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The Forex Trap

The Forex Trap

The Forex Trap! The novice Forex trader is generally the trap’s favorite prey. There are ways to avoid falling into it, and they should be obeyed strictly. Often the Forex trap is even laid by the broker himself. Promising things that can’t be delivered should always be a clue.

Rags to riches

The Forex trader who has been around for a long time will tell you that there are no shortcuts in trading Forex. The Forex trap is only a trap if you fall for it. No matter what the hype is on the website of a robot trading system, or Forex signal provider, or even a Forex broker, the trader must do his homework and check out everything before jumping in.

There is money to be made in Forex. There’s no question about that. But every Forex trader must have a system and a plan. There has to be discipline and moderation. If these rules of thumb are upheld, you’ll be around the Forex market for a long time. If you don’t, you should start checking out the job market instead of the Forex market.


The main key to avoid falling into any Forex trap is to have discipline. There is no such thing as playing catch up in the Forex market. It might work occasionally, but the odds are substantially against you, and what invariably happens is that you will simply fall further and further behind.

The best way to deal with a loss is to forget about it and move on. Any Forex trader, as part of his discipline, should establish a proper profit loss ratio. Your risk-reward ratio shouldn’t exceed 2:1. This is standard, certainly for novice traders, but also adhered to by many experienced traders.

Always use stop-loss orders. One of the key factors to becoming totally undisciplined is to start chasing markets. Get out and forget about it. That should be your rule. Chasing a market is a classic Forex trap right up there with not admitting when you’re wrong. The Forex Trap


Another common Forex trap is getting caught in a market during a fundamental announcement. When a major announcement is due out, the market will become volatile in expectations and predictions of the outcome of the announcement. The Forex trader should be wary of these times. The best advice for novice Forex traders is to stay out of the market in anticipation of these announcements. They can lead to some extreme swings and you could get caught both ways.

Trade the technicals with an eye on the fundamentals. Stay disciplined and have a plan. The Forex market can be a great way to make a living as long as it’s viewed as your business; and not a scheme.

The Forex Trap

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