Logically, if you are trading in the forex market with the risk/reward ratio of 1: 1 and without a flagship strategy, then the chances for profit is 50%. So most traders who use the way should have ended with a turnover (breakeven) after some time a trade, because trade by means of random (random) and the risk/reward ratio of 1: 1 is probably the same as throwing coins, 50: 50. But why most forex traders lose money? Are there any other factors that cause the end result could be smaller than the breakeven?
From some survey ever undertaken, the main reason that causes most forex traders lose money is due to a lack of self-control, tend to be subjective and exaggerated prediction. Here are a few mistakes forex traders do often (especially newbies) to trading results not as expected:
-Against the direction of the trend
Although traders know that by following the direction of the trend is likely to profit will be greater, but they tend to be trading against the trend for various reasons, especially if you've already opened position.
-Do not want to accept the losses or errors
The tendency to throw an error to blame others or circumstances is human nature, but if a disappointing trading results we must blame ourselves. If we suffer a loss rather than a broker we are wrong, or market conditions that are not true, but because we're wrong to open position trading. Blame the brokers or the market will not help improve our trading results. If our entry upon recommendation from a broker or trading consultant and turned out to be the result of that loss, entirely our responsibility for our trust on their recommendations. If we continue to blame the other party for any damage we experience then we will never be able to improve our trading result further, because do not see our own foibles.
-Market Entry at random, not having a specific trading strategies and methods
If you are entering the market with varying methods and strategies that one might say you're trading at random (random). This can occur because you do not have a specific strategy, tested or you don't master the right trading strategy you've chosen. If you are using ever-changing strategies in the forex market conditions which is also always changing then chances are fifty-fifty. Conversely, if you have chosen a particular strategy but you less control or haven't really tested it, then at some point you will doubt it, and if you feel the need to entry because of the very supportive market conditions then you will tend to use other strategies.
-Over trading
Over trading or too often enter the market could occur because:
-The influence of emotions. A sense of euphoria after the profit up to want to open up another position in the same way, or a sense of wanting revenge after experiencing loss. They tend to ignore the agreed trading strategy.
-Trading on low time frame (under 1 hour: 30 minutes, 15 minutes and so on.) that provide a lot of opportunities entry but with low probability because at the time frame tends to happen a lot of noise.
-Excessive market analysis (analyzing over-the-air). Too much information from the news or the use of some technical indicators simultaneously can cause excessive analysis and are likely to be tempted to open trading positions more. Analyzing over-the-air can cause excessive predictions so we tend to over trading.
-The risk per trade is too big
This is done because the trader wants to trade with a large lot size to obtain an adequate profit. This way quite risky and are gambling because it is outside the rules of money management that are prevalent. Usually the risk per trade are set around 2% of the balance on the account trading.
From some survey ever undertaken, the main reason that causes most forex traders lose money is due to a lack of self-control, tend to be subjective and exaggerated prediction. Here are a few mistakes forex traders do often (especially newbies) to trading results not as expected:
-Against the direction of the trend
Although traders know that by following the direction of the trend is likely to profit will be greater, but they tend to be trading against the trend for various reasons, especially if you've already opened position.
-Do not want to accept the losses or errors
The tendency to throw an error to blame others or circumstances is human nature, but if a disappointing trading results we must blame ourselves. If we suffer a loss rather than a broker we are wrong, or market conditions that are not true, but because we're wrong to open position trading. Blame the brokers or the market will not help improve our trading results. If our entry upon recommendation from a broker or trading consultant and turned out to be the result of that loss, entirely our responsibility for our trust on their recommendations. If we continue to blame the other party for any damage we experience then we will never be able to improve our trading result further, because do not see our own foibles.
-Market Entry at random, not having a specific trading strategies and methods
If you are entering the market with varying methods and strategies that one might say you're trading at random (random). This can occur because you do not have a specific strategy, tested or you don't master the right trading strategy you've chosen. If you are using ever-changing strategies in the forex market conditions which is also always changing then chances are fifty-fifty. Conversely, if you have chosen a particular strategy but you less control or haven't really tested it, then at some point you will doubt it, and if you feel the need to entry because of the very supportive market conditions then you will tend to use other strategies.
-Over trading
Over trading or too often enter the market could occur because:
-The influence of emotions. A sense of euphoria after the profit up to want to open up another position in the same way, or a sense of wanting revenge after experiencing loss. They tend to ignore the agreed trading strategy.
-Trading on low time frame (under 1 hour: 30 minutes, 15 minutes and so on.) that provide a lot of opportunities entry but with low probability because at the time frame tends to happen a lot of noise.
-Excessive market analysis (analyzing over-the-air). Too much information from the news or the use of some technical indicators simultaneously can cause excessive analysis and are likely to be tempted to open trading positions more. Analyzing over-the-air can cause excessive predictions so we tend to over trading.
-The risk per trade is too big
This is done because the trader wants to trade with a large lot size to obtain an adequate profit. This way quite risky and are gambling because it is outside the rules of money management that are prevalent. Usually the risk per trade are set around 2% of the balance on the account trading.
Posted by Unknown on Tuesday, February 10, 2015 - Rating: 4.5
Title : Why Many Forex Traders Lose Money?
Description : Logically, if you are trading in the forex market with the risk/reward ratio of 1: 1 and without a flagship strategy, then the chances for p...
Description : Logically, if you are trading in the forex market with the risk/reward ratio of 1: 1 and without a flagship strategy, then the chances for p...
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