top reasons why forex traders fail and lose money?

Before jumping into the factors why do we lose money, or why most of the people failed to trade, I would like you to consider the following statement. If this fact is true that a market can go up or down over the long term, then if people are using a 1:1 risk/reward ratio, there should be at least 50% winners. Is it true or not? Well, the reality is a bit different, and that’s what this article is all about. We are going to debate on the fact that a trader is their worst enemy. We’d be putting some factors in why do traders lose money and fail to trade for longer term? But for now, in short the only reason behind losing the money is the trader themselves and nothing else.

No one can learn trading instantly, forex trading and other currency markets, they require a long term understanding of the markets, shares, stocks etc. If a trader is unable to pick up the basics of trading, or failed to understand market trends and environment. This article is specifically for those who are willing to trade, but having fear of losing their money. If you are interested to invest and trade, go through the following suggestions below and we can assure you, these suggestions will minimize your losing money risks to zero.

Overtrading:

Overtrading can be defined in two ways, either you are trading too big or you’re trading too often. First common reason for failure in trading is Overtrading. Now, there must be some causes, why do people Overtrade? There could be multiple reasons but the most common reasons are;

• Traders are aiming for high profit goals without knowing the market trend.
• They are addicted to the market.
• Lack of knowledge
• Greed for earning more money
• They lack in patience

Trading Addiction:

It is the most common reason why forex traders tend to lose their money. They do not follow the pattern of professionals/Institutional traders. No one can doubt the fact that forex trading comes up with a lot of excitement. Trading with short-term intervals can pace up the market and it can also cause an influx of adrenaline. But if the market is following an irregular pattern it can be a cause of stress as well for all of you.



How Can You Overcome This Situation?

The best way which most successful traders follow is that, you need to enter the market with an exact and clear strategy in your mind. What are you up to? What do you want to achieve and for how long you’d be trading? Even if the market is not in your favour try not getting panic and have patience to let it rise again. We use a term in trading, Chasing The Price, which is opening and closing of trades without a plan. Chasing the price is an opposite approach and we can replace the term with gambling rather than trading. Professionals believe people following this approach have zero control over the market.

When a situation like above arises, professional traders will easily recognize that they should not be taking some foolish steps. They know about the rate of risk with a particular trade which is oftenly high. What you can do in this situation is to stop trading for that day and save you balance efficiently. Don’t forget that the same market will be here tomorrow and more opportunities will be waiting for you. The moment you start believing that patience is not a weakness, you’ll be surely getting success. There will be less chances to lose your money for sure.

Failing To Adapt The Market Conditions:

People fail to trade the moment they start following the same strategy every time. They might think that this one proven strategy will give endless winning trades. Keep in mind that markets are dynamic, they are not static. They can change within a second or stay static the whole day. Since, markets are ever changing, you have to develop some extra abilities in yourself so that you can easily track down market changes and manage to survive in any situation.



The good point about markets is that they don’t only scare you with a risk factor, they contain amazing opportunities for you as well. In addition to other things, a trader needs to keep themselves up to date with average volatility, following money related news deliveries, and should easily recognize the difference between a ranging and trending market. Market volatility has a major impact on your overall performance. So, a trader must know that the strategy they’re going to follow is according to the ups and downs of the markets.

Poor Risk Management:

Proper risk management can help traders in not losing their money quickly. It cannot be a coincidence that these trading platforms are programmed with automatic take profit and stop loss mechanisms. If you can master them significantly they will increase your chances for success. Traders should not only know about the mechanisms existence but also be able to apply them efficiently, and in accordance with the volatility levels of the market.

Risk Return Ratio:

Risk return ratio is simply a set of measurements of how much profit or loss you can get. To make it more clear for you let’s look at the example, you have set your take-profit at 100 pips and your stop-loss at 50 pips, the ratio will be 2:1. This also says that you are going to break every one out of three trades provided that they’d be profitable. So, the best suggestion for traders is to check these ratios properly to make sure they fit with perfect goals. You can avoid risks completely by using a risk-free demo trading account. There will be no need to put your capital at risk when dealing with a demo account. Also, it’s the best place for new traders to learn how to trade and also for professionals to try out their new plans and strategies. Open an account today and try your luck.



