The lack of a strategy or plan is the most common reason traders fail. Many traders deny it, but they do not understand what they’re doing. Trading against what everyone else is doing- is another factor.
Traders lose because of having no basic trading knowledge. So, knowledge means traders have to be good at analyzing the market. Traders must earn efficiency on both technical and fundamental analysis. Otherwise, trading will create no value for traders.
Knowledge is key alright but I’m happy to let everyone know I have never done a minute’s technical analysis in forex.
Even if learned all the FA I could and spent every hour keeping up to date, I would still not be as good as the people at the big 5 international banks. So I let them do the FA work, they buy and sell and we can all see what they are doing in the TA.
Traders who lose money do so primarily because they lack sufficient market and currency knowledge. Getting better and learning new things isn’t a priority for them. And the second most common reason is trading without a strategy in place. To be successful in business, you need to have a solid strategy in place.
ttraders that fasil lacks mindset for a traders and has bad momey management
Yep, and it works for day trading too. Look at a chart, is the trend up or down. Wait for 8am London time, what does price do? If it’s in the direction of the long term trend, then jump on board. Always got to be careful when US opens that it doesn’t reverse, but generally it keeps going all day.
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I can’t remember who it was, but one of you in the thread made the comment that retail trading is completely different game to how the companies / investment banks trade. I was wondering what the difference was, apart from the fees they charge depositors and the size of their trades? This isn’t a rhetorical question - I really don’t know and would be interested to hear if someone has some insight into this that they could share? I always assumed it was just a question of fees and scale.
Also, I was looking at job ads just out of interest and saw that average salary for a professional trader for companies like Shell are just £65K per annum. This seems strange that a professional trader should get so little. I know the most successful ones will get huge bonuses, but still? As a retail trader I’ve always pretty much considered myself bottom of the pile and pig-ignorant compared to the pros, but I make about £25K per year trading in my spare time (average last 3 years) AND have a day-job. Can someone explain to me how this trading profession works?!! Sorry, I know I’ve gone a bit off subject to the OP.
I believe that the majority of people lose due to a lack of fundamental trading understanding, risk management, and patience.
The riskiest aspect of FX trading is greed. Your greedy mentality may cause you to lose all of your money and retailers are mostly greedy in nature.
Greed can tempt traders to increase their position size against their trading plan which results in losing.
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Most traders fail in the stock market because they lack the necessary information. Beginners are in a hurry to make money, so all they care about is making trades and making money. This is the main reason why 90% of traders fail in the stock market. The first step to becoming a successful trader is a willingness to learn.
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Everyone thinks forex to be a ‘get-rich-scheme’ or that it makes them an ‘overnight millionaire’. These are the beliefs that make the game of forex a game of losses. Other factors like greed, no discipline and consistency, and not enough learning and practice make one lose it all.
Trading is the game of applying the right approach and skills without forex can turn out to be a great financial disaster, and it happens (hence the percentage).
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I think most traders lose money because they want to get rich quickly (this is something that motivates most people to forex trading). They don’t want to learn enough, and they start trading on a live account without practising enough on a demo account. Lack of patience, consistency, and discipline obviously makes them lose quickly
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The figure itself reveals how many people want to earn money quickly. Greediness and rushy nature often make them lose. They want to earn money right now, at this particular moment, which is not possible. How can one earn without knowledge and skills? They just want to trade because they want to trade. Their only motivation for that is money, quick money, and that is never possible.
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Traders lose mainly because they are unable to control their emotions and make trading decisions under the influence of emotions leading to bad decisions and losing.
I’ll throw a wild suggestion out there, the reason most people lose money is because of the focus on money management.
Ok, that’s not the reason on its own, but that combined with leverage is the reason. Most people are drilling home not to risk more than 2% on a trade, which means you need small position sizes or tight stops. Small position sizes means you get bored of small wins and start to chase bigger wins, tight stops means death by a million stop losses.
I doubt anybody in here will agree with me, but my strategy is big position sizes trying to catch a big move in the general trend direction, when I get it right, I make a big percentage of the account in one day. When I get it wrong, it’s often because I don’t move a stop to break even when I got a big move and it reversed whilst I was doing something else. I do get a lot of smallish losses if the market doesn’t quickly go my way, but the wins are so big in comparison that a 33% win rate is profitable.
Most of the traders fail, because they dive into unprofitable strategies and their money management is bad.
You are right; most of the new traders are greedy; they want instant success! As a result, they don’t focus on their learning process!
I agree that greed is a major factor resulting in many people perishing in this forex ocean but for me personally it is IMPATIENCE that I have found to be most challenging.
Because there is a lack of knowledge about the market as well as an appropriate understanding of it. It is possible to secure a spot in the top 10% of traders by gaining proper knowledge and a deep understanding of the market.