5 Mistakes Preventing You From Making Money Trading

So you’ve just funded your trading account again, and this time you feel confident that you will start making money in the markets. After all, you ‘know’ what you did wrong on that last big losing streak that blew your account out and you’re confident you won’t make the same mistake again. You feel disappointed that you lost a lot of money but the new funds in your account give you a fresh start and you feel like you are ready to tackle the markets head-first and get on the right track.

Sound familiar? Many traders have been in this same situation, usually multiple times. A lot of traders get a false sense of hope by adding additional funds to their trading accounts or by just thinking that ‘this time will be different’. Unfortunately, neither of these things are actual solutions to the reason(s) why you blew out your last trading account. It’s time to stop glossing over your trading mistakes by refunding your trading account, reading economic reports, or buying some new trading system. The REAL reason you are losing money time and time again is lodged in the gray matter between your ears.

Let’s take a look at 5 of the most common mistakes that prevent traders from making money in the forex markets and consider some solutions for fixing them:

1. You’re obsessed with trading

Are you a trading junkie? Do you eat, sleep, and breathe the Forex markets? Do you forget to pick up your kids from school or leave food in the oven because you can’t stop watching your charts? This is reality for some traders who are obsessed with their trades; I have actually received emails from traders telling me they forgot to pick up their kids from school because they were so fixated on the markets…

While you may not have quite that strong of an obsession with trading, I’m willing to bet that if you are losing money consistently you probably have an unhealthy attachment to the markets, at the very least. If you are thinking about your trades all the time, checking the markets on your phone while at work, or not sleeping well at night because you are worried about your trades, you are probably overly-attached to your trades.

• Why are you obsessed with trading?

Do you feel every pip for or against your position? Are you finding any little reason you can to enter or exit trades, move stops, etc? All of these things are the result of being too emotionally attached to any one trade.

The reason you are emotionally attached to your trades is because you have put too much ‘need’ into making money from the markets. You’ve put all your eggs in the Forex trading basket; you see no other way to find happiness in life. These feelings cause you to risk too much per trade, and / or to over-trade your account. Once you start doing this you are DOOMED. You have to WAKE UP and accept that there are no short cuts; you have to actually practice proper forex money management, you have to be patient, and you have to be disciplined. If you can remove the emotional attachment to each trade you enter, you will be on the path to making money in Forex.

2. Interfering with trades

There’s a very good reason why I stress “set and forget trading” in my education course and members’ area, and why it’s a core part of my trading philosophy. Simply put; it works…

Here’s why:

Remember when you demo traded and you felt no emotion because you had NO MONEY ON THE LINE? Well, the same is true when you are flat the market on your live account; you feel no emotion, and because of this your decisions are much more objective and logic-based.

So, this means when you are flat the market and planning your trades and waiting for the perfect forex price action setup to form, it’s the most objective and effective you will be in regards to analyzing the market. Once you enter the market you immediately have a haze of emotion clouding your thinking patterns. Even if you are managing your risk properly, you are still going to be slightly less objective and logical after a trade is on than before.

This means that fiddling with your stops and targets after the trade is live or adding to positions is generally the wrong thing to do…because these decisions contain more emotion than decisions you made prior to the trade. So, we can say that your brain is at its peak trading performance whilst you are NOT IN THE MARKET, and thus your trading decisions carry the highest probability when they are made before entering the market. In short, setting and forgetting your trades is the best strategy for forex trade management over the long-term.

That’s not to say that there aren’t times when trailing your stop or closing out a trade based on a huge reversal signal doesn’t make sense. But, the point is that more often than not you should simply set and forget your trades, and beginning traders should always set and forget until they have reached a high level of trading skill and success.

3. Over-analyzing and over-thinking

Does the following scenario sound familiar? You doubt whether or not the trade you just entered was a good idea, so you go read some current economic news to see what analysts are saying about global markets. You think you better close your position because you are reading news reports that seem to contradict your trade. You close your trade out and feel a sense of relief for 5 minutes, only to check the market again and see that it has rocketed off in your favor…

This is called second-guessing yourself; it’s the result of not having confidence in your trading abilities and / or not believing that the chart reflects all variables of the market.