Not Having/Following A Proper Plan:

What else could be a reason to lose money? Well, it's your attitude. Your attitude and lack of preparedness plays a role in it. Any business start-up other than trading needs a business plan. Similarly, a trader should spend both their time and effort to develop an effective strategy. So, these were the main reasons why traders lose their money and steps they need to take to avoid losing their money. Try researching and adapting the markets, managing your capital correctly will lead you to success. Your chances are going to increase dramatically by following these instructions.

TOP REASONS WHY FOREX TRADERS FAIL AND LOSE MONEY?

Some statistics have shown that more than 70% of Forex traders are not successful,they fail in their trading career,and that is a very alarming statistic considering the number of traders all over the world. And some of the reasons traders fail is very simple,people do not really take the time to understand what they are going into first before investing in the market.

1. Trial and Error trading: A lot of those who fail, do what i call trial and error trading,they do not have a definite plan for trading,they just want to follow price wherever it is going and that is a very dangerous way to trade.

2. Greed: This is another strong reason why a lot of traders fail in this market,a lot of traders wants to make quick money,especially after a series of winning trades they believe they have mastered the market and so they increase their risks,once market conditions changes they hit rock bottom again.

3. Lack of Knowledge: They say you are what you know,you can not possibly give what you do not have,if you do not have the knowledge to properly trade the market you can not succeed in it.

4 No Plan: If you fail to plan then you have automatically plan to fail,a trader must have a good plan and make sure they follow the plan diligently on a daily basis that is the only way to be successful.

Trading requires a lot, if you are not mentally strong it will be difficult to succeed as a trader because the market will definitely make a strong demand from you. So to be successful a trader must be prepared both physically and mentally.

Losses in forex trading.
The forex trading market is very complex, it is not actually an easy ride to the park when it comes to trading the forex market. This means that a lot of things is necessary for traders to do for them to ensure that they make better profits than losses. The forex trading is made up of losses and profits when trading is done in the market. The trader decides whether he will make profits or losses due to how he trades the forex market. Although everyone gets losses in the forex market but the goal of every trader is to minimize the amount of loses that we can get from the trades and ensure that the profits far outweighs the losses.

Reasons why Forex traders fail in Forex trading
There are some reasons why traders makes a lot of loses in the forex trading market. Some of the reasons are listed below.

Poor forex trading knowledge
This is the main reason that results to forex traders getting huge loses from trades. Poor forex knowledge will translate to poor trading and hence lot of losses would result from this. It is important that a trader should have a very good trading knowledge to ensure that good trades are made and profits exceeds the losses.

Poor trading Strategy
The poor trading Strategy also comes with poor forex trading knowledge. A trade that have a poor knowledge about Forex trading would hardly get a good trading Strategy. Traders ought to have very good forex trading knowledge and develop very good trading Strategies to enable them make very good forex trades that would result to profits and lesser losses

Trading large lot size
Trading large lot size is so much of a risk to traders. A trader that trades large lot size would have a huge loss when trades goes in the wrong direction from his part. A trader is supposed to trade an average lot size according to his trading Capital so as to avoid huge losses that could end a trade in a margin call.

Poor risk management and Trading without stop loss and take Profits
Tradings without stop loss and take profits exposes traders to the risk of the high Volatility nature of the forex Market. Traders that that trades without stop loss a do not monitor the trades manually can get devastating losses if trades move against their direction expecially in time of high Market Volatility. Take profits also helps to lock the profits and prevent them from falling into losses afterwards.

TOP REASONS WHY FOREX TRADERS FAIL AND LOSE MONEY?

Forex trading is very volatile and involves a lot of risks,to be a successful trader there must be a balance between trying to make profits and protecting your investment. One of the major reasons why a lot of traders lose in this market is simply because they are always looking at the other side,trying to make profits only. No matter how good you are as a trader and no matter how good your trading strategy is there is still that probability of losing a trade. That is the major reason why we use stop loss to protect our trading accounts when trading.

MAJOR REASONS FOR FAILURE IN FOREX.

1. Overconfidence: This is one reason of failure that a lot of traders do not talk about,overconfidence has done more harm to traders in this market than anything else,when traders begin to make profits they believe they have seen it all and they have mastered the market. And just one bad trade they are left with nothing.

