I think the main reason why 90% of traders fail is because of a fundamental misunderstanding of risk per trade.
This 2% risk figure is parroted around like the gospel and not one source of information out there talks about trade size and stop loss when defining risk which makes absolutely no sense.
Further expanding upon risk misunderstanding is the fact that everybody out there seems to be trying to do some kind of trend trading and sniping the market at the perfect price with a single order.
How about instead of fishing with a rod, you fish with a net and let the fish come to you?
How about spreading your risk along a lot of little tickets across a wide area instead of one big one at what you hope is the perfect entry?
Trading makes so much more sense and the possibilities of how to get in and out of markets expand exponentially when you learn how to spread your risk and let the price come to you.
If you risk more than 4% per trade it is very likely that at some point you will burn the account even with a winnig strategy.
The problem is that 99% of traders do not have a winning strategy so even if you risk 0.1% you will end the year in red, maybe -3%.
Being ultraconsrevative does not turn a piploser strategy into a pipwinner.
You can lose 80% or 8% you are a loser and you cannot make a living from an activity that lose money.
Traders lose money because designing a winning strategy is as difficult as rocket science.
This because the market is almost 100% efficient and random.
The harding phenomenon is a word that comes from the English word âHerdâ (flock), and means that human beings tend to act according to the thoughts of others and many people. Speaking of phenomena that are familiar to us, we buy products that are in fashion, and the queues call for more queues.The Harding phenomenon is known as one of the insights in âbehavioral economicsâ, but a synonym in behavioral economics may be the âbandwagon effectâ. Behavioral economics has the perspective that âhumans seem to be rational and behave irrationallyâ and âthe economy created by humans also has irrationality born from such a psychological aspectâ, and stock investment and economy It can be said that it is one of the academic fields that are attracting attention in economics. We can see this tape of irrational behavioral action lots of times in financial markets when we see when price makes big divergence agains company fundamentals.
Forex is a risky market, and not everyone understands it. Many traders get motivated by seeing other peopleâs profits and invest their money without having any strategy or analysis.
Can be the best strategy in the world but without solid risk management it wonât matter. I think many come into trading who compare it too much like gambling with a bookie.
Algorithmic trading system is the best way to manage risk especially against Market Maker some platforms using local stop so that will be not visible on exchangeâŚ
Why do you say it isnât? Perhaps in my time trading I havenât been caught out badly and Iâm lucky but I find a combination off all the things you mention certainly help to be profitable, if only slightly.
See I totally agree with this. In my opinion the vast majority of people go into a trade concerned primarily with what they can make rather than what they can lose. I try and look for opportunities that allow for at least 1:3 RR. Coming from a matched betting background I never found it hard to priorise capital preservation. The thrill of risk has never been my buzz.
The idea that we know how much the market is going to give us prior to the trade I believe is a wrong one - I understand your point but this is the type of thinking that gets newbies into trouble
There is no such thing as a crystal ball in the markets
only can wish all the best