Reasons why Many Forex Traders Lose Money

Reasons why Many Forex Traders Lose Money

Did you know that only 10 percent of forex traders usually end up successful? The bigger percentage are usually quitters with some traders racking great losses in the undertaking.

But why is financial trading so complicated?

Well, forex involves currency markets that require detailed and long planning on different levels. The volatility of markets makes the trading process to be either very profitable or extremely risky.

That’s why if you are interested in forex trading you should read on to gain useful insights on why many forex traders end up losing money.

  • Overtrading

One of the greatest secrets to gain good returns in forex trading is knowing the right time to exit the market in question. While most of the traders are motivated by the need to rack up enormous profits, setting a reasonable goal is of the paramount essence. Most of the forex traders always want to go big, which results in overtrading and it is very risky. The reasons that results to this scenario includes the need to achieve unrealistic profits, insufficient capitalization, or market addiction. A good trader does not let emotions and greed to control their trading decisions and they know discipline is key.

  • Low Start-Up Capital

It is a common notion with many start-up traders that forex is a cash cow—well, it’s not. Many of the beginners getting into currency trading usually get started with low capital with the anticipation of making big profits. With a large financial base, you get to trade large lot sizes with high leverage, which brings in good returns. Trading with small capital and going for large leverage is a sure way of draining your account. Notably, $1000 USD is the recommended amount to start-up forex trading. Always remember you have to use money to make money.

  • Trading without a Plan

In Forex trading, failing to plan is planning to fail. Whether focusing on One trade forex or any other asset class, laying down a viable trading plan and sticking to it is key to success. A strategic trade plan helps investors mitigate the common trading pitfalls and help them accomplish perfection. Always remember that 90 percent of quitters are usually plan-less traders.

  • Failure to Manage Risks

Financial 101; risk management is a crucial key to currency trading survival. Even skilled and professional traders get drained when they fail to stick to this technique. Becoming a successful trader means making big wins and suffering smaller losses. With poor risk management, you stand a chance of suffering consecutive losses, which may end up depleting your trading capital. It is vital to learn how to place stop-losses. also, understand how to move stop-losses when you have made a reasonable profit. Always remember your number one job in forex is to make profits rather than protecting what is in your trading account.

  • Indecisive Trading

Did you know most of the currency traders suffer from trading remorse? This is where a trader opens a trade and start questioning their decision on whether they picked the right direction when they are making losses. In most cases, most of them close the trade while they are at a loss and reverse the direction. This is for sure one of the easiest ways to deplete your account. It is important to always make a decision and stand by it.

Final Takeaways

Forex trading is a complicated undertaking that needs a lot of planning. It is one of the ways that you can easily lose money. Also, it is one of the ways that you can make big profits within short time margins when done right. Always remember the higher risk the higher the returns.

For more information on forex trading, contact us.