2.High Risks : When the trading risk is to high there is always a high probability of losing.This is one of the reasons why we see a lot of margin calls in Forex trading.

3. Lack of Forex Education: A lot of traders do not have good trading foundation and that is simply because they do not take enough time to learn and acquire knowledge about the market before trading live. At the end you can not give what you do not have.

SOLUTION.

1. Understand the market very well before investing in it.

2. Do your home work and make sure you have a solid trading plan.

3. Start small and never be in a hurry to make it.

4. Learn to follow a solid trade plan.

5. Treat Forex like a business and have business plan.

What are reasons of losses and failure in Forex market ?

There are many reasons make the trader fail or get big losses during his trading in Forex market, which are :

• The patience with losing trades, and the impatience with winning trades. This is one of the common reason of failure in Forex market. As most of traders typically be patient with losing trades as result of their fear from closing these trades at losses and as result of their hope that these trades may return again to their entry points. But this typically lead them to face big losses. Because there is no thing guaranteed in Forex market and the market may moves against these losing trades for more than 500 pips or more suddenly, causing a big floating losses in their accounts, which may lead them to margin call or stop out. So, the best is to use stop loss to all our trades in order to close the losing trades at small loss when the market moves against us, and we should be patient with the winning trades until they reach their targets. Because if we did that, we will be able to achieve profits more than our losses.

• Using ineffective trading strategy. This is another reason causes failure or big losses in Forex market. As the important thing in any trading strategy is to get correct buy and sell signals from that strategy more than its fake buy and sell signals. Because this can help you to get good entry points in the market can help you to achieve profits more than the losses. As the strategy which can help you to get 60% correct signals and 40% fake signals, can bring you profits of 20% from the difference between the losing trades and the winning trades. So, it is very important to use a good trading strategy can bring you correct signals more than the fake signals in order to be able to survive and success in achieving good profits from your trading in Forex market.

• Lack of control on emotions. It is one of the common reasons of failure in Forex trading. As most of traders who don't have ability to control their emotions during the trading typically trade with high risks as result of their lack of control on their greed in achieving high profits from the market. And they typically take wrong decisions during their trading as result of their lack control on the fear, which typically lead them to take wrong decisions during their trading, leading them to face big losses from their trading in Forex market.

MAIN REASONS FOREX TRADERS FAIL.

The rate of failure in forex market is alarming. Despite the awareness and resources traders are exposed to, 90% of traders still lose money. Research has been made and it has been discovered that most traders actually take the right trade, the problem most times is that they are stopped out before price get to the profit target. This means that a lot of traders know how to analysis the market but lacks how to manage their trades.

Poor trade management and risk management is one of the biggest problem of traders in forex market. Traders who must take their daily cut from the mouth watering $5 trillion that exchange hands daily in forex market must imbibe the culture of discipline. Discipline from point of executing a trade to the point of exiting the same trade. It is never enough to know much about the forex market, the knowledge must be converted to money or else it will still appear that you are barren of knowledge.

More so, traders are losing because they don't take profit on time, and they don't cut losses on time. Set a reasonable profit margin that is easily achievable not something out of your reach. If traders can peg their profit margin to a maximum of twenty pips most traders will be profitable. Also, when in loss take your loss and move on don't allow it to increase hoping to turn the tide, it doesn't work most times.

Finally, ability to take trade with confidence is one thing that makes the difference between a winning trader and a losing trader. Get rid of fear and anxiety and see your trading improve.

There are so many reasons of traders failure in Forex trading market
overtrading is a very big reason of traders loss in Forex trading business mqny of the traders lost their money in Forex because they do overtrading they take too much risk at a time when they do trading and they lost their money in very small time traders you should not do overtrading they should always try to make small profit
greed is also a very big reason of traders failure in Forex because then traders try to make too much profit in this way they lost their money in Forex very quickly traders try to make small profit then they will not lost their money and they will make profit easily.

another reason of traders loss in Forex that they don't use take profit and stop loss in their trading that's why they lost their money I think traders should make their habit of using stop loss and take profit in their trading.
traders should also do proper money management when they do trading many of the traders also do that mistake that they don't do proper money management for their trading

Without doubt, it is a known fact that some FOREX traders make money in the business while other traders lose their money at the same time. The difference between these different set of traders is what they know and what others don't know. Although, FOREX trading does not have a magic or a almighty Formula that brings success, nevertheless, some traders are succeeding in the business because they know their ways around the business.

