you have developed to govern your trading decisions. Therefore you have a trading plan, eliminating the first cause of failure.
Follow your trading plan
The best way to follow a trading strategy is by automating it. Nearly any day trading system can be automated, and you could let a software program trade for you. This way, you won’t have to worry about your discipline any longer, as the computer mechanically trades every setup for you.
Trading with a system extracts emotions and speculation from the decisions you made previously. If you don’t have a Forex trading strategy, and you try to make decisions when the market is moving, you are likely to become emotionally connected to your trades. If and when the market does not move in your favour, you can experience alarm and uncertainty, as you do not have a prepared response. That’s when most traders lose their money. Suppose you follow a system, instead of your feelings; you will know what to do regardless of what the market does.
Limit your losses
You may have heard the expression let your profits run. Unfortunately, most traders let their losses run. A Forex trading system will get you out of a position when the predefined stop is hit.
Many new traders show a lack of commitment. Therefore they lose money. A lack of responsibility means that they stop trading after the first few losses, and don’t give their system a chance to recover the money they lost. Trading is not a one-way street, and losses are part of trading. If you can’t acknowledge that losses are inevitable, you shouldn’t trade. Thankfully, a trading system can help you to overcome this problem; an automated trading system continues to trade according to the rules that are programmed, and therefore adds consistency to your trading.
As you can see, most of the primary reasons that cause traders to lose money in the Forex market are eliminated easily when you start trading with a strategy. While there are no guarantees, your odds of making profit rise significantly when trading with a system.