5 Reasons Why Early Success in Forex is Worse than

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Before dipping your feet into the waters of forex trading, you are warned that losing is part of the game. In fact, you are aware that there are more losers than winners. Nevertheless, you educate yourself, take this thing into account and enter the markets cautiously.

And now, you begin having success: you win a trade and then win another. Your confidence grows. Personal confidence is a great thing, but it can be too much. After a few successful trades, you begin feeling that you are invincible. And that’s when trouble begins.

Here are some of the things that happen when you become overconfident:

  1. Taking larger trades: You have more money in your account, so you can enlarge your positions and make more money. Greed takes over. Well, are the larger trades proportional to the larger account size or far off the mark? The latter is probably what happens and you begin risking larger portions of the account.
  2. Taking more trades: If trading makes money, more trading makes more money. However, this also enhances the chances of losing more money.
  3. Moving stop loss points: With more cash at hand, you feel you have the capacity to bend the rules. It may result in a larger loss rather than a wider range for your trade.
  4. Trading at hours you wouldn’t have traded beforehand: Why not expand trading hours with proven success? You forget that your system may not necessarily work, you might be tired and that you might be losing touch of the big picture.
  5. Neglecting trading plans: Upon having success, you may feel that the system is not behind this success, but rather you and only you. So, what good is a system when the real trader is inside and you can win any trade with your skill? Also here, the road to a margin call becomes short.

So, perhaps it is better to have very limited success at first, or even suffer some losses, in order to avoid the crash following an early success.

What do you think?

Further reading: 5 Most Predictable Currency Pairs

Get the 5 most predictable currency pairs

About Author

Yohay Elam – Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I’ve accumulated. After taking a short course about forex. Like many forex traders, I’ve earned the significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I’ve worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.

42 Comments

  1. great article. almost felt the article is written to me. i suffered some losses because of greed at the start. now hopefully things gets better

    bottomline is still money management and stick to a trading plan.

  2. Hi Yohay, great article indeed ! Hope to learn more from your website. By the way do you have an app for ipad ?
    Appreciate,
    Rgds,
    Zeddy

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  4. Hi Yohay, did you burn your fingers earlier in this business? If yes, how did you go about mitigating the situation?

    • I burned my fingers after having early success. The solution was to restart: open a new account and do things differently.

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  26. I think demo accounts and high leverage are also responsible for some sort of early success consequences. I remember several years ago when I opened my demo, after many years of trading stocks without leverage. I did feel surprised to see my virtual 100K USD to grow to 140K USD in less than a week! But when back to real trading, things went wrong quickly! A broken account was the price I paid then for learning forex specificities.

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  33. Khizar Hayat on

    You are doing a great job here. This website is one of the best I have come across in the domain of forex. This particular article is quite good. Only a person, like myself, who has suffered the early losses after wins at initial stages can truly appreciate what you are saying in this article. Good work.

  34. It’s a relief to read this particular article about early success is worse than early failure. Interesting too that I, like you, have a BSc degree in Computer Science and also majored in Economics, and Forex fascinates me. I finally started to trade only 7 months ago and after 3 months on demo account, went live. I started with only $1 and $2 per pip trades with strict limits and stops. I had a nice success rate over 3 months so felt like I had proved my strategy. Then I did almost all of the overconfident things you listed. Totally blew my strategy, went in bigger and started trading too late and too early, burning the midnight oil. Now I have officially had my first BIG crash and I am kicking myself. Back to basics! Sucks to experience the ‘train wreck’ to discover you’re not invincible! LOL! Thanks for sharing your knowledge!