A lot of reasons count for a trader’s losses in the forex market and they are not always because a trader lacks a certain skill. Sometimes, it’s the market that is so sudden that it’s not easy for a trader to make a gain. This requires a trader to keep patience and follow the set rules so that losses can also be handled.
Truly brilliant assessment. Well said.
There may be several other reasons for this. However, major factors are lack of proper knowledge, patience, unrealistic expectations and so on.
When traders do not accept failures or have a hard time accepting them, they cannot prevent future losses. When losses accumulate, they leave forex trading. But they do not realise that acceptance and acknowledgement, along with patience and discipline, work wonderfully to carry one from failure to success.
The most common reason why traders fail is due to lack of a trading plan. Traders should plan in advance about their trading strategies.
No doubt, greed is such an important parameter here! On the other hand, lack of trading knowledge leads the damage actually!
haha just like a lottery
All of the points that are listed by OP are major mistakes that beginners make when they get into forex trading. And such mistakes can cost a lot as they end up losing a significant amount of their hard earned money. Every new trader should prioritise risk management in order to minimise potential losses. This applies to experienced traders as well. Because many start out well but once they become profitable, they tend to deviate from their strategy as they get blinded by greed. This results in overtrading and leads to huge losses as well.
Most of the traders, especially new trader fail due to:
- Lack of proper knowledge
- Neglecting risk management
- Lack of proper analysis
- Lack of calculated trading plan
- Are unable to have stable emotions
So, they start trading without a profitable strategy then?
Sounds like.
Actually, more relevant metric is how many people who are trading now are losing.
From UK and EU broker statistics this is 70-80 per cent.
Assuming most new traders do not have a profitable strategy, maybe that result is not too bad?
90% of traders lose money due to “greed.” Because of lack of knowledge and experience they are unable to comprehend market fluctuations and hence make incorrect selections. When trading forex it is important to be disciplined and follow the trading plan seriously. Risk management and stop losses are the main tools that you have to use in your strategy to avoid losses.
Most people who are actively trading at the present time are down. But the figure is not 90%, it is 70-80%.
In addition, some of them are no doubt down on their original and total capital investment into trading but are now profitable on an on-going basis.
Never give up.
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