Forex as a market is one of the most booming investment sectors presently. Trillions of dollars crank up after the each trading session. As much compelling these stats are, one equally interesting stat is 96% of traders tend to lose money in their initial trading days. 8 out of 10 traders fail to manage 3 consecutive trades at a stretch. Their inability to make profits compels them to bid farewell to this lucrative venture. Forex lost money happenstances are not new but honestly speaking it is no one’s fault other than the trader.
So… what could be the problem? Though it’s hard to determine one root cause of this loss-fortune, some logical explanations does exist.
1. Chasing after the market:
Most traders like to day trade. It is one of the most popular forms of currency trading and if you want to do so, then it’s not a bad option to consider. Profitable opportunities galore- much like during UK or US trading sessions.
Still, traders lose money…. Why? Experts believe that it’s all about chasing after the market repeatedly. These experts opine- traders think that sitting out for a few hours will mean losing out on a fair number of trading opportunities. It’s something they are not willing to sacrifice and hence they unnecessarily play the game of cat and mouse with the FX market.
• Experts believe it’s a very wrong way to trade. Traders, especially tyros should let the market come to them.
• They state if one is sure about a trading position, there is no point delaying it (again something which many tend to do).
• Plus, they point out because traders have the knack of jumping into trade operations way too late; they even have their Stop Loss at a further level rather than its correct position.
2. Scarce understanding of technical instruments:
With so many trading instruments flaunting the online world, traders tend to fly off the handle. They look up reviews of the best trading tools and only bring them into their strategies without digging deep. Rather than concentrating on using optimal quality tools, they should look to hit the right combination of technical tools. That is more important.
A good combination for preventing Forex lost money occurrence
Fibonacci and Trend Line indicators are a great combination to go with. The former denotes Support and Resistance levels along with Entry and Exit points. While the latter specifies trends and patterns!
Fibonacci helps traders identify trending and non-trending markets while trend lines determine market trend and aids traders misuse Fibonacci during wrong and choppy market situations. This is how the combination should be.
Most traders fail to get this adequate combination and hence that is another reason why Forex lost money happenstances result for them.
3. Getting influenced in the heat of the moment:
This is one of the biggest reasons why most regularly state- I lost money in Forex. Traders get excited in the heat of the moment just when win one or two trades right up. Striving for the full ‘Monty’ they go for glory but wipe out all their entire yields. The excitement level gets the better of them and makes them over-trade, eventually ringing their death knell.
These could be some of those rational reasons why Forex lost money happenstances take place regularly. Keep these pointers in mind when trading and ensure you don’t make these mistakes while trading.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.