Seven Top Incredible Reasons Why Some Forex Traders Are Making Losses In The Forex Market

Online currency trading popularly known as online foreign exchange or forex has become one of the most lucrative internet business going by the number of people that are joining the business. Besides, the liquidity characteristics of the market make it more attractive to many new corners. As at early 2008, precisely January, the daily volume of forex being traded daily is more than $2 trillion This figure is so huge when compare with the daily stock trading of the New York stock exchange which is not more than $25billion dollar.

The potential for making it big in forex market is therefore, enormous following the liquidity of the market as mentioned above and the fact that few people know about forex market. These few traders all these while have been making large profit from the market. In recent time there is explosion in the number of forex traders joining the forex market. Because people awareness has been awaken and the cotton that cover their eyes has been pulled off. However, the risky nature of the forex market quickly begins to show its ugly head as soon as people are joining the money spinning market. So many traders discovered that no sooner than they joined the market that they lost all their investment and turned back. Some that have no lost every thing to the market are not making any headway. It’s even pointed out in a report that about 95 percent of forex traders are losing out from the market.

It is this negative development that propelled me to write this article to clearly show the top reasons majority forex traders are losing out. The top seven reasons if well understood will provide a guide for concerned forex traders who have already fallen victim of these costly mistakes. Let us quickly look at the top seven reasons why forex traders are losing out.

Reason #1: Lack of good training; some of the forex traders just attend one or two seminars which lasted for one or two days. And after these they only demo trade for two or more weeks before they go for real/ live trading. One funny thing with this set of people is that they want to start making thousands of dollars the day they start trading. They had forgotten the fact that it took them four to five years before they could graduate from tertiary college and master their field of interest. In short, lack of proper training both external induced training and self training often account for the reason while some people fail in forex trading.

Reason #2: Over ambition and greediness some traders are over ambitions and greedy. These sets of traders want to make million over night. Rather than using effective risk management principle by not trading with more than 2 to 3 percent of their money, these forex traders will want to make big profit from single trade. Hence, they over bloated their risk management and entered market with what they could not afford to lose and when trend go against them, they often find themselves in a debilitating state and finally loose out of the market

Reason #3: Lack of discipline to follow through the strategy the forex trader developed for himself. If there is anything that can quickly ruin any forex trader, it is lack of discipline. If forex traders lack the good culture and discipline of following the strategy they developed to make big pips such a trader will continue to run after shadow and in no long a period of time loose all his/her investment

Reason #4: Lack of good strategy and methodology to assist the traders to make entry and exit decisions. There is no gainsaying the fact that some traders still believe that forex market is similar to casino and therefore, they can always gamble to make money in forex market. Later than sooner they fumbled and somersault in the market. There is need for forex traders to develop effective strategy that will assist them to enter and make exit from the market. To this extent, the stop loss, trailing loss, take away profit point and pivot points should be built into the strategy all these will make a forex trader successful, Determining best time to trade as well as which currency to trade is often over looked by some traders and this affect their performance.

Reason #5: Over dependence on one or two indicators; another common mistakes that traders make is to depend too much on one or two indicators which may not be enough to predict varied market conditions. Some traders do this to their own detriment to the extent that they lose all their money. While it is good to use indicators so that one will be able to determine when to trade or not it is equally advisable that combination of both fundamental analysis and Technical factors be considered while trading.

Reason #6 : Bad money and Risk management practice: Most traders because of greediness often trade with more than 20% of the capital invested to trade what at times they called sure news. And when the news turns against them they are often left with nothing. A case in mind is a trader who had $1000 dollar in is forex trading account and decided to take $800 dollar to trade. The trade turned against him and he was margin called – visit the link below for better understanding.

Reason #7 : Bad brokers or platform; in selecting platform some factors must be considered one of which is the degree at which the forex broker execute instantly the trader’s order, some platforms are so badly designed that all these factors may not be well treated. If a trader is using a slow response broker platform, it is possible that when a trader gives instruction to buy or sell a currency, the trade would have turn against the trader before such an order is executed. This type of situation is not uncommon if bad broker and not good broker with up – to- date and standard platform is chosen.

Having gone through the seven reasons why some traders fail and will still continues to fail, you are advised to take note of these reasons and quickly do self examination to see how best you can adjust and correct yourself. If you need to read more on forex topic so that you can master the points discussed above why not visit the link below. So that you can brush up your forex trading skills.