Forex stands for the foreign exchange market, which is the heaviest traded market in the world, turning over trillions of bucks every day, 24/7, five days a week. Traders buy and sell different kinds of currencies via speculating on how those currencies will do in the future.
So, if you get involved in Forex trading, you could make or lose a lot of money, depending on how well you make trades. However, if you are not willing to spend money, then of course you aren’t going to make money. Thereby the phrase “scared money don’t make money.”
This phrase refers to those who are too scared to take a risk, since if you don’t risk it you won’t be able to make money at all. Why does this happen? Because it is normal to be a bit scared of investing cash into something as big as trading worldwide on the market! And fear causes people to hesitate to make a trade, which can mean they miss some great opportunities to make money with their investments.
Here are 10 reasons ‘Scared money don’t make money’:
- Your fear of taking any action could make you decide to not to anything, and no money can be made via inaction.
- Being scared to purchase a dip throughout an uptrend would make someone miss the chance to enter the market with a good ration of risk and reward, as well as catch a swing trade back up.
- If you are too frightened to purchase a breakout in price at the start of a brand-new trend, you’ll miss out on any benefits of it.
- A fear of getting an open winning trade turned into a losing one can cause one to lock in a modest profit rather than allowing your winner run to receive a large profit. He majority of winning systems require large wins if you want them to be profitable.
- Being too scared of losing cash will cause one to not invest at all, and you lose the chance to make any money.
- Oddly, being scared of missing out on something could cause one to get into a trade too far into a current trend. Then you also lose cash because your timing is off. This is an example of a fear which causes you to actually take an action instead of refusing to take action that still loses you cash.
- Being scared you are wrong in making a trade makes some people refuse to do a thing. This may be a problem with your ego where you’re concentrating too much on yourself instead of a trade option.
- Being scared of a big loss of capital also makes a person too cautious and so they don’t make much cash.
- The majority of fears come from not having faith in your system or in yourself, so you don’t make progress.
- If your fear of failing gets really bad, you may choose to never make any sort of action that could be profitable. Remember, one has to risk something if they want to make anything!
Don’t second guess yourself
If you want to get into Forex trading, you have to have confidence in your abilities. You have to learn not to second-guess everything. Otherwise, you’ll doubt everything you see and are exposed to and your profits will go down, as well as your stop loss will get wider.
You’ll think more about losing cash than you do planning a trade strategy. While you do have a responsibility to protect your capital, you shouldn’t let yourself get overcome by being afraid of losing with every trade you make.
Only Risk Capital You Can Afford to Lose
If you want to be successful in Forex trading, you can’t be scared all the time, but you still shouldn’t go the other extreme either. You need to only risk whatever amount of money you can afford to lose. Trading capital is many times known as risk capital, as trading is actually zero-sum action. That means whatever you have in a trading account, it’s always at risk at all times.
If you’re financial situation isn’t stable, get out of the market. Don’t invest or make a trade until your financial situation is better. Be sure to learn how to use stop loss as well as take profit levels. Don’t change the level of a running trade. That way you can leave trades to those dictated via the market.
Stopping yourself from being so scared to take action can result from a mental point of view. So, one way to make yourself less scared is by doing things like mental exercises or yoga so you can control your thinking better. This actually will go a long way towards getting rid of your fear of taking action. Then you would be on the way to making profit in no time at all.
Don’t just hope for a good outcome
One mistake people who are working with scared money do is they hope things work out well for them to make a profit in their trades. You can’t just hope things work out to your benefit. You have to have a strategy in place, know what you are doing, and if your trade setup isn’t working, you need to know when to cut your losses and when to stay put and let your losers run.
Scared traders instead cut their losses too soon since they don’t want to lose cash. They don’t risk their capital and are much too cautious so they are deprived of making any profit on their trades. They close a winning trade too soon and then are pissed that they let it happen. All from having fear instead of having confidence your trade plan can work in your favor.
The term scared money don’t make money also can be applied to other venues besides Forex trading. It can be applied to any sort of investment, gamble or attempt to make money. For example if you want to try to make money at a Vegas casino or other such venue. Just like with Forex, you can’t make money without risking money in the first place.
So, if you are the kind of person who is scared to do things like gamble at a casino, or make trades via the stock market or Forex, what would be considered as a safer way to make a profit?
Firstly, you must be prepared to start early. If you want to be able to, for instance, retire with a good financial future, you should begin to save money at least by the time you are 25, or even start earlier if you can. The more you save early and invest properly, the better chance you will be a millionaire when it’s time to settle down and retire and not have to work! This may seem impossible, but in reality it is not at all impossible.
Get a financial advisor to help
One way to have some hope in not being such as scaredy cat when it comes to making investments for retirement is to hire a financial advisor. These are skilled professionals who know all the ins and outs of making money.
They can help you gain the confidence needed to not be someone with “scared money.” They can help you no longer be afraid of doing what is needed to make money and ensure your financial situation.
Kinds of good investments to help make money for the future
You don’t have to put thousands of bucks into the stock market to stop being scared of investing your money. You can do other things to assure you are set to live a good retirement. One way is to stop renting and to buy your own home. Home ownership is an investment!
Research shows that home owners have a much higher net worth than renters. In fact a survey of consumer finances done by the Federal Reserve revealed that an average home owner had a net worth of nearly $200,000, while an average renter was only worth close to $6,000.
Sad, isn’t it? Most of us would of course want to be someone worth the $200K, wouldn’t we?
Another option to help your financial future be bright is to buy insurance while you are young. Entrepreneur magazine listed security and assurance as a top reason it’s a good idea to invest in buying life insurance. This provides you with the peace of mind that if something happens to you, your family has financial help.
You surely don’t want to hesitate and be accused of “scared money” and leave your family destitute! So, a financial planner can discuss the terms for the best kind of insurance for your situation in which your family would be set if you die before your time.
The above are just a couple of investments and financial help that a financial advisor can give you to ease your mind and make sure you are not a victim of “scared money.” You can also find out more about investing money and ways to save for retirement online and in books to add to your knowledge and help you make a good financial plan for your future.
Another great modern institution for helping you stop using “scared money” is the Internet itself. Many organizations help people to not be so scared of using their cash via providing digital means for them to keep track of their investments.
All kinds of places such as banks, credit unions, insurance providers, trading venues (like Forex, etc.) and more offer online accounts that are easy to sign up for and can be easily accessed 24/7, 365 via any Internet capable device.
All in all the term scared money don’t make money merely refers to people being worried about making any sort of financial investment whether that be Forex, Vegas style casinos, buying a house or otherwise using your money. If you feel you are in this category you need to discover why you are so scared and learn how to stop that fear so you can profit in your investments.
If you truly want to make money, you definitely have to spend money! It just can’t happen any other way. There’s no such thing as making a profit via merely stuffing your money under your mattress and thinking it will somehow turn into more cash. That’s not gonna happen! Money doesn’t breed with itself, it can’t grow unless you take the proper action and invest it properly into some sort of venture.
So, take a deep breath and stop being a victim of “scared money.” Talk to a financial advisor or an expert in online trading (if getting involved in Forex or the stock market) or whatever expert you need at the time. Otherwise, if you keep being too scared to take action then you will never make any profit because you never took the chance to do so!