When someone becomes a successful trader in the forex market, they are celebrated by everyone and many beginners see them as role models and try to follow in their footsteps. But while celebrating their success, the struggle that they went through before realising their goals goes unnoticed. Because of this many new traders think that forex trading is an easy way to make money which is far from the truth. There is no doubt in the fact that forex trading can be very rewarding for those who have the skills.

However, there are a fair share of challenges that you must overcome and this blog can be an informative read to help you in the process.

1. Not Having A Clear Trading Plan

This is one challenge that makes trading 10x harder for a beginner. You should never attempt to trade in the forex market without a plan. But just having a vague plan will not be helpful in your trading journey. Your trading plan should be clear and you need to pay attention to the details to avoid any kind of confusion. If your trading plan or strategy is too complex, you will not be able to follow it properly. You need to set some rules and the trading process should be carried out within the set rules.

For example, you need to decide the trading style, timeframe and risk per trade while devising the trading plan. You should not be risking more than what you had planned to in any situation. This also applies to the amount of leverage that you will be using for maximising your profit potential. When you trade with high leverage, you are increasing the risk and if the losses go beyond a limit, your positions will be closed out after a margin call.

Thus, you need to make sure that you have sufficient capital while creating your trading plan. To calculate the required margin, you can take the help of a margin calculator, which quickly finds out the required minimum funds on the lot size you wish to trade. If not, you need to adjust the trade size and leverage based on how much funds you have. While finalising your trading plan, you need to make sure that it perfectly aligns with the goals that you want to achieve as a trader. You should also come up with a plan for managing the risk after assessing your risk appetite.

2. Lack of Patience

Trading forex can indeed be very lucrative and you must be eager to make some profits as soon as you start trading. But you should not become restless or impatient as you will have to wait for a while to get the desired trading results. Hence, those who lack patience will have a hard time in the initial phase and they will make costly mistakes due to their desperation. In order to overcome this challenge, you should be trading with a long-term approach instead of chasing quick gains.

Now how can you overcome this challenge and develop patience? First, you need to get rid of unrealistic expectations as they can often lead to disappointment and dissatisfaction. So, you should trade with reasonable targets and admit your mistakes when you encounter losses. You should not blame the market when your plans don’t work. Just reflect on your decisions and try to identify the shortcomings in your strategy and fix them to get better results.

3. No Prior Experience

Being a beginner, you will have to deal with the challenges that come from not having any prior experience in trading. You will feel overwhelmed with the frequent fluctuations that happen in the forex market and it will take some time to get familiar with the trading environment. You don’t have to be tech savvy for trading on the advanced platforms but you should be able to use the tools and features in the best possible manner. Continuous practice is the only way to overcome this challenge.

You will be able to clear a lot of doubts by simply opening a demo trading account for practice. You will not only get to observe the real-time market conditions but will also be able to test your strategies and try some new trading techniques without any fear. Because the money you trade with on a demo account is not real and the trading results will not affect you as it has nothing to do with the live currency market. So, spend enough time on a demo account and gather some experience.

4. Lack of Discipline

Another challenge that leads to losses in forex trading is a lack of discipline. Being disciplined is important to stay on the right track without deviating from your strategy. In order to build trading discipline, you have to make conscious efforts. You need to remind yourself about the consequences of not sticking to your plan. Habits like overtrading and impulsive trading can be attributed to a lack of discipline as you don’t follow a routine for trading by fixing the trading hours and setting limits.

Many traders are unable to exit their trades at the right time as they don’t stay true to their plans. To avoid such trading pitfalls, you should enter a trade with a definite exit plan by placing take profit and stop loss orders to automatically close the trade whether it is a win or loss. You can use tools like trading calculators to get precise calculations, which will help in better planning and management of your trade positions. You need to take calculated risks and limit the potential losses to preserve your capital.

5. Psychological Complexities

Your mindset and thoughts play an important role in the trading process. No matter how much you try to focus on logic as a trader, there are times when your emotions interrupt your thinking process and you end up making wrong decisions in the heat of the moment. Thus, you should study the psychological complexities that you will face while trading and learning about trading psychology is the only way to deal with this challenge and manage your emotions in a way that they don’t influence your trading decisions.

All traders do get excited about the money they can earn and sometimes this excitement makes you impulsive and over-optimistic as you don’t think about the possibility of a loss while chasing profits. Greed is another emotion that you will experience from time to time. You will often feel stressed and this can also turn into fear and anxiety. The fear of losses is understandable and it helps you to trade safely but if this fear stops you from entering trades, then it means that you lack confidence.

FOMO or fear of missing out on good trading opportunities is another type of fear that many traders have. This fear forces you to jump on every opportunity that you come across and place random trades without a plan. When you are unable to control your emotions, you should take a break and practice mindfulness.

Conclusion

To conclude, those who are planning to trade in the forex market must be prepared to deal with the challenges and risks. The rewards you get in the end are surely worth the effort and you just need to stay committed to your goals and move forward with a professional approach.