What are the biggest reasons of losing Money in forex - page 7
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What will you do when you get a loss
What will you do when you get a loss ?
I would like to make another point over here that there are lots of newbie who used to think that Forex is the only way to earn lots of money within very short period of time, but the real scenario is different over here. If you really want to sustain in this industry then there is no alternative of learning Forex trading meticulously.
The biggest reason is not having good knowledge and understanding of trading. I have seen even such traders that don't even know how to use trailing stops and they are trading since months.
3 main reasons. 1. Low capital 2. Low knowledge in market(little knowledge is dangerous) 3.low discipline
The biggest reason is that there is money : we did not learn yet that we are not allowed to have too much money
Forex market is a risky market for sure. Financial market with big investment in it, has to be risky, can't be other way. The important thing is to know how to measure the risk to minimize it as much as you can, and to be prepared for the both situations to lose ant to win. Always has to thing about the chance to lose as well as the chance to win , because people who are thinking they will always win ,will lose all!
Risking more than 1% of my capital.
1. Low start up capital
Most currency traders start out looking for a way to get out of debt, or to make easy money. It is common for forex marketing to encourage you to trade large lot sizes and trade highly leveraged to generate large returns on a small amount of initial capital. You must have some money to make some money. It's possible for you to generate outstanding returns on limited capital in the short term. However, with only a small amount of capital and outsized risk, you will find yourself being emotional with each swing of the market and jumping in and out and the worst times possible.
Solution:
People that are beginners in forex trading should never trade with only a small amount of capital. This is a difficult problem to get around for someone that wants to start trading on a shoe string. $1000 is a reasonable amount to start off with, if you trade very small. Microlots or smaller. Otherwise you are just setting yourself up for potential disaster.
2. Failure to manage risk
Risk management is key to survival. You can be a very skilled trader and still be wiped out by poor risk management. Your number one job is not to make a profit, but rather to protect what you have. As your capital gets depleted, your ability to make a profit is lost.
Solution:
Use stops, and move them once you have a reasonable profit. Use lot sizes that are reasonable compared to your account capital. Most of all, if a trade no longer makes sense, get out of it.
3. Greed
Some traders feel that they need to squeeze every last pip out of a move. There is money to be made in the forex markets every day. Trying to grab every last pip before a currency pair turns can set you up to lose the profitable trade that you are sitting on.
Solution:
It seems obvious but, don't be greedy. It's ok to shoot for a reasonable profit, but are plenty of pips to go around. Currencies move every day, there is no need to get that last pip. The next opportunity is just around the corner.
4. Indecisive Trading
Sometimes you might find yourself suffering from trading remorse. This happens when a trade that you open isn't immediately profitable, and you start saying to yourself that you picked the wrong direction, and then you close your trade and reverse it, only to see the market go back in the initial direction that you chose.
Solution:
Pick a direction and stick with it. All that switching back and forth will just make you lose little bits of your account at a time.
5. Trying to pick tops or bottoms
Many new traders try to pick turning points in currency pairs. They will place a trade on a pair, and as it keeps going in the wrong direction, they continue to add to their position being sure that it is about to turn around this time. If you trade this way, in the end you end up with much more exposure than you planned, and a terribly negative trade.
Solution:
Trade with the trend. It's not worth the bragging rights to pick one bottom out of 10 attempts. If you think the trend is going to change and you want to take a trade in the new possible direction, wait for a confirmed trend change...nice words tmp!
yes these are main reasons for loosing your money in forex trading most important is risk management and emotional way of trading that effects on trading decisions. new traders specially feel difficulty to solve these problems , with their experience they can overcome slowly difficulties in trading.
Do not want to learn from mistakes and do not fix the mistakes. Trading in forex trading is not easy as we think. If we get loss because we trade with emotion, we should be able to control our emotion. I also still learning to control my emotions