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Thursday, June 6, 2019

Forex trading for Beginners why Forex trader lose money

Reasons why most of Forex trader lose money 

Hi everyone in this blog I shared my personal experience in forex trading.

the following list shows the most common reasons why forex traders lose money.

In earlier every market everyone is new so simply everyone does a mistake, I also did. but if new so at least once read this blog before entering and starting any financial market. 

I have shared my own experience so if any point missing please forgive me.

In forex trading as per data analysis, 96% of peoples lose money if you look data is worst but you need to know why this happens. I had studied from my own mistakes that I have made in forex trading. 

why-people-lose-money-in-forex-trading
why-people-lose-money-in-forex-trading

Forex trading Fomo that make will be Millionaire in 6 months to 1 year:

This point is simple but tough to understand everyone because of everyone thinking that in forex money making is simple. 

People started trading by demo account where you can use free trial with 1000 to 100000$ account so you can easily make 5 to 10$ in 5 to 10 minutes but you never know that this is not reality.

After that, every demo trader has a mindset that we or I can make money easily with quick time.

If you want to win in forex you have to change your mindset.

Peoples not having trading plans that how to trade: 

In the success of any serious business model needs a perfect business plan. Similarly, trading is a business of any trader and a serious trader needs to invest time and take effort into developing your own trading strategy or follow one trading strategy.

Make friendship with the market:

The market isn't something you defeat, so make Friendship with the market by regular visit analysis and giving faith on it that they never broke the trust of you while trading.

Lack of Knowledge of forex trading:

Most of the peoples entering in this market without studied anything they mostly think that in the market only two things buy or sell. so they enter in this market by without technical or fundamental analysis.

Overtrading that kills a portfolio of trader:

Trader loose money by overtrading is simple to understand that most of the peoples ignore this thing and continuously trade on smaller accounts with larger lot size.

a standard lot size of any forex account to avoid overtrading is

For 500$ account 0.01 lot size with 2% daily risk.

For 1000$ account 0.02 lot size with 2.5% daily risk

If you follow this with only one to two trading strategy you will never lose in forex.

A trader does not Stick in one strategy:

If you look great, successful trader or investor you will realize that they follow only one to two simple trading plans or strategies and continuously do this.

If you want to be a successful trader these things you need to be injected in your blood so they implement in your DNA and live.

No risk to reward ratio:

Risk management is key to survival as a forex trading. Every beginner trader has no plans risk to reward ratio.

A perfect Risk to reward ratio is 1:2 

Low startup amount like 100$ to 500$:

well, this is the most complicated points. Every new trader enters the market with an average of 250 to 500$. 

The ratio is Low capital with High Lot Size = High risk = No Risk to Reward ratio = Lose Money

A perfect account size for long term forex trading is minimum 1000$.

Greediness:

If you made 5$ in yesterday then every greedy person thinks that they will make 10$ today, 15$ tomorrow.

so greediness is habits that you need to leave if you want to a successful trader. 

Identify your account size and How many pipes that you want to earn in day trading. this will help you to grow your portfolio.

Leverage that you die within a month:

Most of the brokers give you 1:500$ leverage and trap you. you think this is the best chance to make money with short time by high leverage and you lost your account.

Be careful and follow lot size and risk to reward ratio.

No stop-loss: 

I give you one example 

I place one buy order with 0.02 lot size without stop-loss and sleep. Next day luckily I made a profit of 5$. 

I am more exacting for next day trading and I place another order with 0.04 lot size and sleep. unfortunately, I lost 10$ in next day morning when I check yesterday trade.

Then I understand that if I place stop loss order the loss can be prevented up to 2.5$ as per my risk. 

So successful trader Must use a stop-loss.

Trading is Addiction and Forex trader is Addictor:

This is part of overtrading. When you trade daily without using technical or fundamental analysis then I must say you are addicted to forex trading.

Don't trade daily. Stick to your plans, patterns, and trade as per market conditions.

Find out Trend of Market and flow with the trend:

Simply market has two trends in any pair uptrend or downtrend. You need to find out the market in which trend initially so less chance of lose.

Market trend finds out with more than 4hr time frame best time frame to the identify market trend is 1 day and 1-week timeframe.

If you Lose accept it Don't do similar mistake again and again:

If you lose in forex trading try to accept it, learn from it and make sure that to never do the same mistake again and again.

Learn Technical Analysis and Watch News and Fundamental Analysis:

Take Forex trading as a carrier if you earn from it. If you want to earn from it first you need to learn this.

Learning Forex trading is divided into two types 

Technical analysis: Patterns charts, Time frame, Indicators analysis

Fundamental Analysis 

Follow Forex Factory for Fundamental analysis

Both this part you need to understand and implement if you want to quality successful Waren Buffet.

Conclusion:

forex market is attractive to many traders because of its low account requirements, with high leverage and 24hrs trading.

traders can avoid losing money in forex by:
  • Analyze basics in forex trading
  • Implement basics
  • Make rules when trading
  • Patience and discipline 
  • Money management techniques
  • Take it as Business and be Serious.
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