Great article, mate! It was a good read I would like to add that overtrading is common in forex trading and that is also one of the reasons for failure in forex trading. Overtrading might be caused by unrealistically high-profit goals, market addiction, or insufficient capitalization.
I’m not convinced that bad luck can be considered as the one of the main reasons why traders lose their deposits. You know that if you’re novice you have to forget about luck at all and never rely on it. You must do everything with a help of your personal strength, intentions and goals. The main reason of why all traders lose their money is unpreparedness to trading activity ast itself. Of course, also the effect of unexpectedness matters too in such cases. However, I’m sure that traders, whether professional or beginners always should be prepared for the unpredictable market changes. Fundamental analysis matters here a lot, even if you’re a daytrader.
According to me, lack of knowledge is the most common reason why traders lose in the forex market. When they have no idea about what they are doing, they often make wrong moves and end up losing their money. While the reasons for losing money can be different for different people, not understanding the market is undoubtedly the most common of all.
I believe that the concept of luck is often used by those who are ill-prepared. When you are confident about your trading knowledge, you never rely on luck. Even if you lose, you own your failure and learn from it rather than blaming it on luck.
Fantastically presented. Stops or Stop loss is one of the most vital tools in trading. It is to be used before taking every single entry. Risk management with proper risk-reward ratio are to be calculated as well. Once an entry is triggered, we have to have the belief in our analysis and be patient with it.
Great article. Really informative. I’ve been trading a few years and implementing some of the concepts you mentioned has changed my trading drastically.
managing trading psychology is also key, you can’t be consistent without it
Lack of humility is the main reason people fail at difficult things.
For example I offer mentorship every once in a while. I always ask two simple questions…
- are you serious about becoming a trader?
- can you admit you do not have a working system?
most people cannot even pass the first test in humility and resolve as they cannot answer these simply yes or no questions. They say its a scam immediately as its a convenient excuse to fail. So they can blame their failure on the industry or someone else. It is their own fear that leads them down the wrong path.
When i first started off, i did not care who the data was coming from I absorbed it all. My desparation for a working system overwhelmed my fears. Humility and resolve are key
when someone claims to have the thing i badly want, i play nice nice knowing im not any a position to negotiate.
pretend the market is a person. Its not going to show you profits until you figure out how it moves and what it wants. You are the one bending to the will of the market, you are its bitch at first. And none of your preferences are considered by the market, it does not care how you feel. Being humble enough to practice patience, even though you are getting rejected over and over, everytime you try, wrong, try again…wrong. One more time, wrong again.
This constant rejection by the market of a learning trader is what makes people stop genuinely trying. Only those humble enough to bow down to the market and admit that it has all the power, those people that can last through that constant pain of rejection. If there is someone out there who understands what im saying about humility being the key, talk to me, lets work together.
Great read mate
According to me, the three main reasons to fail in Forex are:
- Lack of Forex knowledge
- Improper trading strategy
- Over trading
Yes, these are the main reasons why traders lose in forex. You can avoid all these if you start tracking your trades and maintain a trading journal. Some traders don’t keep track of their losses. Whether you win or lose, you should backtest your strategy so that you can trade better next time.
This is an excellent article. Thank you, and I hope to learn more from you in the future.
Some of the things I got by talking with my students:
- Jumping in trades, without a solid base of knowledge
- Letting your emotions overtake your patience in waiting for a setup to form
- Focusing on too many things at the same time
Three reasons why I used to fail as a trader:
- Lack of knowledge
- No fixed risk management plan
- Becoming overconfident, when you have a profitable strategy ( the market will keep you humble luckily )
For the colour blind traders…find out which colours are comfortable for your eyes. It does help with your psychology. It helps me
I agree with you, I do think that lack of knowledge is the most common and the major reason for traders to fail in forex.
In my vision,
- overdo the trading
- trading without plan
- trade on sentiments rather than analysis.
Most people try to trade with too small of a bankroll.
They react to emotions more than they should.
They let bad trades go on too long, and cut winning trades early.
it takes so much time to master forex trading
I do agree that the lack of knowledge is the reason for failure. A trader can gain knowledge while trading. Problems come when he thinks about making profits overnight and uses high leverage.