You are losing money by trading forex? This is why!
So many traders don’t want to admit that they are losing money by trading forex. I don’t know why, because losing money in forex is apsolutely normal and it’s a part of this job. But what is important? The important is how much you lose and why? You must detect the reason and fix it in time.
I will not write this as you are a beginner, but like you are already trader and you know all what it takes to be the real one. You know everything, but you are losing anyway. Based on my experience, here are the main reasons.
Nr.1 ‘You can’t maintain discipline!’
You are trading well and everything goes smooth for days, but there is always a ‘one day’ which spoils everything, right!? Well, it’s a matter of your discipline and when you can’t stop you’re trading when things are not developing how you think it should. You must be aware that, you can’t win each day and in that day when you’re losing, you must react properly and in time. It’s mostly you’re judgment day in wich you make a such a damage in you’re account, what can’t be fixed latter. If you manage to maintain the control and stop you’re trading in time when you loose small, you will be the winner. Who cares about 2 or 3% of loss. It’s not important and you will return that eventualy, the market is working 24 hours a day, for 5 days in a week. This is directly connected with risk management. >
Nr.2 ‘You risk and lose too much!’
If you risk too much in your trade, you will lose big eventualy. Mostly, big loss is an account killer. Why? It’s not only a matter of your trading skills and expertise. There is a question about psychology as well. Each trader want’s to return the loss quickly as possible because he’s thinking of this. ‘I lost my money quick, I can return it same way’. But, that’s not possible because you are not able to make right decisions short term with huge loss thinking on your mind. Pressure is to big. You must be calm for trading with no emotions at all. It’s easy to lose big and it’s not easy to return that! If you risk to much in one trade, maybe you will need days or weeks to cover that loss, if you manage to return it at all. Huge and quick loss will make the extraction where you just make mistakes in order to get back as soon as possible and you will eventually lose everything. It is an unwritten rule! You must have a proper risk management, make that from the start! During the years of my trading am taking less and less risk each day. Low risk will make you’re trading confortable and without stress. This is directly connected with you’re plan. >
Nr.3 ‘You don’t have a plan!’
You are trading day by day, but without a plan. In that case, you take 50 pips today and then lose 50 in the next three days in a row!? Then again 70 pips nex day and there is no end like that, you are nowhere. Losing is only a matter of time in that case, because you will become angry and will want revenge, after wich you will start to make a big mistakes, what lead at failure one after another. Because of that, you must have a plan. Let’s say that you’re plan for this month is to take 500 pips, which will be a 10% gain on you’re capital. Take a pen and calculate how much you will need daily for that. It’s 500 pips/20 working days = 25 pips daily. Now, calculate how big position you must have for that. You can also start with the smaller ones, bigger at the end. Wow, looks easy to take ‘only 25 pips’ daily, isn’t it? Well, it’s not so easy as it look like. Because, if you fail one day and you will, you must make a double tomorow. That’s why the risk management is very important in you’re plan. Try this! It will force you to mantain you’re discipline and to reach you’re goal. It’s a huge motivation to me. This is directly connected with patience. >
Nr.4 ‘You don’t have enough patience!’
You have a plan, but you don’t have patience. To be patient and to wait a right moment for entry is priceless. Most of the traders are rushing into positions making to many mistakes in a row and mess up everything before even started. You must wait and find a perfect place for entry and even if you have a pending order, wait, don’t rush. If you placed your order in a right place, the market will come to you. If market don’t reach you’re predicted level, you didn’t have a good analysis. End, when you finaly are in the position, you must be patient as well and follow the move, after wich you must decide to wait or to close before you’re target. Most traders wait too much and missed the opportunity, because the pair returns to the start. The other ones close the position ‘to early’. Remember this! There is no such a thing. Gain is gain and it doesn’t matter if you’re out and your pair continue in your direction. Don’t rush back, but wait for another opportunity. This is all directly connected with you’re analysis. >
Nr.5 ‘You’re analysis and predictions are not good!’
For all of this what I have wrote above, you have to make an proper analysis. Because, without this, you don’t have nothing. Where to place you’re position, how and where to protect the same and where to place you’re target. You can’t trade on blind, because none of this up is not practicable without a proper analysis. During my beginning in the forex market, I’ve tried so many tolls wich are ‘the helper’ in you’re decisions. But, eventauly I throw it all away and relied only on the most basic ones. SR levels, trend lines and MA’s 100 and 200. Sure, it’s not only a technical analysis what important is in you’re decisions. You must understand the market and the moves on the same, for wich you will need a huge experience. And, I wrote about that in my previous education arcticle about mutiply monitors.
Well, this is mostly the common and the most important mistakes, the reasons why the traders are losing money in the forex market. Which one is you? Let’s discuss it here in my blog. All questions and oppinions are welcome.