Forex Trading: 4 Possible Outcomes of a Wrong Market Analysis

25 June 2016, 18:45
Sherif Hasan
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Interpreting your forex charts could be a bit challenging and if you do not analyze with care, you might misunderstand the currency actions.

This aspect of Fx (Chart Analysis) is a very sensitive part; which is why your total attention is required for it.

In the recent market world, a lot of newbie traders are currently in trouble; because, they are not properly educated with the possible outcomes of their decisions.

Do you know that a lot of traders are in deep mess? Yes, because they don’t heed to instructions and their anxiousness of making it big at once has consumed their thought.

Here are 4 possible outcomes from wrong market interpretations; they are:

#1 Placing the wrong market order.

Let me begin with a practical example; Mr. John was introduced into a multimillion opportunity (fx trading). He was actually looking for a business he will invest the little money he has. After some time, he became anxious of making it through forex trading.

He went for some training to know more about it. After a while he was certain within himself that it’s time to get the party (business) started. He registered with a broker and was making about 30-50 pips for over a month.

But something remarkable happened one Tuesday morning; Mr. John, after carrying out his normal analysis, lost his portfolio.

The questions are;

  1. How did he lose his portfolio?
  2. Why did he lose his portfolio?

From all indication, He lost his portfolio by placing the wrong market order.

And why it happened was because he resolved the market wrongly, by misunderstanding the currency-pair price action.

I believe you can learn from Mr. John experience.

Someone asked this question;

Is it just a false interpretation that caused his loss?

Well, my advice to you is this- just a little mistake can cost you all that you have labored for. You have to be very careful when making decisions and also adhering to advice.

Placing a wrong order is a process whereby a trader places an order that move against him in the market.

For example, a trader who loves GBP/USD as his currency pair, analyzed the market, and discovered that the pair is going long; and placed a buy order.

To his greatest surprise, the market moved against him by going short. Such an executed order is seen as a wrong market order; because the market moved against him.

#2 Losing excess money.

Losing money in forex trading is a function of the order you place from your analysis about the market movement.

This action directly depends on the order (buying or selling) you engage, after carrying out your analysis.

One major effect of wrong market interpretation is losing a huge amount of money or even your portfolio.

‘’This is the main reason why many forex coaches, forex training colleges, keep alarming the fact of being careful with whatever move you make. It is highly advisable that you take forex trading as a business rather than a game’’.

#3 Mental confusion.

Mental confusion is also an outcome of false forex interpretation. How? We are all human and one of the basic problems we are likely to face is being in charge of our psychology.

According to an article written by Micheal Ashworth, He mentioned an important point I will love to share with you.

’He said that those who take time to relax and release inner -tension do much better physically and emotionally than those who fail to engage in such behavior’’.

In connection with the information shared by Michael, it will be difficult for someone who lost a huge sum of money, as a result of wrong forex interpretation, to be in full control of his emotion.

#4 Looking down on yourself.

This is one of the most common outcomes from traders, who falls victim of wrong chart interpretation.  

They do believe in the fact that if it doesn’t work for them at first, it can’t be for them-especially the newbie’s.

The gospel truth is that you can do better if you want to.

Looking down on yourself is a downgrading act. Doing that, is telling yourself that you are nothing, which is very wrong.

Allen H.Neuharth said in his quotes that

-‘’I quit being afraid when my first venture failed and the sky didn’t fall down .you can now see that it is not over for you. You can really bring out the best in you, never give up’’.

In conclusion, these four possible outcomes of wrong market interpretation are to expose you to the negative effect of whatever decision you make while trading forex.

Always trade responsibly.

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