By F. Robey

Forex trading isn’t for sissies.

Savvy traders can make a lot of money with foreign exchange (FOREX) trading, the simultaneous buying of one currency and selling of another in an over-the-counter market. But most who try it (95%!) end up losing their money and quitting.

So why not find out right up front what they’re doing wrong?

Here are 5 ways to lose your shirt with FOREX.

1. Leap Before Your Learn. Because FOREX is so “hot” right now, new traders don’t take the time to learn. Instead of waiting until they understand the fundamentals, they follow advice and tips from other traders. So if you’re not going to take the time to learn how to make sound trading decisions yourself, hire someone to trade for you!

2. Thinking Demo Accounts are Real Life. While using broker demo accounts may be a helpful learning tool, they are not the same as real-life accounts! Time sensitivity is everything in this market, and you don’t get that with demo accounts. When you deal in real time, with real money, the real action begins. So be real careful!

3. Forgetting Trades Happen in Pairs. If you make the right decision about one currency, you’re only half-way there. You have to be right about the second currency that makes up the pair. So be twice as diligent!

4. Getting Upset by Losses. If you’re afraid of losing money on a bad trade, that’s OK—as long as you don’t let that fear keep you from acting. If you do, this isn’t the investment method for you. This is a very volatile market and you need to accept that losses will happen. So accept them when they do, and move onto the next trade!

5. Chasing Short-Term Gains Instead of Developing a Long-Term Strategy. You might get lucky and make a few bucks right away, but the FOREX is not a get-rich-quick scheme. You need to develop a plan for trading success that includes making small trades day in and day out over a long period, instead of expecting to strike it rich with one or two huge trades. So plan for the long haul!

Avoid doing these five things and you and your wallet will be much happier!

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