Why most traders fail?
Most of the forex trainer will tell you that data shows 95% of the traders fail. Only 5% making money! I don’t want to discuss the accuracy of that statistics. The fact is that most of the people trade forex like they are playing in a casino. They don't really know how to play the game and they are in the game. Or, they know the rules and regulations of the game; just that they refuse to admit that they are wrong when they are wrong. Below examines some common reasons of why most of the traders fail.
Bad profit and risk management
Do not expect instant huge amount of fast cash flows into your account and always remember that any trading instrument involves risk of losing money. Most of the traders simply forget about it when their emotion comes into play. When they open a losing trade, they refuse to admit that their analysis is wrong and refuse to close the position. Usually they hope that the price will somehow come back to the breakeven level later. As long as the position is open, the mistake simply cost you more and more money. Always trade with the money you can afford to lose and stay away from buying larger volume when you still do not have the skill to win most of your trades.
Too dependent on leverage
Leverage is only there for your convenience. You should never let the thought that higher leverage can make up for a lake of leverage. To a certain extent, leverage is there to attract you, so that you can start contributing your savings to other big player in the market willingly. You just need to understand a simple fact. Leverage is a two edged sword. It can help you to bring
Let emotional involved
Most of the traders get emotional when fail to get profit from a trade. The trading platform suddenly turns into a casino. Traders start to bet on an unpredictable outcome. When you experience few unsuccessful trades, just stop for a while. Think and find out what went wrong. Get yourself a cup of coffee and let your mind cool down before open another position.
Greedy
Another scenario happens when they are in a winning trade. Still, the position is kept open, hoping for extra few pips by waiting a little longer. It feels good seeing the money grow. Most of the traders simply want too much. Always remember, there are only two outcomes when trading. The price either goes up or down. Just close the position if you already reach your target profit level or when your exit indicators give you signal. Follow your trading plan. There are plenty of opportunities around. Why bother about those few pips when you can earn more next time
Overconfidence
Most of the traders simply jump into real money account and high leverage thinking or probably hoping that they will get their money back fast, real fast. Knowing how to trade does not make you a successful trader instantly. Trading needs skills as well as experience. There are other factors that whatever tools or indicators won’t show.
Too many trading system
Maybe this is the opposite of overconfidence. A trader only needs one trading system to succeed. There is no holy grail in forex and other trading market. The indicators used are all lagging indicators. They are plotted base on past data. It is normal that you get into some wrong trade sometime. The important here is to know that you know you are wrong and cut your losses fast. You don’t need to switch from one system to another system. Stick to the one that make sense to you and make you win more trade.
Do not pay attention to market situation
If a trader does not pay attention to market situation, it is like sailing in an ocean without a compass or swimming against the stream in a river. It is definite for a trader to fail if he/she trade without direction and against market force. Therefore, always pay attention to the latest news release about a country's economic perspective, political issues, etc to get a better picture of where the market is going.
Most of the forex trainer will tell you that data shows 95% of the traders fail. Only 5% making money! I don’t want to discuss the accuracy of that statistics. The fact is that most of the people trade forex like they are playing in a casino. They don't really know how to play the game and they are in the game. Or, they know the rules and regulations of the game; just that they refuse to admit that they are wrong when they are wrong. Below examines some common reasons of why most of the traders fail.
Bad profit and risk management
Do not expect instant huge amount of fast cash flows into your account and always remember that any trading instrument involves risk of losing money. Most of the traders simply forget about it when their emotion comes into play. When they open a losing trade, they refuse to admit that their analysis is wrong and refuse to close the position. Usually they hope that the price will somehow come back to the breakeven level later. As long as the position is open, the mistake simply cost you more and more money. Always trade with the money you can afford to lose and stay away from buying larger volume when you still do not have the skill to win most of your trades.
Too dependent on leverage
Leverage is only there for your convenience. You should never let the thought that higher leverage can make up for a lake of leverage. To a certain extent, leverage is there to attract you, so that you can start contributing your savings to other big player in the market willingly. You just need to understand a simple fact. Leverage is a two edged sword. It can help you to bring
Let emotional involved
Most of the traders get emotional when fail to get profit from a trade. The trading platform suddenly turns into a casino. Traders start to bet on an unpredictable outcome. When you experience few unsuccessful trades, just stop for a while. Think and find out what went wrong. Get yourself a cup of coffee and let your mind cool down before open another position.
Greedy
Another scenario happens when they are in a winning trade. Still, the position is kept open, hoping for extra few pips by waiting a little longer. It feels good seeing the money grow. Most of the traders simply want too much. Always remember, there are only two outcomes when trading. The price either goes up or down. Just close the position if you already reach your target profit level or when your exit indicators give you signal. Follow your trading plan. There are plenty of opportunities around. Why bother about those few pips when you can earn more next time
Overconfidence
Most of the traders simply jump into real money account and high leverage thinking or probably hoping that they will get their money back fast, real fast. Knowing how to trade does not make you a successful trader instantly. Trading needs skills as well as experience. There are other factors that whatever tools or indicators won’t show.
Too many trading system
Maybe this is the opposite of overconfidence. A trader only needs one trading system to succeed. There is no holy grail in forex and other trading market. The indicators used are all lagging indicators. They are plotted base on past data. It is normal that you get into some wrong trade sometime. The important here is to know that you know you are wrong and cut your losses fast. You don’t need to switch from one system to another system. Stick to the one that make sense to you and make you win more trade.
Do not pay attention to market situation
If a trader does not pay attention to market situation, it is like sailing in an ocean without a compass or swimming against the stream in a river. It is definite for a trader to fail if he/she trade without direction and against market force. Therefore, always pay attention to the latest news release about a country's economic perspective, political issues, etc to get a better picture of where the market is going.
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