Here are some factors that usually make some traders to lose their money in FOREX trading.

- Inadequate trading knowledge: Hardly will any trader become successful without first equipping themselves with the proper trading knowledge. Knowledge remains the power and the most essential tool that can be used to face the FOREX market.

- Over trading: Overtrading comes as a result of greed and inexperience. When a trader over trades, he is bounds to fall into errors and do things wrongly. Over trading ends in desperation, and desperation is one of the reasons traders lose their money in Forex.

- Lack of planning: The fact that the FOREX market can be accessed anytime and anywhere does not mean traders should open positions without proper planning. Trading without planning ahead is one of the reasons for failure in the business.

- Taking wrong trading advice or copying the wrong traders: FOREX trading is a type of business where almost everyone will have an opinion to give. But in order not to get your account burned as a trader, the only way to avoid that is to only accept advice from the traders who are trading and making profits consistently, rather than try and error type of traders.

Many factors can affect forex trading but I will just give a brief example to this issue.

In stock trading, you can make a big profit when prices are rising (Almost guarantee) as long as you have chosen the right shares to have. But the game is different with forex trading because when you make money somebody else out there are losing their money and vice versa.

So only less than 10% of forex traders are making their fortune at a cost of the other losing traders.

How about reading a forex books that authored by a legendary successful forex traders, will this help you to survive? The answer is YES and NO.

NO because by reading those books does not guarantee you can copy their success. Just like reading a Warren Buffet's story does not mean you can become rich as he is.

YES only in terms of knowledge and personal experiences to motivate you and giving you some basic pictures of what forex trading is.

To finish this introduction, my advice do not easily trapped by a broker's advertisement which often says: "We will show you how to make money in forex easy without stress" OR "Do you have 5 minutes to 1 hour free time each day? Earn a living from forex"

Are the above sounds familiar to you? I can be sure that you will shout YES, YES, YES I have seen those kind of advertising in facebook, google, etc.

However, making money for a living or even just for an additional second income in forex trading is not an easy job at all.

Now I will show you 4 simple mistakes that most people made during their trading time:

Mistake #1: No Trading plan.

If you are going to have a franchise business or opening a shop, will you just put the money for deposit, rent a place, pay for all warehousing, staffing, etc and start selling? Of course not; Why? Because you have to make sure that everything is going your way and not opposite. This is why trading plan is important.

It is not a big surprise that people are not making their fortune in forex trading. Simple yet powerful. In many cases, a vast number of traders execute their trades without a proper plan for entering the market, exiting the market, SL and TP, what if the trade is not going the right way (Emergency plan? Cutting losses?)

Many new comers want to make money straight away and as fast as possible to fill their rainbow jug and start their dream come true life NOW. But remember, even a successful traders still making their mistakes from time to time but they learn fast and adapt because they can look back to their trading plan and tuning it to a better one.

There is an old saying for forex trader like "Plan your trade and trade your plan". Have you?

Mistake #2: Lacks of understanding of Leverage.

Leverage is like a double edge sword which can make you rich faster or opposite. Just for your reference that many successful traders are actually trading using 1:1 or 1:30. Yes I know, you might said that you need a very large capital for that but remember if you know how to use the leverage than I suggest stick to 1:100 maximum.

Avoid high leverage brokers and do your homework (Research and learn).

Mistake #3: Risk Management.

If you are going for a skydiving, I am sure you will double check your parachute, belt, goggle, suit, etc before you actually jumping from the plane. Right? Why? I am sure you know the answer for that. The main key is never jump from a plane without a parachute. You will hit the ground and die instantly.

But why in forex trading, new comer traders often break the rules of risk management. Remember that only suicidal and hopeless traders are going for a live trading without a practice and sufficient knowledge of the market.

There is no easy money here as it was described in the advertising. Keep watching and guarding yourself so that the market cannot reach you and knock you out in the bear and bull market. Always calculate how much risk you can handle, what your maximum drawdown will be, etc.

