As a trader, everyone tends to find out the possible ways to multiply their profits and be successful. But the darker side which reveals why most of the forex traders fail what they aspire to become is given least importance to or completely avoided by the trading community. It is quite important to know the reasons why forex traders end up losing everything they have. Here are 7 main reasons which could explain why forex traders fail.
1. SKIPPING THE BASICS
Being a forex trader, if you have skipped the basics and started to trade without adequate knowledge, you can assure yourself that your trading career is doomed to fail.
Forex trading is the largest trading financial market in the world and it requires great knowledge & practice to stay consistent in it. Being a beginner, it is strongly recommended that you do not skip the basics. Go through forex tutorials, glossaries etc. which could help you become a better trader.
2. TRADING WITHOUT A PLAN
If you have failed to plan, it is clearly evident that you have planned to fail. Forex markets are highly volatile and unpredictable. You need to be highly calculative and work out a winning strategy to be in the game. Reassess your plans often and visualize what your goals are and trade accordingly.
3. HIGH LEVERAGE (HIGHER THAN NORMAL)
High Leverage serves as the opportunity to amplify your returns but it could also cripple your career to a great extent. It is necessary that you do your homework before you start trading with high leverage. Understand the leverage ratios and the risks involved in it to avoid potential losses.
4. POOR OR NO RISK MANAGEMENT STRATEGIES
Devising a winning strategy does not mean that you could be successful forever and ever. The unpredictable forex market could prove you wrong at any moment. The results could be devastating if you do not have an effective risk management strategy.
Stop Loss is an effective risk management technique which saves your capital investment when the market turns against you. Using such risk management techniques could help reduce losses in trading.
5. GOING AGAINST THE MARKET
A market trend is a pattern in which the market flows. Being a beginner, it is safe if you follow the trend in order to avoid huge losses. Some expert traders dare to go against the market trend by trusting their experience and risk management strategies. But being a beginner, it is highly recommended that you go with the market for a certain period of time until you gain adequate knowledge and experience.
6. REFUSING TO ACCEPT YOUR MISTAKES
As a trader, it is mandatory that once you have made a mistake, accept that and see what can be done to overcome it. Do not adhere to the same method which will only lead to further disappointments and losses. Analyse what went wrong and try to fix it with positive measures.
7. CHOOSING THE WRONG BROKERAGE & PLATFORM
A trading platform is where you execute all your trades and monitor them. If you choose the wrong brokerage and the platform, the results could be fatal.
Before you choose your brokerage, explore what they can offer you and how concerned they are about your success. You could become a successful trader and reach new heights if you manage to choose the right brokerage.
Success in forex is not defined by how much you earn, but it is the experience and knowledge that you exhibit at crucial times, how you manage your stability and sustain yourself as a trader every day is all that counts.
