WARNING: This is a relatively lengthy article. But if it is an article aimed at helping you save your hard earned money, then it is definitely worth the read.
On an average month, I interact with hundreds, if not thousands, of Kenyan Forex Traders both physically and through my numerous social channels and most will complain of having lost money at one point or another while trading forex. I have discussed this extensively with my students and the following are the Top 9 reasons why Million shilling forex accounts go bust in the blink of an eye.
- THE AUTOMATIC MONEY MACHINE: For some inexplicable reason that I am yet to figure out, very many traders want to earn money from forex but they simply don’t want to sit down and trade. Neither do they care for a proper forex class. They believe that a robot, a signal provider, an automated forex software, a guy who you give your money and he sends you profits every fortnight, a powerful super computer in Russia, an Expert Advisor (EA) file, a market forecasting network or a hack in the brokers system will miraculously vomit millions upon millions of dollars – risk free – at the click of a button.
Not gonna happen.
I have repeated this many times during my forex classes and even here on this site and I will repeat it again for the benefit of those who have lost money via the aforementioned shenanigans and they are wondering what went wrong. “The only way to profitably trade forex is (surprise surprise) to SIT DOWN and TRADE FOREX!” Forget all the antics above and please sit down and trade. Simple!
- IGNORANCE: To trade forex profitably is to earn a 6 or 7 figure salary when converted form Dollars to Kenya shillings. You are looking at potential earnings that exceed those of your legislator or former boss. Now, do you sincerely think you are going to earn that much by reading two or three ebooks or skimming through a blog? You want to earn more than a surgeon at Kenyatta National Hospital on the strength of a couple of Youtube videos and a ‘Super Profitable Money Minting Strategy’ that you copied from a facebook page?
Let’s get serious people. Just like in all other avenues in life, you will be required to invest in yourself if you are going to be any good at trading forex. I am both a forex trader and a forex trainer but every day I learn something new both from the markets and from my students. Attend Seminars, discuss with fellow traders, find a mentor, Sign up for a forex class, learn from your mistakes and give yourself time to master the basics. It is not going to happen overnight.
- WILD AND UNREALISTIC EXPECTATIONS: Can someone make 1 million dollars in forex in less than 10 minutes? Yes. But unfortunately, that someone is NOT YOU! Sorry. To do this, you need to have a very huge risk capital (in excess of 25 million shillings) and you must be a very experienced trader able to correctly predict a huge spike in the market precisely and exit the market within the few minutes that this happens so as to grab your million in the blink of an eye. It is a very hit-or-miss risk only undertaken by the best or the best (or the foolhardy lucky) with several years of market analysis and trading experience. For now, stick to your strategy pal and enjoy your modest profits. Speaking of strategy…
- LACK OF STRATEGY: I get the opportunity to train people who have been trading forex for a year or two and I am always shocked at the fact that some of them have never had any clear strategy – just gut feelings and a good ‘vibe’. AND YOU WONDER WHY YOU ARE LOSING MONEY?? How do you know if the market is moving up or down? How do you know when to buy or sell? How do you know that the tide is about to turn and you should exit before all your profits are swallowed by the market? To trade forex without a solid (underline solid) strategy is to pit Chuck Norris against a mongoose in a Kick Boxing fight. In this case, sadly, you are the mongoose.
- HOLY GRAIL: Still, on the issue of strategy, I probably need a baseball bat to hammer this point in but, oh well, here goes: BANG BANG BANG! THERE IS NO HOLY GRAIL! And don’t make me pick the bat again because I will!
There does not exist THAT ONE BEST strategy which if you get it you will become profitable for the rest of your life. Stop jumping from strategy to strategy looking for one with zero losses and 100% profits. THAT IS HOW TRADERS LOSE MILLIONS! Master one or two strategies and you will always giggle all the way to the bank…
- THE COPY PASTE SYNDROME: No two forex traders are alike. I have trained many of them so I should know. Always look for a trading system that is in tune with your personality. Just because you have watched a video of a long term trader who is profitable does not mean that if you copy his system you too will be profitable. If you are innately impatient, you are better off with a short term strategy. If you are inherently analytical, a chart based system will be better for you. And if you are well versed in current affairs, trading that incorporates fundamental analysis will suit you well. Trade in a style that you are comfortable with and you will always make money. Go copying everybody’s style from whatsapp groups and youtube videos and you will forever wonder why they are constantly profitable and you are incessantly broke.
- WRONG MENTALITY: Uuuuhhm, how do I put this? BOSS, THIS IS FOREX! This is not Stocks, this is not Bonds, and most definitely, this is not Securities. Take time to learn the difference between Forex and all these other instruments and you will immediately realise that the trade dynamics are VERY DIFFERENT. Do not try to adapt you stock trading success to forex – You will fail. Hopelessly. In the words of a famous movie which I cannot recall right now, “Forget everything you have learned up to this point and empty your mind,” so that you can fill it with fascinating and immensely profitable forex information.
- SMALL AMOUNT: Always endeavour to match the quantity you bite to the size of your mouth. In forex, there are several distinct advantages that come with having a huge account including earning more dollars per pip and being able to withstand huge drawdowns as you wait for the market to turn in your favour and push you back into profitability. Have realistic expectations when you have, say, a $100 account. The same applies for Kenyans with $1,000 and $10,000 accounts. These might seem large in Kenya Shillings, but in the US these are the amounts traded by practicing high school students. Do not take your $100 account and put a 1000pip stop loss. You will be wiped out faster than a skid. Do not use your $1000 account to place a very long term trade meant to run for half a year when, clearly, the risks outweigh the benefits. Know the size of your account and apportion your trades wisely to always reap maximum profits out of the market.
- THE ORACLE UP IN THE MOUNTAINS: Do you have any idea how many people I have met who always start their forex story with, “I once gave a guy 1 million shillings to trade for me and he lost the whole amount…” or “There is this guy who makes really good profits in forex so I want to take a 1 million shillings loan and give it to him to trade for me…” THREE THINGS;
(a) LEARN HOW TO TRADE FOR YOURSELF: You will be calmer and more relaxed and the lack of pressure from a third party will ensure you make healthy trades.
(b) LEARN HOW TO TRADE FOR YOURSELF: There does not exist a forex oracle up in the mountains who takes people’s money and doubles it every X days/months.
(c) LEARN HOW TO TRADE FOR YOURSELF: With time, you will learn that this is the best way to do it.
‘Nuff said. My Full Forex Classes are the cheapest around town at only 35k (HERE) and to book you only need to call me on +254736600868. STOP LOSING MONEY AND START ENJOYING YOUR FOREX CAREER NOW!!!