Mistake #4: No Discipline.

Now let's say that you have done your homework for calculating the risk, applying an entry and an exit strategy, putting your SL and TP. And you say this is really a very high probability trade; I should trade it now (With a big hope...) then you put yout first trade and your first one is a losing trade. But you might say it is not a big deal at all as it is part of trading and everybody experience a losing one.

Ok now you make a second trade and you are still losing it. And you might say maybe I was doing something wrong and missed some checklist. Let me double check again.

Then comes to the third trade and you are be more careful now before putting the trade and execute it. The result is another losing trade.... Hate, anger, impatient, hot and fury are filling you at that moment.

You keep thinking and have no clue at all for why your system fail. So you plan to skip the next signal and a few hours later the market is breakout to the same signal that was generated. You might think to jump in the late train but could be too late and you decide to jump the next one and relax for now. Increasing in confident and feel like in control so you wait and wait and wait for the next coming signal but the price is keep steady into the same direction and no sign of reversal.

Well, good system but I missed plus increase confident and seems in control; you virtually start counting the profit that you should have made in your trade. In addition to that you whispering to yourself "Man, I should taken this trade earlier and I will earning $x,xxx or $xx,xxx extra money by now."

From now I am going to follow all the signal and join the big ride but everyday you see your account balance start to sink like a submarine. The period of losing trade is start again and even worse. You finally decide to quit the forex trading and never ever want to touch or hear or read anything about forex forever. As a result, you become a self appointed hero that sharing your story about forex and your experience but I will tell you guys to not trading forex bla bla bla...

Emotional problem is the issue here and many traders focus primarily only to money, profit and make a revenge to losing trades without utilising a trading plan. This is part of lack of discipline.

Before jumping into the factors why do we lose money, or why most of the people failed to trade, I would like you to consider the following statement. If this fact is true that a market can go up or down over the long term, then if people are using a 1:1 risk/reward ratio, there should be at least 50% winners. Is it true or not? Well, the reality is a bit different, and that’s what this article is all about. We are going to debate on the fact that a trader is their worst enemy. We’d be putting some factors in why do traders lose money and fail to trade for longer term? But for now, in short the only reason behind losing the money is the trader themselves and nothing else.

No one can learn trading instantly, forex trading and other currency markets, they require a long term understanding of the markets, shares, stocks etc. If a trader is unable to pick up the basics of trading, or failed to understand market trends and environment. This article is specifically for those who are willing to trade, but having fear of losing their money. If you are interested to invest and trade, go through the following suggestions below and we can assure you, these suggestions will minimize your losing money risks to zero.

Overtrading:

Overtrading can be defined in two ways, either you are trading too big or you’re trading too often. First common reason for failure in trading is Overtrading. Now, there must be some causes, why do people Overtrade? There could be multiple reasons but the most common reasons are;

• Traders are aiming for high profit goals without knowing the market trend.
• They are addicted to the market.
• Lack of knowledge
• Greed for earning more money
• They lack in patience

Trading Addiction:

It is the most common reason why forex traders tend to lose their money. They do not follow the pattern of professionals/Institutional traders. No one can doubt the fact that forex trading comes up with a lot of excitement. Trading with short-term intervals can pace up the market and it can also cause an influx of adrenaline. But if the market is following an irregular pattern it can be a cause of stress as well for all of you.



How Can You Overcome This Situation?

The best way which most successful traders follow is that, you need to enter the market with an exact and clear strategy in your mind. What are you up to? What do you want to achieve and for how long you’d be trading? Even if the market is not in your favour try not getting panic and have patience to let it rise again. We use a term in trading, Chasing The Price, which is opening and closing of trades without a plan. Chasing the price is an opposite approach and we can replace the term with gambling rather than trading. Professionals believe people following this approach have zero control over the market.

When a situation like above arises, professional traders will easily recognize that they should not be taking some foolish steps. They know about the rate of risk with a particular trade which is oftenly high. What you can do in this situation is to stop trading for that day and save you balance efficiently. Don’t forget that the same market will be here tomorrow and more opportunities will be waiting for you. The moment you start believing that patience is not a weakness, you’ll be surely getting success. There will be less chances to lose your money for sure.

