We have been asked this question numerous times when intrigued investors wanted to know why they couldn’t make quick bucks in trading. If you look at this industry from diverse perspectives such as techniques that help to make money without waiting like scalping, this came into our mind that it is a quick money making machine. All we need to do is make some decisions and the trend will favor them in the end. This is a big misconception because there is no way investors can make a profit that easily. It takes a lot of time and effort to master the basics.
In this article, we are going to debunk misconceptions about why traders fail to make a profit consistently even after doing the hard work. Some of you might have anticipated this is going to be an interesting article and ready to dive into the details. Without any further delay, let’s get into the details of this article.
Scalping or day trading does not assure a profit
First of all, the scalping method needs to be addressed. The idea behind believing in a get rich quick industry is those plans that are followed by millions. This particular style allows an individual to make benefit from the erratic movements on the chart. As the patterns are not consistent they wait for an opportunity when there is going to be a sharp increase or decline. Scalpers only stay for a few moments but make a substantial gain based on their deposit. Although this may sound like the perfect strategy, they do undertake risks. Sometimes volatility can simply turn against and capital will be lost within few seconds.
Unlike the long-term strategies, they stand zero chances to recoup the money. Due to the nature of their formula, any loss becomes much worse. The same goes for day trading. The only difference is a trader can hold the position for a day but not more than that. If the decision is accurate, they make a profit, but otherwise they face a loss. In both scenarios, any small scenarios can affect the value drastically. Their prior success can be wiped away by one bad decision. Think about the pro traders in the commodity trading industry. Most of them prefer to trade in a higher timeframe as it offers them a better opportunity to make money. So, try to trade in the higher timeframe to reduce the risks in trading.
The trends are not predictable
Now comes the part of volatility that makes people confident and numb from time to time. Unfortunately, there is no certain formula to predict how the day is going to end. Forex is a global market where news from every participating nation affects the currency pairs’ price. Even if a nation is not on the list, correlations can still change the outcome. Major holidays have a significant impact and these factors can make things more complex. If you believe the patterns are simple, demo trade using virtual money. The moment a person thinks he has got the idea that the pattern changes, he is back at the initial phase of the market.
Though the market is very dynamic, you can still use some special tools like Fibonacci retracement, trend line, and major chart patterns to identify the trend. But make sure you use this tool in a higher timeframe. While taking a trade, keep your risk exposure low because nothing is certain in this industry.
No examples of quick rich individuals
Probably the most concrete evidence is the lack of proof that would change their mind. Never mind professionals. They have spent a lifetime trying to understand this mystery. Experts may look like it’s easy to accomplice but takes a lot of effort. Before trying to do so, learn about the life stories of successful investors. This would open their eyes and make them realize there are no shortcuts to achieving success in trading. Only with strong devotion, hard work, and determination, can you succeed as a trader.