PR Release Oct. 23, 2013
While the federal government shut-down has come to an end, and growth in China's export
market has lifted the global
economy this week, the landscape remains decidedly uncertain. Even as
developed economies throughout the world have showcased considerable signs of
growth during the second and third financial quarters respectively, these
developments are being consistently undermined on a global scale. This is
having a considerable impact on the forex market, which is suffering from even
greater levels of volatility than usual.
The
Challenges Facing Forex Traders
With this in
mind, it is worth considering the main challenges facing contemporary forex traders
and the steps they can take to overcome them. Consider the following: -
A Failure to
Appreciate the Market's Complexity: One of the
biggest issues facing traders is complacency, especially if they fail to fully
comprehend the complexity of the market. The forex market is the largest and
most volatile financial environment in the world, and it is therefore crucial
that traders establish a core knowledge base and prepare for what is in store.
Opening a demo trading account through your online brokerage firm is an
excellent way of achieving this, as this allows you to practise your strategy in
a real time but simulated environment.
The Lack of a
Trading Strategy: Without a viable trading
strategy, it is almost impossible to achieve success within the forex market.
When operating in such a volatile and changeable environment, it is imperative that
you boast a certain level of determinism, and establish a strategy that is
compatible with your investment philosophy. This will ensure that you are
comfortable with your strategy, and therefore able to implement it in the quest
for long term gains. To determine which method of trading is right for you, you
need to acquire as much knowledge as possible about both the market and
derivatives involved.
The Threat of
Human Emotion: Automated trading has become hugely
popular in recent times, primarily because it executes trades based on
predetermined algorithms and eliminates unpredictable human emotion. Adopting
an emotive approach as a trader can seriously hinder your chances of success,
as it may cause you to abandon a potentially successful strategy after a poorly
judged transaction or sudden loss. In short, traders who are governed by
emotion make snap financial decisions, which make it impossible to pursue long
term gains. To balance this, however, it is important to remember that human
instinct will emerge as a valuable tool in your armoury as you gain experience
of the forex market, and one which can be sued to great effect.
The views and opinions expressed herein are the author's own, and do not necessarily reflect those of EconMatters.
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