The most important thing to take note before starting your Forex trading journey is that this particular endeavor is not a get-rich-quick scheme.
Do not expect to make a lot of money doing this for a living.
Unless, of course, you are handling large amounts of money, such as those who handle hedge funds and fund managers.
However, even then there are a lot of risks involved, and some people with large capitals can lose a huge amount in the Forex market.
With a correct system and of course some luck, traders can make a decent and steady profit from the Forex market.
A reasonably successful trader can expect to make a monthly return of around 1 or 2 percent of his or her capital.
This may also result in around a 25 percent return annually.
Of course, this will only happen if the market conditions are favorable and there are no other unforeseen circumstances, such as war, political upheaval, large natural disasters, and other events that will occur.
Using these figures, a person who invests around US$100,000 in the Forex market can expect an annual return of around US$25,000.
This is definitely a good chunk of change, but most will likely not want to make Forex trading a full-time job.
Recent data has also shown that only a quarter, or 25 percent, of traders in retail Forex end up earning any profit in three months.
A good chunk of these traders are day traders, while the rest only take a small number of positions and hold them for longer periods.
Currency pairs will more often than not only move by minuscule amounts throughout a few days.
These pairs typically rise and fall by around 10 percent over a year.
Some people view the Forex market as a form of gambling.
However, traders would argue that the odds in Forex are much higher than any casino game out there.
This form of analyzed betting gives traders a big advantage as they have a lot of clues and data to go on to make informed decisions.
It has to be noted that similar to traditional gambling, people may experience a string of bad bets.
No matter what method you follow or how strict you are with your analysis and trading, there will be some days where you just can’t win.
On average, one out of three trades will be a losing trade. In reality, this could be much worse depending on how lucky you are.
Then again, if you work hard, and focus on your strategies and charts, it is possible to make a modest amount of money in the Forex market.
Now that I have given the clear picture of Forex expectations one must understand that it is possible to become a successful trader if you are truly dedicated to it.
If you think Forex expectation is the problem, then, you must find solutions to overcome the expectations that aren’t healthy to your trading journey.
Let us dig deeper into the concept of managing expectations in Forex trading.
Do you know why it is important to manage Forex expectations?
Well, as I mentioned if you are not aware of Forex expectations, you’ll become one of those traders who quit even before beginning the trading journey.
Hence, you must try to manage your Forex expectations.
First of all, what are the expectations?
Let’s be honest, and it is impossible to set aside expectations because everything in this world is based on expectations.
Even the most successful Forex trader would have entered the market with some expectations.
However, the important point is related to the way you handled the market expectations.
If you let your expectations play the game, then, you are not going to win the game.
Hence, setting reasonable expectations is crucial.
You must consider the factors that will impact your expectations so that you can get a clear view of it.
Emotion is the triggering factor that controls your expectations.
When you set reasonable expectations, and when you get the opportunity to meet them, it feels great, right?
But then, how does this relate to trading?
Basically, human beings are born with the ability to avoid pain.
We have it in our body.
But, your pain-avoidance ability works differently in trading that it links with emotions.
When you set a trading expectation, you try to avoid all the information that invalidates your expectation.
Somehow, you find reasons, rationalize, and even worse, you make yourself feel great about avoiding the information.
This isn’t healthy. You might end up blowing your trading account as a whole, so think about this!
Anyway, you’ll face difficulties if you don’t manage your expectations.
But, what could happen with mismanaged expectations in trading?
It is completely okay to set expectations in trading, yet the problem is with unrealistic expectations.
A higher percentage of naive traders have the habit of setting unrealistic expectations because they are not aware of the market.
Your expectations will lead to frustrations when things don’t turn out as you planned.
When you are continuously defeated, and none of your expectations are met, so the frustration turns to resentment towards the Forex market.
This may even result in giving up on trading altogether!
For example, when you hope for a losing trade to turn into profitable miraculously, this kind of issue occurs.
Even if the price action is not in your favor, you might ignore all the signals and details to support your expectation.
The obvious pattern will be invisible because you don’t want to accept it.
This is not a good sign if you want to persist in the Forex market.
You must manage your expectations if you want to remain in the market.
Also, if you are ready to manage expectation, you’ll start to see what price action is signaling you.
Sometimes, you must let the market move a little bit if you want to gain profit; thus, adjusting your expectation is the only wise choice that you could make.
Let go of the market when you can’t handle it, but manage your expectations because it is in your control.
If you do this, you’d be able to make rational decisions in trading and only through rational decisions can you achieve your goal.
It is better to explain the importance of managing your expectations in Forex trading.
Generally, when you are trading Forex, you have to consider many factors.
You might have to learn a lot before entering the market.
It is important to be up-to-date with the market, to have a journal, a plan, trading strategies, and much more.
So with all these, you must also give due importance to your expectations because it is the basement to your success.
In Forex trading, you must anticipate the market movement to make a decision or to execute your plan.
At this time, you must be a trader who doesn’t make emotional decisions, instead of a rational decision.
If you want to trade like professionals, you must treat emotions as your enemy.
The emotions will not let you move forward when you see a profitable trade signal.
Or they might push you out of trade even if the price signal is profitable.
Somehow, your emotion will make you a weak trader and make decisions on your behalf.
Hence, in trading, it is important to think logically, not emotionally!
Moreover, emotional discipline is one of the important parts of the Forex journey.
Almost all the professional traders would have passed this stage.
Of course, you can’t completely avoid expectations or emotions, but you can control your emotions and manage your expectations.
It is completely natural to expect because we are humans.
Like I already said, you must learn to manage your expectations.
If you set unrealistic expectations, you are the one to be frustrated at the end. Remember, you are not going to make profits alone; this is going to be a roller-coaster journey.
You will come across losses so you must learn to overcome the losses.
Managing expectations is not when you hang on to a trade that you are going to lose.
Instead, when you give up on it and accept that it is not going to be a profitable outcome.
Once you learn to cut losses short and to accumulate profits even if they are small, you’ll become much better at what you are doing.