Reasons Why Forex Traders Lose Money

This book is written to fill the gap by giving you the right trading edge that will help you to trade profitably in the market. This trading edge works in all market and in all time frames. In fact, the existence of such non-random trends is one of the most important trading facts exploited by forex traders who use technical analysis.

If you find a professional trader’s career, you will see most of them have experienced at least 7 to 10 years in the trading industry. Therefore, know when to enter the market and when to exit. Also, know when to do nothing, example when there is an upcoming news or when the market is consolidating. If FOMO moves you, you will hardly grow in forex trading. As I mentioned earlier, there is no way you can grow as a trader if you are not disciplined. Always know that forex trading is meant to be an investment and not gambling.

I use nothing more than daily and weekly price charts, not a bunch of fancy indicators, no fancy bells and whistles. Basic math and price charts are all one needs to make money in today’s markets. If you are a newbie or an average trader still struggling on how to make consistent pips from trading, I’d advice you give-in more of your time to learn and understand the language of the market better.

Based on the facts above, there are huge differences between FX retail brokers. 98% of FX retail traders think that they lose because of their trading strategy, but most of the time they lose because of their broker. Most traders think that they pay only spread / commission.

However, the successful trader doesn’t view a loss as a “bad” thing. But there’s a distinct difference between how the beginning trader loses and how the best Forex traders lose. Justin Bennett is an internationally recognized Forex trader with 10+ years of experience. He’s been interviewed by Stocks & Commodities Magazine as a featured trader for the month and is mentioned weekly by Forex Factory next to publications from CNN and Bloomberg. Justin created Daily Price Action in 2014 and has since grown the monthly readership to over 100,000 Forex traders and has personally mentored more than 3,000 students. Because whenever you make a trade, you are not 100% sure that you won the trade.

Related Posts

If you are looking for forex trading strategies that are simple, effective and proven to help you make money from the forex market, this is a book you need. Happily, with the advent of online forex brokers, forex trading is now available to just about anyone with a modern computer, an Internet connection, and a modest amount of money to put at risk. Of course, the market has its own special way of welcoming “newbies”.

This is why Forex trading communities must take consistent education as a task to unravel the realities of Forex trading and reduce the spread of Forex misconceptions. Misconceptions about Forex trading are rife because many people do not take the time to understand the nitty-gritty of Forex trading before venturing into it. People always fear what they do not know, and this has been the major fuel behind these erroneous beliefs about Forex trading. There is no other way on trading 10 k account and make 10-20% a month, am i right? So i just find a way to manage big accounts after managing in profit e.g my 10 K for 3-5% a month . If you want to make quick money, don’t follow a trading challenge.

This is a technique used by many experienced traders to minimize their risk. By automatically selling a currency when it reaches a pre-determined price, traders can avoid huge losses if the market takes an unexpected turn. Since Forex trading has a trillion-dollar value daily, it’s clear that many people believe it to be a highly profitable venture. After all, if it weren’t, the big banks and investment firms wouldn’t participate.

truth about forex

This might apply to other ventures in life, but Forex is the exception. Successful Forex traders know that trying too hard is a sign that something isn’t right. The key is to only tackle one or two factors at a time.

Truth about forex brokers

For me, I started to learn how to trade in the foreign exchange market to relieve the stress from sales. I was in a business that required me to sell a home in order to make my income. I got tired of that uncertainty and wanted to take hold of my finances. I knew that if I always depended most volatile currency pairs on someone else to make a living, it was going to be a rough and stressful career in real estate. Actually, only about 2% of the total number of all brokers in the world are fair, and only with these brokers can you, without conflicts of interests, be long-term profitable in forex trading.

