Reasons Why Forex Traders Lose Money

We know that most of the forex traders fail because of the statistics which have been provided to us. It is estimated that more than 96% of the forex traders lose money and quit. There are a good amount of organisations was noted that there are a lot of Forex traders which do better than that but the new traders which get into Forex trading have a hard time getting aground in this market. These are the most common reasons which lead to the failure of the newbie Forex traders.

Befriending the market place

First of all, it is important to understand that a market is not something that you need to beat but something you need to join and understand so that you can go with the trend. The market has the ability to throw you out of it if you are trying to get too much out of it with too little investment. If you have a mindset that you want to defeat the market, it will lead you to you trading to aggressively and going against the trend. This is the worst thing that could possibly happen to a trader.

Low capital investment

Most of the traders want to get out of Dept or to make easy money. It is a common thing for the marketers to encourage people to trade in Big sizes using leverage in order to get larger returns and a small amount of initial capital. It is necessary that you have some money in order to make some more money and it is possible that you might generate a lot of good results even when you have unlimited capital in the short term. If you have a small amount of capital and you have a lot of risk because of high leverage, you will let your emotions get a hang of you with each and every swing of the market’s ups and downs. This is not what you want. You want to solve this by never trading with a really small amount of capital and this is a difficult problem to get around who wants to start reading. Thousand dollars is a reasonable amount if you want to start trading in small amounts.

Risk management

This is one of the most important factors if you want to survive as a Forex trader in your life. Even if you are a really skilled trader, you might still be thrown out of the market if you have poor risk management. Your first priority is not to make a profit but to protect what you have. If you are capital gets lost your ability to make the profit is also gone with it. If you want to prevent this from happening then you have to implement a good risk management strategy and place stop loss Orders and move them once you have a reasonable amount of profit. If you feel like the trade is no longer making any sense, make sure that you get the hell out of it.

Greed

Sometimes, the beginner traders feel that they need to squeeze each and everything out of a move in the market. You can make money in the forex markets every day but trying to Grab each and everything before a currency pair turns might set you up to lose big profitable trade.

The best thing to go around it is not being greedy. It is ok if you are shooting for a proper amount of profit but the currency will continue to move every day so make sure that you get out as soon as you make the desirable profit.

Rejecting your Wrong side

Sometimes, those trades do not work out and we know that you will want to be right but sometimes you just are not right. You have to accept that you made a mistake and you have to move on sometimes instead of ending up with zero balance account. It is not easy to do but sometimes, you have to admit that you have entered the trading for the wrong reasons and it did not work out the way you wanted it to.

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