The Ins And Outs Of The Forex Market

The Ins And Outs Of The Forex Market

  1. Forex is a trading market based on foreign currency exchange and is available to anyone.
  2. The news contains speculation that can help you gauge the rise or fall. You need to set up some email services or phone to stay completely up-to-date on news items that could affect your chosen currency pairs.
  3. Don’t ever make a forex trade based on your emotions.This can help lower your risk and prevent poor emotional decisions. You need to be rational trading decisions.
  4. To do well in Forex trading, discuss your issues and experiences with others involved in trading, but be sure to follow your personal judgment when trading. While it’s always good to take other’s opinions into account, you should understand that you make your own decisions with regards to all your investments.
  5. Stay focused on the plan you have in place and find a greater chance of success.
  6. Do not base your forex positions on that of another trader’s. Forex traders, like any good business person, not their losses. Even if a trader is an expert, they also have their fair share of failures. Stick with your own trading plan and strategy you have developed.
  7. Panic and fear can lead to a similar result.
  8. You can get analysis of the most useful forex charts are the ones for daily and four-hour intervals. You can get Forex charts every fifteen minutes!The problem with these short-term cycles is that they constantly fluctuate and it’s sometimes random luck what happens. You can avoid stress and unrealistic excitement by avoiding short-term cycles.
  9. You need to pick an account package based on how much you know and what you expect to do with the account. You need to acknowledge your limitations and be realistic. You will not become amazing at trading overnight. It is widely accepted that having lower leverages can become beneficial for certain account types. A practice account is generally better for beginners since it has little to no risk. Start slowly to learn all the ins and outs of trading.
  10. Traders new to Forex market often are extremely enthusiastic and tend to pour all their time and effort into trading.You can probably only focus well for 2-3 hours before it’s break time.
  11. You shouldn’t follow blindly any advice about succeeding in the Forex market. Some information will work better for some traders than others; if you use the wrong methods, or even incorrect. It is essential that you to be able to recognize and react to changing technical signals.
  12. Beginners and experienced traders alike will find that if they fight the current trends, and even experienced traders should shy away from fighting trends since this method is often unsuccessful and extremely stressful.
  13. One of the most important things to have for forex trader should adhere to is to not give up. There will be a time for every trader where he or she runs into a bad luck patch with forex. The most successful traders are the ones who persevere.
  14. This is surely a tentative position to assume, but you can increase your success odds by confirming the tops and bottoms prior to trading.
  15. Forex is a moneymaking program that is designed to make you to trade different foreign currencies with the chance of turning profits. This practice can bring in extra income or possibly even become a living. You want to be very familiar with what to do before you begin forex trading.
  16. There is a great deal of Forex information on the internet. You will be prepared to trade when you know enough information. If you need clarification than this article can provide you with, join an online community such as a forum where market veterans can illuminate you.
  17. You can find news about forex trading from a variety of places. News channels, as do certain Twitter feeds and any number of other online resources. You can find this information in a variety of places. Everyone wants to know how the money at all times.
  18. It is inadvisable to trade currency pairs that do not have high liquidity. You might not finding a buyer with rare currency.
  19. If you will be doing it for a long time, keep a list of standard practices in mind. This will transform you into a well-disciplined trading success for years to come.
  20. Don’t try to trade against trends if you’re just starting out. You should also refrain from selecting highs and lows against the market either. You will see a real increase in your level of anxiety when trying to trade against the trends.
  21. Make sure to enjoy your success. Retrieve some of your earned money by sending your broker an order of withdrawal. You should be able to enjoy the money that you make from Forex.
  22. Your first priority when trading should be highly influenced by your risk management. Be aware of which losses you can afford to lose. Never override your stops or limits once trading begins. You can have a wipe to your account very easily if you get too emotional and don’t focus. You need to always look out for losing positions and know when to get ahead.
  23. You should not gamble on the Forex market, Forex isn’t like gambling in a casino. Do your research before you make a trade.
  24. Never risk more than 5% of your total in a trade. This will allow room to make a mistake. You can come back strong if you suffer a hit after a bad trade. Watching the market may entice you to want to do some heavy trading. It is far better to be conservative and consistent with your trading style.
  25. Forex traders need to understand that there is a downside to using an account that is highly leveraged. Understand what it is you are doing.
  26. Forex is the best way to trade currencies on a worldwide level. The tips you are about to read will help you understand Forex and generate another source of income, as long as you exercise self-control and patience.

The difference between Binary options and Forex.

In the last few years, binary options have become more and more popular. A lot of investors have become interested in binary options because they’re comparably safer and easier to understand than Forex Trading. But what are the exact differences between binary options and Forex Trading? This article gives you the low down.

The first difference between binary options and Forex trading is in what they actually are. With binary options, you will just have to predict whether an asset will go up or down in price. For example, if you expect a price to go up within a certain time frame, you just put a call option on the asset. You then check back with the asset after the set time frame, and if it actually went up, you reel in a profit. Forex trading is different because you will actually have to predict the actual future price of the asset. You’ll only reel in the profit if the asset will go up or down to the price you predicted.

Secondly, Forex trading uses margin and use the best trading strategies You use a lever to make your potential profit, whereas you do not use a margin with binary options. The upside of the absence of a margin is that there is not margin call. Thirdly, with binary options you actually know your profit upfront. This is also possible with Forex trading, because you can limit which profit you want with limit/stop orders.

Finally, Forex trading closes on a certain profit or loss. This makes it very solid in terms of what you can expect regarding your investment. Binary options are different because it will expire after a set time frame. This can make it more volatile because you have to be more precise in your prediction, since the time component is there. It therefore comes down to personal taste what kind of trading you want to get into. Be sure to do your research!

Forex Trading Psychology: What is it all about

The kind of influence that psychology has over forex trading is stupendous. It is to be noted that forex trading is often considered to be equal to that of gambling, but there are few things that make forex different and completely unique in its own way. Forex trading can turn out to be a successful venture if the trader has a specific successful trading plan at hand. A trade entry without any plan or strategy at hand is sure to lead the trader in the wrong way. There are many discussions all over the world about emotions and its impact on trading. While the causes and effects of psychology and trading are widely discussed, the methods to control such barriers and come out with successful results are not made available widely. Here, let us discuss the methods for effective trading and how to exercise emotional control for successful trading, also remember that physical exercise is also important at this point, we recommend to at least to a session with a pilates ball everyday.