If you have ever worked in or visited a professional foreign exchange trading floor, even at the most prestigious financial institutions, then you will already know that this myth is not entirely true. Basically, this statement is both true and false depending on the broker model. When a trade is executed in the forex market, there has to be another party taking the exact counter trade at the same time. As for me, I find that trading gives me purpose. The amount of stuff I have learned, both in terms of knowledge and in terms of personal growth, is insane.

truth about forex

Meaning that, these people have passed different stages of forex, learnt and relearn, practiced, lost money, tried and tried till the success you are seeing. You may see someone’s highlight reel and forget that they are years ahead in experience. Your day one will never resemble those highlights. Although possible, I knew it was going to take time to reach that status and wanted to make sure I shared the reality with everyday people who were looking to start their own journey in forex trading.

As a student that’s interested in forex trading reading such articles from experienced traders such as yourself definitely helps. All successful Forex traders know when to walk away and take a break. Those who are truly passionate about trading Forex know how hard it can be sometimes to walk away from the market. Still, it’s necessary in order to become a successful trader.

Unfortunately, system failures and malfunctions are not unheard of amongst forex traders. Whether this is due to system overloading, loss of electricity or a single computer crashing, if you’re unable to close a trade you’re unable to cash in when the timing is right. Even slight delays can prove costly if a transaction doesn’t go through in time. Experienced traders claim that risk management is required to identify the profits to your capital. The more you take a risk, the more you can get profit. But without having a proper education, I think risking more is a complete loss.

Ultimately, there are three types of brokers:

3) 2% Direct Market Access ECN / STP (a-book) brokers who actually send all your trades for execution to the interbank market without any conflict of interest. FX retail ECN /STP brokers usually transmit your trades to the only market maker, which is owned by the ECN /STP broker. 1) Retail market makers – dealing desk (b-book) brokers – these brokers do not hide the fact that they forexee act like a counterparty to all your trades. Chasing nickles around dollar bills refers to when a foreign exchange trader chases the market, or when a business avoids upgrades due to the costs. Instead of looking at simple things such as price movement and whether the market is trending or ranging, the trader attempts to determine exact reversal points and make more trades.

Why do I keep losing money in forex?

Overtrading. Overtrading – either trading too big or too often – is the most common reason why Forex traders fail. Overtrading might be caused by unrealistically high profit goals, market addiction, or insufficient capitalisation.

That gain of 5-10% is very low, and trust me there are ways to get more from the market, in safe conditions. Although you have relevant content, i must tell you, this is not 100% true. I have been reading your blog for a while, but this is my first post. … is to quit your job and jump straight into full-time trading, hoping to “figure it out along the way”.

Trading System

FOREX TRADING IS ONE of the easiest businesses a man can set up. It does not require much start-up capital like you would if you are to establish a physical business. With a good device like a laptop or tablet, internet connection and a good broker, you can start with as low as $100. Forex trading is not about pulling the trigger when you see a big move; you need to have a PROVEN TRADING EDGE. A Trading edge is what defines if you will succeed in this business or not. And it is the signals you are looking for in the market that inform you when to buy and when to sell.

truth about forex

Next time you have a loss, take it as constructive feedback. Analyze the situation to see how you can improve the next time. Keep in mind, though, that even an A+ setup doesn’t always work out. It’s the market’s way of disproving a trade setup. That’s the only thing the Forex market has the ability to do because it doesn’t know anything about you or where you entered the market, nor does it care. The Forex market doesn’t know where you entered or where your stop-loss order is located.

All the Truth about Forex Leverage

Many forex traders come from diverse academic backgrounds. To be a successful trader, what you need is a good head for numbers, an intuition to help you guesstimate where the market is heading and the ability to react quickly to market-moving events. However, for those who don’t have a huge amount of start-up money, Forex trading can be a risky proposition. Inexperienced traders can quickly lose their investment if they’re not careful. Mostcurrency tradersstart out looking for a way to get out of debt or to make easy money.

This may be possible by analyzing the charts and recognizing certain patterns that have occurred in the past and assuming they might occur again. But for the most part, it is rather the quickness of reaction that makes a trader money instead of novice predictions which may or may not come true. A good trader is always alert, reads and interprets the news and is always willing to learn and evolve.

