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Thread: Why Forex Traders Lose Money ?

  1. #1
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    in2ition.trading's Avatar
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    Why Forex Traders Lose Money ?

    dynamo - First and lasp post every thread AXITrader aff
    Perhaps the main reason most traders lose money is because the majority of people have little self-control and cannot resist the temptation to over-trade and over-leverage when there is no one to be accountable to. Another main reason most traders lose money is because they try to buck the trend for some reason, even though they KNOW they have a statistically higher chance of winning by sticking with the trend until it is clearly finished.

    Not accepting responsibility for losses and mistakes

    As human beings we all have a tendency to pass the blame and find fault elsewhere. However, when you are trading badly, it is your fault and no one else’s. If you find you are losing money in the markets it is not your broker’s fault, nor is it the result of a bad quote, a bad tip, or a hardware failure. There is no mysterious “They” out to get you or steal your money from you. Everything that happens to you in the market, good or bad, is ultimately your fault; blaming anyone else or thing is not going to help you become a successful trader.

    Accepting responsibility for your losses and trading mistakes is paramount to turning your trading around.

    Over-trading and not trading higher time frames

    One thing that definitely prevents most traders from making money in the market is over-trading. Traders who just jump in and out of the market on emotion and greed, will not only suffer many more losing trades, but they will also rack up a lot more fees via spreads and (or) commissions over the course of a year than traders who stick to the higher time frames and understand the value of self discipline and having patience. Trading lower time frames causes many traders to over-trade because they end up thinking they see many more trading signals worth trading, when in reality there is just a lot more “junk” signals and “noise” on lower time frames.

    So, if you are currently losing money on a consistent basis and you are trading lower time frames, you will definitely benefit by switching to higher time frame Forex trading.

    Risking too much

    How many times have you won a few trades in a row, made some money, and then given it all back quicker than you made it? This happens all too often for traders who have not yet learned to risk the same amount every trade or who have not yet learned to manage their emotions effectively. Trading should not be viewed or treated as gambling, you don’t want to “double down” just because you are up some money. That is not how it works. You have to stop and ask yourself, “Are you a Forex Trader or Gambler?”

    Poor Forex trade management / no trade management

    If there is one single thing that most traders do wrong who lose money on a consistent basis, it is poor trade management. Every trader knows after a little practice and education on a high-probability trading method like price action, they can pick near-term market direction with pretty good accuracy, at least enough to get into open profit. This is not the hard part of trading. The hard part comes after you enter a trade. Most traders have no forex trade management plan, either because they don’t understand trade management, or don’t think they need to do it. What these traders don’t understand is that they are sabotaging their own effort and potential skill as a trader by thinking they will somehow behave more logically and effectively AFTER entering a trade than BEFORE. This is just ridiculous. No human being on Earth will be more objective or less emotional than they will be when there money is NOT on the line. It’s a fact of human psychology that when something you care about (money, relationship, etc) is at risk, you become more emotional. Everyone knows this. So, if you are guilty of not managing your trades BEFORE entering them, accept responsibility right now and start changing it.

    Entering randomly / not mastering a proven method

    Traders who don’t have a definable and “mastered” trading method are hurting themselves because they essentially have no trading edge and are just shooting in the dark, so to speak. When you learn one effective trading strategy and truly master one Forex trading strategy at a time, you will largely eliminate the problem of fear and second guessing your own trades. The key here is that you REALLY NEED TO MASTER an effective trading strategy. Most aspiring traders just jump around from one trading strategy or system to the next, never really giving one enough time to truly master it. So, the first thing is that you need a truly effective trading strategy, and then you have to give it enough time to truly master it.

    Unrealistic expectations

    Finally, one thing that is definitely common to all traders who are losing money in the markets is that they have unrealistic expectations. If you have $500 to trade with, there is no way on Earth you are going to be able to live off your trading. You have to take into consideration what you can REALISTICALLY expect to make each month or week, given the amount of money you have to trade with. This is assuming you will commit to effective Forex money management, because if you are properly managing your risk on every single trade, there is just no way you can make enough money to live on if you don’t already have a lot of money to trade with.

    This doesn’t mean you can’t be a successful trader however. Being a successful trader means you are consistently making money in the markets. If you have a small trading account but are making consistent profits that are in-line with your small account, then you ARE a successful trader. The same habits that make a trader successful on a small account are the SAME habits of successful traders of large accounts. Remember that. Forex trading success is not measured by whether or not you get-rich-quick, it is measured by your consistency, and the only way you can become consistent is if your expectations are in-line with the reality of your current financial situation and the reality of the markets.

    Wish all success,

    In2ition Trading Desk
    Last edited by in2ition.trading; 04-16-2012 at 01:12 AM.

  2. Under 1st Post -dynamo
  3. #2
    Redouane
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    I agree 100% with the "Risking too much" part I'd add that they also experience loss when they become so greedy and they let that greed control their emotions to do illogical actions !

  4. #3
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    - Avoid overtrade and greeding.
    - Manage your money and trades carefully
    - Always set stop loss
    - Don't trade by feeling
    - ...

  5. #4
    kudokun
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    In summary, they didn't learn how to trade. Also, they are treating Forex like casino. I don't know what is Forex actually in their mind. An easy game to play?

  6. #5
    angela.trninic
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    Beautifully said - thank you for the well put information - very very well placed!!! Thank you onced!!!

  7. #6
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    Quote Originally Posted by kudokun View Post
    In summary, they didn't learn how to trade. Also, they are treating Forex like casino. I don't know what is Forex actually in their mind. An easy game to play?
    nice post! Sometime I see Forex as gambling, I don't know how to trade and trade by feelings... It's same with game. But I have never consider Forex is easy

  8. #7
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    They Lose Money because most of people jump in live without proper knowledge about how to trading.. My advice for newbies is before you jump into live please please please take good knowledge about how to trade and how Forex works.
    Best of Luck

  9. #8
    kudokun
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    Most traders lost money because they are gambling their money into Forex. In this way, they never treat Forex like the way it is supposed to be.

  10. #9
    oranjes2
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    I think its important to learn to distinguish between good systems and all the scam products out there.
    When you trust in scam products you just canīt make any money trading the forex.

  11. #10
    kudokun
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    box - einstein 250x250
    Quote Originally Posted by oranjes2 View Post
    I think its important to learn to distinguish between good systems and all the scam products out there.
    When you trust in scam products you just canīt make any money trading the forex.
    Do you take a careful study with the broker that you registered? Did you get enough information from forums about your broker? If not, then you are gambling your money as well. Hoping that it will be the best broker. Then you only blaming them by scamming you because you are not reading their profile carefully. The best broker are the broker that can answer each and every mocking and insults either from their traders or non - traders.

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