Failing To Adapt The Market Conditions:

People fail to trade the moment they start following the same strategy every time. They might think that this one proven strategy will give endless winning trades. Keep in mind that markets are dynamic, they are not static. They can change within a second or stay static the whole day. Since, markets are ever changing, you have to develop some extra abilities in yourself so that you can easily track down market changes and manage to survive in any situation.



The good point about markets is that they don’t only scare you with a risk factor, they contain amazing opportunities for you as well. In addition to other things, a trader needs to keep themselves up to date with average volatility, following money related news deliveries, and should easily recognize the difference between a ranging and trending market. Market volatility has a major impact on your overall performance. So, a trader must know that the strategy they’re going to follow is according to the ups and downs of the markets.

Poor Risk Management:

Proper risk management can help traders in not losing their money quickly. It cannot be a coincidence that these trading platforms are programmed with automatic take profit and stop loss mechanisms. If you can master them significantly they will increase your chances for success. Traders should not only know about the mechanisms existence but also be able to apply them efficiently, and in accordance with the volatility levels of the market.

Risk Return Ratio:

Risk return ratio is simply a set of measurements of how much profit or loss you can get. To make it more clear for you let’s look at the example, you have set your take-profit at 100 pips and your stop-loss at 50 pips, the ratio will be 2:1. This also says that you are going to break every one out of three trades provided that they’d be profitable. So, the best suggestion for traders is to check these ratios properly to make sure they fit with perfect goals. You can avoid risks completely by using a risk-free demo trading account. There will be no need to put your capital at risk when dealing with a demo account. Also, it’s the best place for new traders to learn how to trade and also for professionals to try out their new plans and strategies. Open an account today and try your luck.



Not Having/Following A Proper Plan:

What else could be a reason to lose money? Well, it's your attitude. Your attitude and lack of preparedness plays a role in it. Any business start-up other than trading needs a business plan. Similarly, a trader should spend both their time and effort to develop an effective strategy. So, these were the main reasons why traders lose their money and steps they need to take to avoid losing their money. Try researching and adapting the markets, managing your capital correctly will lead you to success. Your chances are going to increase dramatically by following these instructions.

This is another strong reason why a lot of traders fail in this market,a lot of traders wants to make quick money,especially after a series of winning trades they believe they have mastered the market and so they increase their risks,once market conditions changes they hit rock bottom again.The trader decides whether he will make profits or losses due to how he trades the forex market. Although everyone gets losses in the forex market but the goal of every trader is to minimize the amount of loses that we can get from the trades and ensure that the profits far outweighs the losses.Overconfidence: This is one reason of failure that a lot of traders do not talk about,overconfidence has done more harm to traders in this market than anything else,when traders begin to make profits they believe they have seen it all and they have mastered the market. And just one bad trade they are left with nothing.the important thing in any trading strategy is to get correct buy and sell signals from that strategy more than its fake buy and sell signals. Because this can help you to get good entry points in the market can help you to achieve profits more than the losses.

Why Traders Experience Consistency With Losses Rather than Profit.
I have come to discover that having losses in the forex market is very easy for people but making money is very difficult, trading in the foreign exchange market is not all about having a very good strategy, success goes beyond ability to analyse the market
properly,there are some other things that we must take into consideration if we are going to make it, the assumptions that beginners make regarding how much they are going to earn within a very short period of time is what has hindered them for a very long time from becoming really profitable.

Why Losses are Quite Easy.

1. Impatience.
Impatience is the very first reason why a majority of traders are not making money in this market,it is very easy for you to pull the trigger because you feel that price is going to move in a certain direction, this habit that many people develop has cost them a lot of money in the course of trading.

2. Trading on Impulse.
There are traders who consistently enter the market based on impulse,you really cannot make money from the business this way,you have to be very organised before you take any trading opportunity because trading based on impulse can have a profound negative impact on your performance.

3. Disobeying Trading Strategy.
Every strategy has a rule,it is expected that those who are trading in the Foreign Exchange market follow their trading rules and regulations, the moment a trader begins to move away from obeying their trading rules, this is when they will begin to have challenges in the forex market.

There are reasons why forex traders lose fail and lose money and these can be from the outside factors or from the inside. So let’s discuss them one by one.


