Why 90% traders losses their money in forex trading?

Beginner Questions Trading Psychology
1

Time and time again you’ll hear people say 90% of traders consistently lose money trading the forex markets.

With so many traders losing money across all types of financial markets it begs the question “What are all these people doing wrong” ?

This is the question I hope to answer today, we’ll start by taking a look at some of the things which are commonly blamed for 90% of traders losing money and try to decipher whether they are the actual reason for so many traders consistently losing or if there is something else which people are doing wrong ?

1. No Strategy

The Number #1 reason why traders fail is that they have no strategy.

A lot of traders don’t want to acknowledge this but the fact is they have no idea what they are doing. Their idea of a strategy is some combination of technical indicators that they have heard or read somewhere.

2. Insufficient start-up capital

Many new Forex traders are already starting on the back foot. They begin Forex trading because they need more revenue and hope Forex will be a quick and easy way to make large profits.
This is exacerbated by Forex marketers encouraging beginners to trade using high leverages by promising the potential of big returns for a small amount of initial capital.

3. Psychological Factors

It’s pretty shocking, but the fact is that more than 95 percent of traders lose their whole forex investment pot in the first six months2, as the market can certainly be unforgiving. Part of the reason why this is the case is that there are still some people who see forex trading as a get-rich-quick scheme. This has strong links to the feelings of both luck and greed, two things that can act as a psychological block to anyone who is new to trading forex.

4. Over Leverage

The fourth reason why traders fail is that they take trades way beyond their capacity.
I have seen traders with Rs.1 lakh of capital taking trades worth Rs.10 lakh and even Rs.15 lakhs. These guys want to get rich quickly and, in that greed, they take excessive leverage.

5. Financial Factors

Arguably, the biggest issue facing new traders is to simply comprehend the sheer size and complexity of the forex market. No matter whether you are trading part-time, full-time, or casually, the worst possible thing you can do is underestimate the market’s power, along with its varying levels of volatility. Commit to trading, strive to learn the ins and outs of forex, and learn to appreciate the potentially complex nature of what you’re doing.

6. No Emotional Discipline

The six reason why traders fail is that they have no emotional discipline.

They are driven by emotions rather than logic. In one single day, they experience all kinds of emotions: they get excited, they get impatient, they get frustrated, they get confused and yes, they become greedy and fearful.

7. Poor Risk Management

Poor risk management, and even worse, no risk management is a major reason why Forex traders lose their money quickly.

Risk management is key to survival in Forex trading including day trading. You can be a good trader and still be wiped out by poor risk management.

Strat trading without proper knowledge

Many news forex traders start forex trading without proper trading knowledge. They haven’t proper trading plan. It’s a big reason for losing money in forex market. Traders need to learn proper about forex trading first.

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Thank You

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2

We’ve read it all before, but its all true.

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3

You said it all!

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4

Basically because it is hard. But marketers make people believe it isn’t.

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5

Yeah it’s true

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6

Impatience and greed.

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7

Most brokers have a whole lot of data about their clients.
Generally, they tend to be right about direction.
But, newbies traders take small gains, but hold on to their losses for longer.
Tom Hougaard has a youtube session about this.

Newbies double-down on losing trades; they tend to accumulate a good profit over many trades, then lose it all spectacularly trying to “get back” the loss on new subsequent trades.

I think mentally separating each trade as a distinct event is difficult.

One of my bug-bears is the fluctuation of the price before it goes to stop-loss or take-profit.
It’s not like a coin-flip, or drawing a card at blackjack; the price meandering to the profit-level, then coming back, then going again, then coming back, is the mind-destroyer.
Taking a trade, setting a SL and TP, and walking away is the way, but is mentally draining.

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8

Most fail due to an inflated ego(head). We act like we are in a position of power because we are afraid to genuinely ask for help and let go of doubt. We assume the sources of information are too vague and misleading as if we would know the difference. When you first start we dont know what we dont know, we must have faith and submit to an unknown amount of time. Afraid of the unknown, afraid of wasting time, admit that its the only game in town if you truly value your remaining balance(time$)

9

That’s why is advised to invest on money you can afford to lose. Also having a side hustle/job can ease the tension. Meanwhile Knowledge on how to trade is a never ending process.

10

“90 percent of traders lose 90 percent of their money in the first 90 days of trading,” you may have heard. The 90/90/90 rule is what it’s called.

Here are the top seven reasons why traders lose money.

  • Putting much too much money on the line in a few trades.
  • Not having a thorough understanding of the trade structure.
  • Instead of learning to trade on your own, you rely on suggestions.
  • Failure to adhere to stop-loss and profit-target discipline.
  • Taking a 360-degree perspective of the market is not taking a 360-degree view of the market.
  • Trade without regard for the trading plan or the trading diary.
  • Putting more emphasis on being correct than on generating money.
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11

Jumping on live charts too quickly is a huge curse for new traders .
I would suggest 6 months in demo before going live

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12

If you ask me, I would say that psychological factors are the most important reasons why traders lose money in the forex market. Their psychology is related to not learning properly, taking it too lightly, not practising enough, etc.

13

Probably due to wrong strategies and too much fear and/or greed.

14

The major reason why 90% of forex traders fail is they are undercapitalised in comparison to the size of the trades they make. This happens due to trading decisions which are driven by emotions like fear and greed and earning vast amounts of profits immediately.

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15

Another element is trading under duress I mean where the money is so important for people from poorer backgrounds trying to do their best so they take too much risk overtrade

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The Forex market is risky and hard to trade. The reason many forex traders fail is that they are undercapitalized in relation to the size of the trades they make. It is either greed or the prospect of controlling vast amounts of money with only a small amount of capital that coerces forex traders to take on such huge and fragile financial risk.

17

This is because of their unrealistic goals about making an abundance of money overnight. Moreover, many traders tend to neglect the risk involved and do not use proper risk management strategy.

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18

Plenty of options actually. The most common reason why many traders lose money is simply that they want to become professional traders without learning more about it first. This is mostly because many traders start trading when they see an advert talking about trading (or extremely favorable conditions, such as in early 2020). These ads are in all platforms like Google, Facebook, and television.

After spotting an ad and learning more about its potential, they open an account and start trading. They do all this without even learning the differences between assets and how trading works. Other people start trading after seeing the hyped stories of millionaire traders on television.

19

Kinda hard to believe that nobody has mentioned the actual reason… That’s what these markets were designed to do. There isn’t a single market on this earth that was designed with the intent to make rags to riches millionaires. Everyone here is chasing a ghost of you think you can be the one guy.

20

The main and most important reasons are never mentioned in the hundreds of threads on this site asking the same tired old question !

The fact of the matter is that the ODDS are stacked against you - exactly the same as in any Casino or Bookmanker

Yet every time the question is asked we get the same tired old “explanations” as above - seeking to blame the victim !

on a series of trades you have to win a lot more than you lose just to break even !

If you take a look at the mechanics of it you will find that for a large movement like 100 pips you stand to lose say 106 pips or to gain 100 pips on any one bet

On a smaller bet like a day-trade 20 pip bet - you stand to lose say 26 pips just to gain 20 pips !

The smaller the movement, the bigger the odds that you will lose.and proportionately the bigger the loss!

Yet you will NEVER see this explanation here or anywhere else ! :slightly_smiling_face: