Top 10 Reasons Why New Forex Traders Lose Money

Top 10 Reasons Why New Forex Traders Lose Money

Submitted by adil on Mon, 01/28/2013 - 07:01

Forex trading is often seen as a tough venture to enter into. Statistics show that very few start up Forex traders in the world fail miserably during their first trades. After making several initial losses without making a single or little gain, such investors will leave the market disheartened and believing that Forex is a really monstrous venture to even think of entering. However, this doesn�t have to be always the case.

1. Lack of experience

   This is probably the main reason why many people fail badly when they try their hand in Forex. Like anything else in life, the Forex trading has a learning curve. There will be steps to take in order to move from minor chord to a major chord. Many of the Forex trading platforms have come up with virtual trading dollars that will allow you to hone your skills before putting your hard earned cash here.

2. Having Unreasonable Expectations

   Every other business can make you rich; none is the simpler. The schemes that get flaunted by some Forex sites of ‘get rich quick’ really don’t work. You have to earn your money. If you enter the industry using these practical reasoning tenets, then you will good to trade.

3. Lack of Discipline

   every business requires discipline if great consistent results are to be observed time and again. Forex demands that rules of fundamental and technical importance be observed. As a trader, you will need to use your own volatility calculations and at the same time also the very strict rules that you should never break. Never be carried away into for example trading all of your money in one trade.

4. Lack of a Concrete Plan

   Planning is critical in becoming all that respected Forex trader who rakes tens of thousands a day. Planning will start with the very basics. Do not enter Forex with the expectations of humongous profit overnight. Have a steady growing plan that over the time will involve leverage and basic business common sense.

5. Having Excessive Leverage

   A trader is always required to be on the move. A trader who uses leverage wisely will probably be referred to as shrewd but it the perfect understanding of trade leverage that really counts.

6. Holding Excess Open Trades

   it is very risky to have many open Forex trades. Forex happens so fast such that if you had many trades they could all be required to be called in at the same exact time.

7. Holding losing Positions too Long

   A good trader should know when to cut the losses. Never carry those losing trades for too long.

8. Ignoring Spread Fluctuations

   The asking price and the bids price can change ever so swiftly without the faintest of warnings. Still, you should notice the changes as a trader. For little spread fluctuations, always act.

9. Focusing on the "Big Win" more than Practical Cash Management

   Well, traders will be looking forward to getting that ideal break and earning a whole wad of hundreds or thousands of notes. Well, never forget that the most important thing is the effective cash management.

10. Failing to set Stop-Loss and Take-Profit Rules

    When you define these rules, it becomes easy to trade in Forex because you will be able to know when to sell and when to buy with ease.