Why do almost all Forex traders fail

[Davidee]

Why do 95% of Forex traders fail?

I have three ideas as to why this could be -

1. Small Forex traders are mostly gamblers trying to fade the longer term trend and pick tops and bottoms and are therefore almost always wrong.

2. What 'feels' like the right thing to do is usually the wrong thing to do, we want to avoid pain and seek pleasure. Small Forex traders usually trade their emotions (or at least let their emotions influence their trading) and do things like grab a small profit when they have it so it doesn't run away from them and let losses run OR do something else equally counter productive that feels right but has bad results like setting 15 pip stop losses.

3. Large institutions with virtually unlimited funds always take the otherside of the trade that the small traders are on, when the majority of small traders are long they continue to take the otherside of the long positions until the small traders give up and the market falls and they reverse their positions and so on.


Personally I think it's a combination of ideas 1 and 2. But what are your ideas? Someone always has to be on the otherside of every trade it's true, but I don't see why that means the failure ratre has to be as high as 95%