May 26 2021 0
Why are there as many as 95% of all forex traders that fail when they join this market for the first time? Here, we will give you 7 most common reasons that lead to the failure of those forex traders.
Lack of discipline
You have a good trading system, you have sound trading plans but they mean nothing when you don't have the discipline to trade.
The less disciplined you are, the more overwhelming your trading emotions will be. That's the main reason why you gradually lose control. Transactions go further and further with the plan and gradually erode the money in your account until the end.
Are you familiar with this image:
A gambler sits at the table. He got off to a great start with a series of consecutive wins. His wallet thickened considerably until he started having losing games and then decided to bet all the money he had won. Finally, he left the table with an empty wallet.
Trading Forex without discipline is just like that. Think of trading like you're running a business. Every action must be controlled and planned in advance. This is absolutely not a gamble.
2. No risk management
Your first priority is not to make a profit, but to protect what you have. Every opportunity will deny you when you run out of capital.
In Forex trading, the way for you to always control the risk of your account is to use Stop Loss. You always have to use Stop Loss rationally and with a plan.
Consistently using Stop Loss in a disciplined way will help you avoid one of the most dangerous psychological factors to a Forex trader's success, which is "bearing in losses".
Surely you are no stranger to the image of a trader who enters an order and leaves it there. There was no Stop Loss and he just let the market run. Only when the trade is profitable will he close it.
Bearing in losses can be said to be one of the most common problems faced by traders.
3. No patience
Most people are impatient. That sucks, especially for us Forex traders.
If you have a good enough trading system, you will have a list of requirements for an entry decision. However, it is a pity that you do not have the patience to wait until market conditions satisfy those requirements. Given the reality most people lack patience. Practicing it is a prerequisite that sets you apart from the rest and ensures your success.
Having a sound trading plan and the patience to execute it consistently will help you manage your fears and emotions to get the best trading results for yourself.
4. Too greedy
Of course, we are human and we all have different greeds, more or less. A lot of people come to the Forex market with the mentality of wanting to make a lot of money quickly. I have to admit that I used to have the same misconception.
There's nothing wrong with being greedy. Optimistically speaking, greed will sometimes be the driving force behind your determination to work. But, you need to keep it under control, otherwise greed will only harm you.
If you let greed take control, you will also expose yourself to terrible risks. You will treat the Forex market as a gold mine for you to get rich quick. You will even jump into the market even if you don't know what to do.
When greed becomes excessive, your mind will no longer worry about the consequences that you may have to suffer.
5. Get carried away
Confidence and excitement are easy to develop after you have made big profits or won consecutive winning positions.
Remember, your success in the Forex market is determined over a long period of time with your discipline and your trading plans. It doesn't make sense to make a lot of money and then lose it later.
Confidence in your trading plan or in your trading system is essential.
But once you become overconfident, that's where the danger begins. You don't even withdraw your profits to preserve them. You also no longer care about risk management, because you believe you will continue to win. Those are really serious mistakes.
6. Unrealistic goals
This is also one of the main reasons why 95% forex traders fail from the start. Never let anyone's offers, quick money ideas get into your mind.
Making money has never been easy in any field (legal sector of course). Especially with the foreign exchange market, one of the toughest financial markets today.
The journey to becoming a successful trader is not a sprint. It is a long-distance race that requires you to always try and control yourself.
Setting reasonable profit targets keeps you from getting off track.
7. Lack of trading knowledge
Manage your Forex trading account like you would a business. You need to build a plan, develop a complete plan, and execute everything according to that plan. You must always keep learning, improving and adding more knowledge to improve yourself. Avoid making unnecessary trading mistakes.
The above are the most common mistakes that make 95% of new forex traders fail when they start trading. Make sure you don’t commit any of them. Trading is not hard when you know what to do.