INTERNAL FACTORS

Lacking knowledge
If you don’t have enough knowledge you will fail. This is a surety! Anybody who says they can turn a complete noob into a profitable self-managed trader in a week or two is simply a liar and you should run away from such people (mentor). Yes, you can make money in a week but not by your own analysis. Usually they will give you trading signals and from there they (the fake mentors) will make you pay even more. This payment can be in different forms from the commission that they get when you open a trading account under their ref code or other types of payment.

Weak mentality
Forex trading is not for people with weak mentality because this business is harsh. You can make money very quickly or lose them in minutes. When you decide to make money from forex you have to also make sure to train your mentality. Some great tutors provide both the technical aspect training and psychological aspect as well. Great analysis but weak mentality will only cause great loss. You need to have both in order to succeed.



Risking too much
People like to make money quick and this can lead to quick loss as well. Those professionals who often get margin call but still trade the next day usually don’t tell you that they have a different kind of money management. They keep a huge portion of their money for trading outside of their trading account. The money they have in the trading account is what other traders usually say “risk per trade” money. We’ll expand on this some other time.

Using a trading strategy that is not suitable for them
What happens when you, a conservative trader, use a very aggressive trading style and aggressive money management? A big failure! This is why you should know the trading strategy and money management style very well before starting to use them. Find the one that really matches your personality as a whole.


EXTERNAL FACTORS

Trading during critical time
Loss can happen anytime when your analysis does not go in line with the market direction. This factor is amplified even more when you trade during critical times like the major event such as NFP or FOMC. Anytime there is a schedule for events like this you better not trade (if you are an intraday trader).

Trading near major price levels
Sometimes the market struggles so much and you can see this in past data in your chart where the market really gets volatile. These zones produce what’s called a stop hunting zone where the pending orders are usually located and get wiped out.

Market crash
In times like this, nobody survives if they are already on the wrong side of the market. Sub prime Crisis, Flash Crash and Black Swan are the three most recent market crashes where billions of dollars change hands almost instantly. Following news is not necessarily important for every trader but everyone must know the general news and learn to take hints from many sources to avoid this kind of wipeout. If you don’t follow the news then try to look at the Black Swan crash below and try to figure out how your stop loss will be filled when the price drops without any fills in between for thousands of pips.

Top reasons why forex traders fail and lose money

Forex trading is a very profitable business and one of the best online businesses around today. The reason behind this is not far-fetched. It is of high leverage and high liquidity. This makes it possible for a trader with the right understanding of the nitty-gritty of the business is likely to be making profits consistently. On the other hand, the ones with inadequate knowledge and perspective are to be involved in loss of money and ultimately failure.

To achieve success there is a need for a trader or an investor to do or consider the following;
-Have a good understanding of the principles of technical analysis, fundamental analysis, and the psychology of the market.
-Use the knowledge of the analyses to develop a personal strategy. This entails the use of price action in conjunction with indicators
-Practice the developed strategy until it becomes a second nature. In this case, the strategy should have a 7 out of 10 chance of success. This should be done by making use of a demo account.
-Develop the habit of keeping a trading journal. In this case, all the records of trading activities should be in place. Regularly, there should be an evaluation and reevaluation of trading progress. All the objective recommendations and remarks should be strictly adhered to
-Understanding and the application of risk/money management

When all these aforementioned are not in place, then it is very likely that a trader will be losing money consistently and ultimately fail.
Observing the principles above with the right perspective, determination, willingness to persevere, and believing in oneself against all odds will ensure success at the end. Regardless of all these, forex trading is a business that is recommendable and very worthwhile.

Most of it is down to trader psychology. People are often not disciplined enough to trade, in some ways traders have to go in exactly against human nature. If you do what everyone else does, you will not have an “edge” and most likely will lose. People are not patient enough.

Traders should study the basics first. The is excellent for this. Then, get a demo account from a good and regulated broker (I can recommend , I’ve been with these guys for years now and their spreads, support and reliability are top notch) and try to get a feel of how trading works.

People have a . Exactly that fear of missing out (or FOMO) will make them take trades too early or take trades that are not the best quality. There are very real working against traders. A lot of times, structure is missing. Structure that can be provided by creating your own with a trading journal.