I started trading from scratch. It wasn’t easy
But patience, determination, and strategy worked.
Though I have learned so much, I am still improving my skills
From my trading journey, I’ve learned these five reasons why forex traders fail.
5 Reasons Why Forex Traders Fail
1. Greed
Many traders feel that they need to stay in a trade until the last pip of a move in the forex market.
They want to make money from every trade they enter.
They believe there is money to be made in the forex market every day.
When a trader tries to grab every last pip of a trade, they tend to hold positions for too long, and it will result in losing the profitable trade.
2. Insufficient Capital
Most investors know the fact that it takes money to make a return on investment.
But, when you enter into the forex market, one of the significant advantages you have is the availability of highly leveraged accounts.
It means forex traders with insufficient or limited starting capital can still make big trades.
There lies the problem, high leverage though promises significant returns, it also guarantees you will lose your capital fast.
3. Trading Addiction (Overtrading)
Another reason why most forex traders fail is trading addiction – it is one of the worst habits most forex traders have.
Traders with trade addiction do things that institutional traders never do, like chasing prices.
Forex trading can be exciting. It lures traders to make trades one after another, for the thrill, and for the attempt to make money fast.
The more you trade, the more you expose yourself to trade risks and the more trade costs in commissions and spreads you incur.
Please don’t overdo it.
4. Poor Execution / Implementation
Implementation or execution is another significant aspect of the currency market.
Planning is an essential factor in becoming a successful trader, but a plan without implementation will not give you any results.
All successful forex traders not only have a plan or strategy on their minds, but they also execute their plans.
They do not enter any trade randomly, and this allows them to make huge profits, more than the average trader.
5. Lack Of Knowledge
Making mistakes and learning is human nature, but what if you are making mistakes consistently in a particular field?
This happens only when you don’t have a clear idea about that field.
Similarly, in the currency market, traders fail because of a lack of sufficient knowledge.
When you play the forex markets without a sound understanding of how the markets work, you lose.
Digest these and make sure you do not fall into this category, make sure you are prepared and have PURPOSE in the market.
Apart from edits for clarity and minimum word count – the tips were shared by James Kwenya, a Civil Engineer and a forex trader from Kenya; you can find him on LinkedIn.
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