Reading everything you can find related to your trade and analyzing every chart in order to find “evidence” that supports your trade is simply counter-productive. You and I both know that you can find just about anything if you look hard enough on the internet. The same is true in trading. If you’re long the EURUSD, you’re likely to find some analysts citing reasons why the market is about to tank whilst others are talking about why it’s strong. If you look for it on the internet, you will find it, but that doesn’t mean it has value.

The way out of the over-analysis and analysis-paralysis syndrome is to simply accept that the chart reflects all market variables, and then learn how to read and trade the raw price action strategies that form on it. Once you gain confidence in your chart-reading skills you will forget about all the contradictory news reports floating around the web. Trust yourself, not some over-paid analyst…after all he is an analyst…AKA probably a failed trader.

4. Searching for the “Holy-Grail” trading system

I have a big secret for you guys. I know what the “Holy-Grail” of trading is. It’s called patience. It’s true; patience is the most important ingredient to Forex trading success. If you know what you’re looking for in the markets, and you only trade one time a month, but you make say 5% a month…what’s wrong with that?

Too many traders are trying to double their accounts every month in some vain attempt to get rich quick. This is what fuels the futile quest for some “Holy-Grail” trading system, then when traders realize there is no perfect trading system they simply revert to gambling because they simple can’t stop trying to get rich quick.

I am telling you that patience is the closest thing to the “Holy-Grail” that you will find. Patience comes when you have mastered your trading strategy and have built a trading plan around it, because then you will KNOW 100% what your trading edge is and when to trade it. You have to commit and believe in one concept at a time, master it. Don’t chop and change every time you lose a trade or two. Your doubt, greed and uncertainty need to be controlled; otherwise you will never make consistent money in the markets.

5. Trading with confusing programs, indicators, or other ‘magic’ methods

Recently, we had to shut down a thread in our members’ forum that was getting out of hand because it was based off a confusing and complicated trading technique. People seem to have an innate tendency to be drawn to complex and confusing trading systems; it seems to be in our human nature.

Simply put, mechanical trading systems, EA’s, and indicators are B.S. trading strategies, here’s why:

• The markets are dynamic and constantly changing, a rigid set of trading rules cannot effectively trade a dynamic market over a long period of time. Market conditions change, whereas computer systems are programmed according to a rule set, and they cannot re-program themselves every time market conditions change. This is why your brain wins the battle of the human mind vs. computers in Forex trading, over the long run.

• A computer does not know when to have patience and when to not have patience. A finely developed sense of discretionary price action trading will beat a computer every time, because there are a lot of subtle ‘clues’ that only the human eye and mind can pick up on. If a computer or EA sees that its pre-programmed conditions are present in the market, it will issue a buy or sell signal regardless of any other variables that may clearly imply to stay out of the market.

• Human emotions and perceptions of ‘fair price’ of a market are the main drivers of price movement in any market. Therefore, why would you attempt to read or trade the market with forex indicators or robots? In other words, a human is clearly going to be the best candidate for reading and making sense out of human-derived price movement.

Humans make the best traders, provided they simplify their trading approach and don’t get carried away with indicators, robots and other overly-complex ideas.

For some odd reason, most people just can’t accept that making money in the markets does not need to be technically complicated. The markets are a lot simpler than most people think; they are really just reflections of human behavior as plotted by the price action on the charts.

This price action tracks the thought process of all market participants and reflects their aggregate view of the market. Thus by learning to read the simple price action of the markets we can find patterns and setups, and predict price movement with a high enough probability to profit; simple works.

Ask yourself why so many traders fail so often with quick-fix, complex, and outrageous ‘magic’ trading methods like Elliot wave, Fibonacci extensions, and indicators like Stochastics, MACD and RSI…this stuff is haphazard at best and catalysts for blowing out your trading account at worst.

In my opinion, to make it as a trader we must go back to basics, wipe everything off the chart and go back to the ‘organic’ picture of a naked price chart. I know more successful price action traders than any other type, this speaks volumes. KEEP IT SIMPLE STUPID.

If you want to keep it simple and learn how I trade with price action, feel free to check out my advanced price action trading course & trading newsletter here.

Nial Fuller

About Nial Fuller

Nial Fuller is a Professional Trader, Investor & Author who is considered ‘The Authority’ on Price Action Trading. His blog is read by over 200,000+ followers and he has taught 25,000+ students since 2008. In 2016, Nial won the Million Dollar Trader Competition. Checkout Nial's Professional Trading Course here.