Why you lose Money in Forex Market / Forex Trading?
It is a commonly known fact that most Forex traders lose their money. In a survey it was found that 96% traders lose their money in currency trading and finally they quit. If you want be in that 4% winning traders you should go through the most common reasons why people lose money in foreign exchange market.
Low starting capital: – Most of the traders start with a very small amount. Is it possible for a trader to generate outstanding capital from a small amount in a short span of time? By using only a small capital you will become emotional with each and every swing of the market and will try to jump out of the market. So beginners should never trade with only a small capital. $1000 is a decent amount to start with.
Failure to manage risk: – Risk management is a key for survival in the Forex market. A skilled trader can easily be wiped out by poor risk management. It is necessary to protect the capital you have. If your capital gets depleted, you will not be able to make a profit. For this purpose use stop loss and try to exit from the currency trading market once you have made a decent profit. Always use reasonable lot sizes compared to your account capital.
Greed: – Don’t be greedy. Currencies move everyday so never try to get the last pip. Always pick a direction and stick to it. Switching back and forth will make you lose your money.
Try to pick tops and bottom: – Many traders place a trade and continue to add to their position even if the Forex trading market is going in the wrong direction. It is suggested to trade with the trend. If you find that the trend is changing and you want to take a trade in the new direction, you should wait for a confirmed change in the trend.
Refuse to be wrong: – Some traders do not work out and enter a wrong trade. It is better to admit your mistake, dump the trade and again move on to the next opportunity.
Buy a system: – You will find many currency trading systems on the internet for sale. Traders buy these systems and try them. Finally they find that there is no way to win and give up. You should build your own online trading system and avoid buying these worthless systems on the internet.
Unreasonable expectations: – You should not rely on “get rich quick” hype because you will fall prey to trading scams and will lose all your money instead of gaining.
Lack of experience: – Some inexperienced traders lose their money in the Foreign exchange market. It is better to open a demo trading account and observe how market reacts to different economic events before investing actual money. You should treat this demo account seriously if you want to learn about Forex market. Take advantage of this currency exchange training before investing your money to a real currency trading account.
Forex Currency Trading As a Career
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