We see a common mistake among traders which is they never search for the market trend that leads them to take a wrong entry. So, this is the main reason traders bear losses from trading. Traders should invest their time in learning more about technical tools so they can identify the right trend.
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Those traders who are doing their trades without any plans will be the ones who will get the losses.
There are plenty of reasons why forex traders lose their money. Some of the common mistakes committed by forex traders are: not doing proper research, overtrading, and following too many recommendations. These mistakes have caused many forex traders to take losses.
No one can specify the exact reason for why so many traders are losing. The forex market is highly volatile and even a small mistake that is made by the trader can lead to losses. The reasons may include:
- Lack of proper trading plan
- No risk management strategy or stop-loss not placed properly
- Entry and exit point not set appropriately
- Trading strategy is losing edge
- Lack of knowledge about reading charts and patterns
- No proper understanding about the nature of the market
I think most traders lose because they fail to learn how to manage risk correctly. We have poor intuitive understanding of risk or uncertainty, telling apart degrees of risk involves dealing with uncertainty which is hard to measure or judge about. That’s why fixed stop loss doesn’t always work as you apply same constraint to various situations and this is the reason of decrease in performance.
If you ask me, the most crucial reasons why traders lose money in the forex market are psychological aspects. Their psychology is linked to improper learning, taking things too lightly, not practicing enough, and so on.
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Avoid doing what new traders do and you stand a good chance of avoiding being a member of the 90% club -
do invest adequate capital
do have an alternative income to trading so you do not have to regularly withdraw profits
do not trade reversals
do not consider scalping or trading on time-frames of minutes
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True that!
Many traders tend to lose money as they do not have much knowledge about the market movements and they ended up making wrong decisions. Also, because of their lack of research on the forex market as well as their trading strategies, they ended up losing money in the trading process.
The reasons for losses are:-
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Not practicing on the demo account
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Doing emotional trading
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Earning before learning
There could be a few reasons for that like lack of a solid trading plan, impatience, lack of knowledge, and last but not least, putting all the eggs in one basket. Be smart in what you are trading, so as to avoid mismanagement of your funds.
Losses are an inevitable truth and you can never be accurate with your trading predictions every time. Losses are as much possible as profits. A trader who doesn’t prepare for losses often ends up failing at trading and blaming the market.
I agree, as a trader one should learn to take both profit and losses in stride.
The forex market is quite volatile because of which 90% of traders lose their money in forex trading. More reasons are as follows:
- Less knowledge of analyzing price charts
- Failure to place stop-loss properly and no risk management strategy
True, most of the traders go for their live trading without proper game plan! They just try to follow others trading strategy or system! But, it’s not the proper way to sustain in this volatile market!
I think many might fail ,cos their scenario is .Successful demo trading and live trading for so long, then the market conditions change, their strategies may no longer work,a series of losers, panic, then irrational choice of trades letting losers run ect ect.You have to be adaptable and "on the ball all the time "
There are many reasons for why many new traders fail. But I believe that the main reason is the lack of right trading psychology. They do not have any control on their emotions and become greedy, risking large amounts of money and ultimately get panicked and anxious while trading and making wrong trading decisions. And this leads to losing the trades.
Most new traders don’t prepare themselves for losses. They keep trying to make profits but forget that losses can also be an outcome of trading. Entering the market without a risk management strategy often makes traders lose it in the end.
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Every single individual has their own opinion in this topic and here is mine if you want to read and comment about.
** Trading Psychology**
It comes with different subjects which includes:
A) Irrational trade
Basically, the gamble. We all know what it is and how it kicks in right? This paralyse trader, wash the brain out take the money away in short period of time. This is called irrational trade and every single professional trader have to gone through this stage. Very simple and straight forward.
B) Risk management
This is all about how much money you are willing to risk and you are still comfortable even if you lose. Once you are out of this perimeter, very likely to come across with irrational trade and lose in one way street.
C) Trading Rules
If you don’t have rules then basically you are going random places and end up losing because you do not have any target and no rules what to do and what NOT to do. This is your own disciplines which keeps you in track at all time.
D) Truth
You must understand the 5 fundamental truths about market and what that mean to you. Please take it positive, because this is not me who is telling this instead he was a great writer.
Knowledge
It comes with 2 part.
A) Lack of Technical Analysis
Thousands of tools you can find and use it as suits your personality. Without these knowledges, there is always an edge.
B) Lack of Fundamental Analysis
What is the reason behind the news and the likely outcome of future result matters to all. Above all, Collective human behaviour make the difference to the market movement either bull or bear.
At the end you may not read all of these by the way.
Thank you.
Most brokers lose their money due to a lack of knowledge of forex, and many beginner traders rush into forex without having any demo or live experience.