I just want to say a big thank you to you Justin. I have been following you for some months now yet I am deeply burried among the 95% unsuccessful fx traders but you know what, you exposed me in this post. I am making amends and soon will share my story. In my experience, having the patience to wait for the “A+” setups and do nothing else in the meantime is the number one trait of successful traders. At a 50% win rate, that’s a 20% gain on a $5,000 account over the course of 10 trades. An average of 90% of novice traders thinks that they will become rich soon.

How much can I make on forex with $100?

In 2022, a successful novice can earn around $100 a day at Forex, provided that: his deposit is at least $200, he trades using the EUR/USD currency pair, with leverage of 1:100, and uses a successfully aggressive strategy. The larger your deposit is, the larger your profit will be.

When I first started trading Forex, I remember spending countless hours studying setups over the weekend. I would often come back to my trading desk multiple times on Saturdays and Sundays. For instance, you can’t spend too much time learning the ins and outs of the various currency pairs, or how to draw key levels. The harder you try to learn those particular topics, the better. These are all things that make up your trading edge. The money you put at risk on any given trade, whether it’s $5 or $500, is an investment with the best Forex coach in the world—the market.

“If there is a minimum trade fee of $10, that will add up every time you close or open a position. People say they have made a trading profit, but when you look at the costs, they usually haven’t,” says Duncan. Duncan compares forex trading with learning to drive a car – if you try to drive a car after only reading the learner’s licence manual, you are going to have an accident.

Then on Monday, more often than not I would end up taking a completely different trade setup only to watch the original trade idea move in the intended direction without me. In fact, I wrote a post that features several of his books. If you try to master too many of these factors at once, you’re setting yourself up to become good at a lot of things. An edge is everything about the way you trade that can help put the odds in your favor.

It’s mostly about measuring and tracking risk, and managing positions over time. I did it and in 4 years I lost only the first year The first thing I learned is money management and do not stress myself. Yes, you well said,Forex is one of the largest and popular financial markets concerning the volume. It has attracted thousands of traders and has also boosted many financial service providers’ confidence to come up and offer forex trading services.

Quick navigation

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. Between 74-89% of retail investor accounts lose money when trading CFDs. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. In hindsight, seeing a move in currency after a high-impact news announcement like the U.S. Nonfarm Payrolls Report can make people salivate with thoughts of quick money. Unfortunately, news events can be extremely hard to trade in real-time.

I really appreciate the way you have written and explained. From my experience as a forex trader , my most successful trades come from maximizing the opportunity of volatile news . I place stop orders on both sides of the market . But just as the market may move past the stop loss , it sometimes moves understanding stock quotes past take profit . But, the number of retail traders that fail to make money trading forex is estimated to be in the 90 percent range. What that potentially disheartening number means is that you must educate yourself and start to think like a professional trader in order to join the winning 10%.

Forex is not about pulling the trigger when you see a big move; you need to have a TRADING EDGE. A Trading edge is what defines if you will succeed in this business or not. Your trading edge is the signals you are looking for in the market that will inform you when to buy and when to sell. Otherwise, the odds are that you will just become yet another member of the retail trading herd where the Blind leads the Blind over the cliff to an unprofitable trading experience. The chart below shows a notable long term trend in the USD/CAD currency pair. In part, this trend reflects stable levels of benchmark interest rates in Canada contrasted with rising benchmark interest rates in the United States that results in a stronger U.S. As for the purpose, I agree as well, though I right now I feel like I’ve learned enough.

“It’s not whether you’re right or wrong, but how much money you make when you’re right and how much you lose when you’re wrong”. Not all brokers offer New York close charts, but you can go here to get access to the same style charts I use. It’s just your ego drawing you into one of the most common and costly traps in the Forex market.

Leave a Comment

Your email address will not be published. Required fields are marked *