We trade Forex to make money. “Forex” is a good investment opportunity to increase your wealth. No doubt that everybody loves to make more money if possible. Novice traders start learning Forex while they already know that they can potentially make a lot of money through Forex. So they start with a lot of enthusiasm and confidence. They know that they will make money through Forex sooner than later. They are not worried about failure, because they have enough enthusiasm that motivates them, and so they know that they will make money through Forex trading definitely. Something that they are worried about is the amount of the money they will make. They know that forex works, but they want to make the most of it. And this mentality makes them get deviated from the right track and make mistakes.
“Greed” shows up even before you make any money through Forex, and while you are learning and demo trading. A limited amount of greed is good to motivate us, but it is a poison if it goes beyond that limit. It won’t let us make any money through trading.
Greed interferes through different ways. In novice traders it whispers that “You can make a lot of money through forex. Now that you are learning it, do it in a way that you can make as much money as possible.”
You will ask yourself how is it possible to maximize the amount of the money that I will make through forex?
The first answer that comes to your mind, is “taking more positions”. You think if you trade more, you will make more money.
Therefore, the second question comes to your mind: How can I trade more? How can I take as many positions as possible?
The answer is in the “time frames”. When the second question appears in your mind, most probably you have already learned about the time frames. You know what time frames are and what the differences of a short time frame like 5min is with a long time frame like daily. You know that you can have more trade setups with the shorter time frames like 5min, compared to long time frames like daily.
This is what you were looking for. You wanted to take more positions (trades), to make more money. In the novice traders’ mind, taking more positions equals making more money.
So you go for it. You focus on the short time frames like 5min and you become a day trader.
Do you see how “greed” makes you deviate from the right track?
Who says taking more positions equals making more money?
I have seen so many novice traders who focus even on 1min chart. You see how greedy some traders are?! They trade EUR/USD on one minute chart, because (1) EUR/USD spread is too low, and (2) one minute time frame forms several many trade setups every day.
Of course they are absolutely right. EUR/USD has a low spread and one minute time frame forms several trade setups within a short period of time. However, there is just one problem: They cannot make any money!
It is just wasting of time. Many novice traders spend several years working on the shorter time frames. They either give up on trading, or shift to the longer time frames finally. I have never seen even one successful day trader who can repeat his success consistently for a reasonable length of time. Some of them can make money for a limited time, but then they lose all they have made.
In this article, I don’t want to go to details that why you cannot make money trading the shorter time frames. What I am trying to say for now is that the probability of making money with shorter time frames is less than 0.01%. So don’t try it. A few winning positions doesn’t mean that it works.
Taking more positions through short time frames doesn’t equal making more money. It equals losing more money. It is not only that. There are more problems with the shorter time frames. You have to spend several hours at the computer every day. It has too much pressure and stress. It even hurts you physically in long term.
Trading doesn’t have to be that hard. Even if you can make money through shorter time frames, you should not do it, because there is an easier way to make money too. Why should we choose the harder way, while it is possible to do it through a much easier way?
I know many of you want to be a day trader, because you think it makes more money. Everybody wants to make more money. There is nothing wrong with it. However, the problem is that you cannot make more money as a day trader who works with short time frames like 5min, 15min, or even 1hr. You can only lose money. I don’t trade even the 4hrs chart, because forex market has changed a lot, and even 4hrs chart is choppy most of the time and I cannot trust the trade setups it forms.
If you don’t listen to me and stop trading the shorter time frames now, you will have to do it one day, because you will also come to this conclusion that it doesn’t work, and it is wasting of time, energy and money. However, I hope you do it before you give up on forex trading, and before losing a lot of money and wasting a lot of time.
Working with the longer time frames needs more patience, but less energy, time and money. You should not allow your greed to make you work on something that doesn’t give any good result. You may have more trade setups with the shorter time frames, but it doesn’t necessarily mean that it makes more money. Be patient enough to wait for strong setups on the long time frames. You will see that your patience will pay off: I Trade the Daily Chart, But I Am a Day Trader