It has been a common fact that most forex traders fail. You may have heard dozens of stories about that. There are around 96% of forex traders quit trading due to losing their capital. According to DailyFX, many forex traders can do much better than that, but new traders usually just have a difficult time to stand their ground in this market. Here are the stories behind those forex traders who lose money.
Trying to Befriending the Market
You have to remember that the market is something you have to beat. You have to understand and join the trend in it, instead. Having the mindset to beat the market usually only brings the ambition to trade aggressively or go against the trend.
You should try your best to avoid that since that is the main recipe for trading disaster.
Having Low Start-Up Capital
Many people go to the forex market when they suffer from debt and want to make easy money. With the help of forex marketers who always encourage these people to trade large lot size and using high leverage, these people highly believe that they can make huge money from a small initial capital.
Sadly, the small start-up capital will not be sufficient to outsize the risk brought by too-high leverage. Consequently, these people become emotional during their market ups and downs.
In the end, these people end up losing their money. If you do not want to be one of them, you need to trade small (micro lots or smaller).
Failing to Manage the Risk
Risk management is the key to survive in the forex market. Even the most professional forex traders can make a huge loss without settled risk management.
Risk management indeed does not help you gain money, yet, it helps you minimize your potential losses. The most common risk management in forex trading is by placing stop-loss orders and move it once you have generates a sufficient profit.
Besides, you need to also choose reasonable lots compared to your account capital. Once you feel the trade makes no sense, then exit that trade.
Giving in to Greed
Many traders think that they have to squeeze every pip from the market. Indeed, traders can make money in the forex market every day.
But, trying to grab every last pip available before a currency pair turns can make you hold your position too long. That way, you can lose profitable trades.
The obvious solution to this problem does not be greedy. You have to short for a reasonable profit. Currencies move every day, so follow the moves. Do not get too focus on getting the last pip out of a currency pair.
