Failures in Forex Trading: How Can You Avoid Them?

Forex Trading
Forex Trading

Did you recently encounter a losing trade in Forex? You are not alone. In fact, 95% of new traders lose money in the market. But this 95% have specific reasons for failing. Their failure can be due to these reasons – bad timing, poor strategy, and lack of money management. All these factors contribute to failure in Forex trading.

Why does the Forex market always create trouble for Forex traders?

Before anything else, there is a very important point that needs a thorough understanding. Contrary to our long-standing belief and the advertisement that we always see online, the market is actually a very risky place for your hard-earned cash. In the market, you will also have a feeling of missing something no matter how informed you are and how big you already earned. You will keep on asking yourself, ‘why I sold my position too early’ or ‘why I didn’t wait much longer’. You will never be satisfied no matter the outcome of your trades.

And since the market can go in different directions, you will somehow exhaust you. The market will always have doubts that you should address. The market will surely give its traders an emotional journey. By the time you end a trade, a new one starts. Therefore, the emotional journey also goes and comes along. The rollercoaster ride will exhaust you and will lead you to the wrong path if you are not emotionally stable.

This surge of emotion is particularly true with traders who make a continuous string of profits for a couple of months but with a single, wrong move, they have lost everything. But a trader who is emotionally stable deals with this loss coolly. They try to play harder and learn from their previous mistakes.

So Why Do Forex Traders Lose Money?

The very common reason for this is that traders don’t have a reasonable concept, the reason why they ultimately fail in trading. Their sole motivation when they decided to enter the market is to become rich overnight. They are mostly attracted to all those ads showing traders in their lavish lifestyle. But they don’t know and understand that behind these ultimately rich traders are the sacrifices and obstacles that they had to go through to be where they are right now. They acquired good habits of trading after painful experiences in the past.

As funny as it might sound but people are only seeing the positive side of trading, the happiness once you gain some profits, and not the sacrifices that you have to endure to be able to call yourself a successful Forex trader.

3 Reasons For Failed Trades

Lack of Tactic or Strategy – once you enter the market and compete with huge financial organizations and banks, you will realize that Forex trading is not a game. As much as possible, prepare a strong strategic plan and tactics that you can use to survive.

Poor Risk Management – the most common mistake a trader can ever do is to join the market without a proper risk management plan.

Emotional Trading – when your emotions start to take over your trading plan, leave right away before disaster comes in.