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.

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.

Basic Forex Principles Explained!

The Forex market is the largest market and is also the most liquid market. It has certain principles that you should follow. The thing is that getting started, or even pursuing a career in Forex trading isn’t easy, you need to get lots of good sleep with your wedge pillow amazon in order to be able to handle. There are countless elements that you need to acquire knowledge of, because if you don’t, then the one thing that you will acquire is that of pure failure! All in all, to be able to trade successfully in the Forex market, you must consider the following aspects:

Significance of Forex Trends

Forex trends typically tend to provide investors and dealers with the most necessary aspect of trade, which is information. The high and lows of the market are precisely and accurately found from trend lines and thus, trends act as a present and future guide for investors. Trends help to calculate support and resistance levels that act as pivotal points for deciding purchase and sale times of currency. With the help of trend lines, investors can understand their entry and exit points in the Forex market. The most valuable information that the trend lines provide are the unwarned movements in the market depicted by their sharp turns in the pattern.

Different Types of Forex Trend lines

There are different forms of trend lines that are used in terms of carrying out a basic Forex market analysis. All the types always follow the basic trend guidelines that assume that a trend cannot be inferred from two points and the beginning and end of a trend line cannot be chosen upon ones convenience. A simple line drawn between the first data point and a last data point is not a trend. Now, there are three types of trends, simple line trends that can vertical, horizontal or diagonal. There are Fibonacci trend lines that have gained quite popularity nowadays, as they provide an excellent and clear way of understanding Forex market trends. Then there is the pivot trend line that are used to find out fluctuations of the market at previous time frames and last but not the least speed lines where calculations are made in thirds unlike the other three types.

Selecting Currencies

Forex trading currencies should be selected in pairs. Also, there is no such connection between the forex pair you select and the ‘base working currency’ (the currency to handle the forex account and make withdrawals and deposits). If you want to “buy USD”, for the simple fact that it is less than the EURO, and you have speculated that the USD will increase in the near future, then once the rate of the USD has attained the level of your anticipation, you can close the deal and get more EURO against the USD and hence, you earn a profit.

Amount selection

Although Forex trading deals in currencies, but there’s no physical cash transaction in the process. Rather, the Forex deal has a “volume”, which signifies the amount of currencies in the contract. You need to identify the volume of contract instead of purchasing the whole amount. Generally, most of the transactions are carried on common leverage and so you can deal 10,000 euro with much less amount.

Selecting the amount of risk

Risk is always involved with the amount you are investing, because it is the maximum you can lose. At a ratio of 1:100 leverage against 10,000 EURO, you actually put USD 100 at risk.

Stop loss rate in Forex Trading

This rate is the currency exchange rate at which the deal will close automatically when the market attains this rate. In this situation, you would lose USD 100 from your investment. The “stop loss rate” can be defined in a different way but the amount of risk will change accordingly. A direct relationship exists between the “margin” (the risked amount) and “stop loss rate”, which is required for the deal.

Freeze rate

In forex trading, after going through the rate of the deal, you might be all set to go ahead with it, but to be honest; you may need to take a few seconds to think. The freeze rate allows you to think for those few seconds, and allows you to either accept or decline the deal.

Accept

Once you are ready to accept the deal, it is activated. If you are ready with enough money for the  trade to get through, dive in. Now you are in an “open position” in the Forex trade.

These basic concepts and principles of Forex trading are going to help you a great deal once you get started. Just pay attention to them, and you’ll do just fine in the live market!

The beginners guide to the Forex Market – Part 2

How to get started with Forex trading: The basics

A newbie in the field of Forex trading needs a place to start. To be honest, those who have what you can call a ‘no sense of direction’ upon entering the world of Forex are faced with nothing but sheer failure. To be honest, before actually getting down to making a successful trade in the most volatile and liquid market, it is necessary for you to pay attention to certain bits of preparations that are totally important. Knowing about the much-dreaded Forex market is essential, and practicing with a demo account certainly helps. These are actually the basics of entering the Forex market. Opening an account with a highly reputed broker and getting acquainted with the various market terminologies and trends also sets you one step ahead of the game. However, to give you a bit of a head start, discussed below are certain basics that you should understand if you want to trade in the Forex market in a successful manner:

What’s the exchange rate?

At large, the Forex exchange rate is the value of a certain world currency with respect to another world currency. It represents the amount of quote currency (second currency while quoting currency pair) that is needed to achieve the precise amount of base currency (equal to 1 monetary unit of exchange).

How do I actually indulge in trading currency?

Forex trading is done in various loads like the macro lot, which is around 1,000 units of a currency. The mini lot is 10,000 units of the base currency. A standard lot is 100,000 units. There are three sessions in which the actual trades need to be carried out. These are inclusive of the European trading session, Asian trading session and United States trading session. The main currencies of each market are traded during these market hours, and what you need to know is the basic fact that various currency pairs have additional volumes during certain sessions.

Pairs and Price Interest Point

Forex trading is done in pairs where a trader can buy one currency and sell another. On the whole, the Forex market is quite unlike the stock market where only a single buying and selling transaction of stocks is carried out. All currencies are priced out to the fourth decimal point. The term ‘PIP’ stands for Price Interest Point, and typically, it is considered as being the minimum increment of trade. One pip in a micro lot corresponds to only a 10 cent move in the price where losses are easier to manage. One pip in a mini lot represents one dollar, and ten dollars in the standard lot.

How do I gain knowledge about the Forex market?

The first and fore-most task of an online trader is to get to acquire a basic insight into his very own trading details and strategies. For this reason, it is highly recommended for you to acquire a detailed Forex trading education before actually starting to trade in the live market. Various types of books are available in the market that will help you greatly in this regard and will help you gain profits in all your trades. If you don’t have any past knowledge and experience about the transactional condition of currency trading, then Forex trading is going to turn out to be a difficult task for you. You must understand the basic Forex terminologies like exchange rate, long position, short position, bid price, ask price, spread etc.

Start Trading With a Forex Demo Account:

Begin with a Forex Demo Account. Beginners fail to succeed due to lack of practice and experience, discipline and knowledge. Forex Demo Market sharpens and improves your skill before you enter the real market of Forex trading.

Money Management Approach:

Experts suggest not risking more than 2-3% of the total trading account in the Forex market. Money Management approach should be done in such a way so that a trader can continue in his field in a long-run even in critical and adverse conditions.

Observe The Trend:

While Forex trading a trader must give proper attention and follow the trend of the Forex market in order to attain his desired goals. You can maximize your chances to succeed by observing the trend or by making your own trend.

Educate Yourself about the Leverage

Leverage is both useful and harmful.  One can make a large trade even with a small capital .Most brokers allow leverage from 50:1 to 400:1. The result can be disastrous if it is not utilized properly. Forex trading is thus an excellent choice for people with low capital to earn huge profit.

Familiarize Yourself with Reading the Charts

To know about the different types of chart before starting to trade is absolutely essential. The working of the charts should be clear in the mind. Time frames allow us to understand the nature of the market. Short time frames provide an idea about the movement of the market minute to minute while the larger ones give us a general idea about the larger trends. Before starting forex trading one must give ample time to study the charts and analyze the market.

Research Different Brokers

Before actually making an account and starting to trade, researching different brokers is necessary to find the one that is suitable for you. The ones with more than ten years of experience should be preferred in this regard to be honest. Also, look at the different products offered by the broker and reviews about them. This will make sure that you have a smooth experience while conducting your trades in the Forex market.