Understanding the Profit illusion in the CFD market

Apr 09, 2021

Profit is often considered as a mirage because the more people try to make money, the more they lose money. Though millions of resources are available online, this does not help an individual to reach their goals. Traders apply all sorts of techniques due to the instability of the trend, only a few could make money. The remaining trades lose all their capital and despite the promising offers fail to survive in this competitive sector. In this article, we are going to describe why this is considered an illusion despite the assistance available. Investors are easy to scam as they desperately search for a way out of Forex.

Every person wants to trade successfully but the effort required is substantial. Not many can afford to put in the effort, but those who can are the winning individuals. For beginners, this is mandatory to read as we will discuss various important concepts. Be sure that you will not know them from other sources.

It can be made through unplanned actions

The pattern in Forex is often interpreted as simple, predictable movements of volatile currency pairs. In reality, thousands of factors influence the movement. This is a global economy where the price does not vary in a national context. Based on the economy of the two countries, a level of volatility is reached. This is still not certain as financial decisions made by governments around the world can affect the changes. From a broader perspective, the pattern looks easy to understand. Sometimes it’s going up and sometimes it’s going down. Traders think if they open any order regardless of the position, money is bound to accumulate in their account.

This never happens because only strategical planning can work well. Professionals spend hours trying to figure out the news. They do not formulate a strategy based on intuition. Whether it is long-term or scalping, everyone should focus on preparation. This is the only way to make money. Always trade with elite a broker like Saxo capital markets pte so that you don’t have to deal with any technical problems.

Profit can be earned through overtrading

This is another example of why this concept is regarded as a mirage. Overtrading is a bad habit that slowly drains out the balance. This exerts pressure and by focusing on quantity, you are distracted from the quality of the trades. When this happens, people become elated after winning a few bucks. The reality is, they have placed numerous trades simultaneously. When 10 trades are opened by the same person, a few will certainly be profitable. The concern is how the losing orders are going to affect your balance. You can experiment in the demo account and learn more about this issue. You might win most of the trades but few losing trades will wipe most of the profit.

As people are excited, they forget to focus on failure and only emphasize the profits. Thus, they start overtrading which is the most efficient way to destroy a prosperous career. No formula in the world can save investors from impending outcomes.

A short timeframe is better than a higher timeframe analysis

This idea is established and many believe this is a fact of trading. As volatility seems more mobile through a shorter timeframe, it is considered as more profitable. However, the patterns remain the same. Moreover, dangers are high in the shorter timeframe as people don’t have sufficient knowledge to interpret the data. They only get a glimpse of the occurrence and base their method surrounding inadequate understanding. The result most often turns into a failure.

Conclusion

Now you know some critical facts about this trading industry. So, if you intend to trade as a full-time trader, we suggest you follow the tips mentioned in this article. Never trade the market with emotion or set unrealistic goals. Conservatively trade the market and try to develop a strategic method so that you can earn a decent amount of money. Stop trying to make a big profit in a short time and try to develop a strong trading mentality.