Reasons Why Forex Traders Lose Money
It is generally known that most forex traders not succeed. Actually, it is estimated that among all of forex traders almost 96 percent traders fail to gain profits and end up quitting. To facilitate you to be in that exclusive 4 percent of successful traders, I have written a list of the most common reasons why currency traders fail to generate profit.
- Low Initial Capital
Most forex traders begin seeking a way to get out of debt, or to earn some easy money. It is usual for forex marketing to encourage you to trade highly leveraged and trade large lot sizes to earn huge profit on a small amount of primary capital.
It is surely possible for you to make large profit on small capital in the short term. Nevertheless, with only a limited investment and big risk, you will get yourself being emotional with each movement of the price and the worst times possible.
- Failure to Manage Investment
Money management is most important to survival. You can be a great skilled trader and still be exhausted by poor money management. Your main target is not to generate some money, but rather to protect what you already have.
Many traders think that they need to grab every last pip in a move. There is opportunity to make money in the currency markets every day. Trying to squeeze every last pip in a price move before a currency pair reach in a potential position can set you up to lose the profitable trade that you are sitting on.
- Uncertain Trading
Sometimes you might find yourself suffering from trading remorse. This happens when a trade that you execute is not instantly profitable, and you start thinking that you chose the wrong direction, and then you close that trade and reverse it, only to see the market go back in the primary direction that you picked.
- Trying to Pick Tops or Bottoms
Most of the traders try to pick turning points in currency pairs. They will execute a trade on a pair, and as it keeps moving in the wrong direction, they continue to add to their position being sure that it is supposed to turn around this time. Unfortunately, you end up with much worst experience than you planned, and a very negative trade.
- Refusing to be wrong
It is human nature to always want to be right, but sometimes we just are not. As a currency trader, sometimes you have to accept losses and move ahead, rather than clinging to the idea of being profitable and ending up with the entire account.
- Buying a System
There are thousands of ‘forex trading systems’ for sale on the internet. Most of the traders are out there searching for the exclusive ‘100% accurate forex trading system’. They buy systems One after another and try them our but end up losing all their capital and find that there is no way to win.