No one can trade the market without embracing few losing trades. In fact, more than 96% of the retail traders are losing money regularly.To succeed as a trader, you have to know the core factor that drives the market. Because until you become aware of the roots, you cannot start the cultivation. Trading, mainly Forex, is not as simple as we think. It requires an enormous dedication to know the features of this market. Though you will make a lot of mistakes, the journey should not be stopped. By making mistakes, one can learn perfectly. In this article, we will discuss some of the common reason for losing money in Forex.
Not Having a Valid Strategy
If your strategy is unproven, the chance of losses keeps in touch with you. Without a tested system, you are bound to drown in failure. But still, you can dream. With continuous education, proper research and analysis, and a perfect psychological balance, creating a unique method will be workable. One has to start the experiment to see the results with a demo account. But it should be tested on different currency pairs, time frames, sessions, and indicators to understand the probability of success.
When your brain remains busy thinking about risk, you cannot focus on the process. Intellectual traders know how to control risk and manage the calculation before thinking only about revenue. They usually avoid the trades that increase the risk level. Even if they receive multiple losses, they still stank on making rational choices.
The most valuable part of being last in Forex is trading psychology. When the decisions are based on money, greed, fear, emotional attachments make the moment very tough. Learn to control the emotional aspects when it is about foreign exchange. Think twice when your mind wants to ignore the risk factor. Do not let your emotion spoil the assets. Try to know more about the options trading business by visiting https://www.home.saxo/en-sg/products/listed-options and improve your mental strength.
You may lose many trades but you should never lose hope. The intelligence is to accept the situation instead of thinking that you are always right. It may fail to work out the way you wanted to. But no worries. The best move will be to acknowledge the mistake, dump the trade and start a new opportunity.
Having a Bad Phase
Sometimes the whole research and methodology get failed because that day is not yours. It doesn’t matter how much afford you spend on a particular trade. It may go wrong. But what you could do to control your revenge or overtrading mentality during that time. Otherwise, the number of losses will just start increasing. Say to yourself, that it is all part and parcel of business. If you focus on the risk management issue and methodology instead of frequently trade, you will turn the loss into profit today or tomorrow.
Not Having a Clear Concept
If you join a war without knowing the capacity or possible movements of the opposite team, you will be called foolish. The same thing happens in Forex. Probability does not remain the same all the time. You have to catch the moment when it indicates the ideal time to trade.
It is beyond the philosophy that only education can save you here. A constant analysis during a specific period and taking steps based on the market sentiments is the most brilliant move that professional traders agree on. Since it’s a fluctuating place where the currency price changes every second, the system will not be relatively straightforward. We need to explore that complex theory while befriending this market. One should not tend to beat the Forex but to understand and intersection with it when the trend is well-defined.
We have known the main reasons to lose money in Forex. Investors should take it seriously in order to prevent losses from occurring. A summarized figure would be; Collecting information, research, analysis, understanding the market sentiments, preparing trading with organized daily routine, managing capital, and Risk management ability. By following these, your trading results will improve dramatically.