Self-control and discipline

One of the most important traits required out of a successful trader are basically those of intensive self-control and discipline. A forex trader should necessarily be disciplined enough to take the right course of trade action at any point of time. If the trader gets influenced emotionally or psychologically, then there are higher chances that they go beyond the prescribed rules and regulations for trading and face loss. If a deeper look is taken into successful trading practice, traders who are experienced will always makes sure to discipline and condition themselves to go in the right direction. Novice traders will often meet up with failure as they are completely new to the field and are often carried on with emotional trading.

Know what you are doing

For successful trading, the trader should be well aware of the do’s and don’ts associated with forex trading otherwise the entire venture is going to turn out to be rather unsuccessful in the long run. The trader should be well aware of the technical indicators and should employ a thorough analysis on the technical and fundamental aspects before entering into a particular trade. The more amount of money at stake, the better should be the approach and discipline – that is if you truly are interested in making it BIG in the world of Forex.

Develop a personalized trading style

Following the crowd and taking the path of successful traders will not provide success every time. The strategy which worked for one trader may not be useful for another trader as the plan and position are completely different now. Successful traders who have gained name and fame in the trading space are known to have developed their own trading style and strategy. They set their own trading parameters and watch the market closely day and night. Forex traders are able to come out with a winning strategy through experience and expertise developed over a period of time.

Consider the entire ordeal as a business

Traders who value forex trading as a business rather than just an act to get rich quickly are rewarded with successful results. Trading should be treated as a business and a success strategy and goal should be developed like any other business. This will give the traders a clear sense of purpose and act devoid of any sort of emotions.

These are a few important steps that need to be taken into account for effective forex trading. Remember, you must not indulge in forex trading blindly – there are rules to be followed, and in order to be successful, it is necessary for you to pay ample attention to them.

The effect of emotions in Forex.

How do emotions affect Forex trading?

Forex trading has always been looked up to as a basic form of trading that requires one to follow the right and logical steps in order to increase their chances of acquiring immense success. There are many forex traders who have achieved outstanding success in the Forex market owing to their talent, which involves logical thinking and the right use of technical analysis. Technical analysis is looked upon as one of the most trusted form of analysis for gaining better understanding about the market conditions. Forex trading and psychology are very much interdependent and one needs to pay adequate attention to this particular link to be able to indulge in trades that are all the more profitable.

Psychological detachment

In order to emerge as being successful in terms of forex trading, it is absolutely important that one pays attention to each and every aspect of trading, it is also important to keep yourself healthy, getting enough sleep with a pregnancy wedge pillow. This is basically going to help you make sure that you take the right course of action at hand and remain detached about the outcome or result. This may sound too difficult to follow, but it is not altogether impossible. There are countless forex traders around the world who do so on a regular basis. The more emotionally detached you are about a particular trading position, the better the results will be because it is only the emotions that drive you in to taking the wrong move. Emotions like fear, greed and hope changes the trade directions to a great extent. Experienced forex traders are always well aware of this particular rule and this is the reason why they are able to continually indulge in profitable trades.

Trading emotions

Greed will drive one to stay in the market for a longer period of time and sometimes, even if the market position does not seem really good. This eventually leads to a big loss, and the profit gained so far is lost as well. This is something that traders obviously need to avoid to be able to guarantee their success in the world of Forex trading. Fear, on the other hand, will not provide the traders with a chance to explore new avenues. Forex traders who fear loss to a great extent would quit the market much earlier and want to protect the money they have in the trading account at all cost. If this is practiced for a prolonged period of life, it would definitely lead to loss.

Technical indicators

It is always safe and reliable to go with a more conclusive system when it comes to trading. There are many tools and techniques available for forex trading that guides the traders all along the trading activities. Forex traders who have the expertise make sure to have a perfect trade plan at hand before jumping into the trading platform. Such forex traders also ensure to watch the market closely and come out with a more probable trading plan applicable at that point of time.

Making use of charts, such as bar charts and candlestick charts is known and believed to be absolutely helpful, and effective in the case of forex trading. These technical analysis tools basically provide for a clear cut understanding and direction about trading right from the beginning and help one to have absolute control of their emotions.

By staying in control of their emotions and acting wisely during the ups and downs in the trade market, traders are sure to come out with exceptional results that increases profit returns manifold. On the whole, these basic elements are going to help you indulge in trades that guarantee outstanding profits.