The perception that exists in the markets is that Forex traders usually lose. In fact, according to estimates, most investors are losing money. We’ve created a list of the most common reasons why Forex players lose money to help you stay in the winners.
- Low starting capital
Many traders who trade in foreign currencies look for a way to get rid of the debt or to be rich on the short side. In the Forex market, investors are often encouraged to make high volume transactions and try to get large returns with a small capital at the beginning as there is leverage! With a limited amount of money, you may be able to make a substantial amount of money. However, with only a small amount of capital and great risk, each up and down movement of the market, you can find yourself feeling more emotional and the most stressful days of your life.
Solution: People new to the Forex market should never trade with a small amount of capital. It is difficult to find a way to earn something for those who want to start trading with a small amount. If you are going to process microlot or lower volume, it is a reasonable figure as a starting point of 1000 USD. Otherwise you only put yourself into a possible catastrophe.
- To be fail to manage income
Risk management is a key to salvation. You can be a very talented trader, but if your risk management is weak, you will still suffer. Your top priority is not to profit but to protect what you have. If your capital runs out, your ability to profit will disappear.
Solution: Use “Stop” and enable when you reach a reasonable level of land. When comparing with your account, take ‘lot’ transactions at reasonable rates. Most importantly, if taken position does not make sense anymore, turn it off.
Some investors need to position themselves even for every last action that takes place. They think that the Forex market should be profitable every day.
Solution: Actually it looks obvious. Do not be greedy. Of course it is your right to try to make a reasonable profit, but you are trying to act every second. Indices, currencies, commodity prices move daily, you do not have to try to catch the latest move. The next opportunity is already waiting for you in the corner.
- Do not hesitate to your process
Sometimes, you find yourself in regretting what you do. This usually happens when you open a position, where you cannot make a profit right away, and you start telling yourself that you are in the wrong place. In that case, you close and change your position, and you only do this to see that the market is choose yourself, goes back to the beginning.
Solution: We have a solution for this. Decide in one direction and take that position. All these forward and backward changes will only cause you to lose your account in small pieces.
- Try to catch the top and bottom places
Many investors try to catch the turning points in the parasites. They perform a parity transaction and if parity goes to wrong direction, they make additional purchases to their positions because of making sure that parity will return. If you do something like this, you will eventually have more loses than you planned and have done a very bad negative action.
Solution: Do not stick with graphics. Move in the direction of the trend. If you think that the trend will change and you want to take a position in the new possible direction, do your processing when you have clear signs that the trend has changed.
- Refusing to be wrong
Some operations may not work at times. It is in the nature of man to ‘want to be right’. As a stockbroker, sometimes you just have to be wrong, but keep going. Do not lock your idea of being right.
Solution: Yes, this is hard to do but sometimes you have to accept your mistakes. You may have done something wrong, or you may not go as planned, as the movement of the market is already very influential. Regardless of the outcome, the best thing to do is to accept the error to give up the position and move on to catch the next opportunity.
- Buying a system
There are many “Forex Trading Platforms” on the market. Some traders are looking for the most profitable system – the “Forex Trading System with hundreds of results in 100”. Of course, there is no such thing. The systems keep getting them until they see that there’s no way to win.
Making money on Forex markets also requires working like all other jobs. Set up your own system and stop paying for the useless systems sold on the internet. The paid money you have will take time to depreciate from this point of view.