Why do the retail traders lose money in Forex

Why do the retail traders lose money in Forex

Losing money in Forex is a very common problem. No matter which trading strategy you follow, you are most likely to face consecutive losing trades. Does this mean everyone loses money in Forex? The answer is YES. But the pro traders follow proper risk management policy to protect their trading capital. Even after losing more

Losing money in Forex is a very common problem. No matter which trading strategy you follow, you are most likely to face consecutive losing trades. Does this mean everyone loses money in Forex? The answer is YES. But the pro traders follow proper risk management policy to protect their trading capital. Even after losing more than five trades in a row, they manage to recover the loss by following some simple rules. Being a new trader in the United Kingdom you must learn about risk management policy. Focus on the high-risk reward ratio in each trade so that you can easily cover up the loss. Let’s explore some of the key reasons for which the majority of the rookie traders are losing money.

Low investment

The size of your investment plays a great role when it comes to losing trades. The new traders always try to earn a decent amount of money by taking advantage of the leverage trading account. Leverage acts like a double edge sword. Unless you have extensive experience in the trading profession, you are most likely to lose money by using a high leverage trading account. If you invest a decent amount of money, you can easily support your family with a 2-3% gain per month. To earn 2-3% per month, you won’t have to risk more than 2% of your account balance. This simple technique reduces stress in trading to a great extent.

Failing to embrace the loss

You must have a strong mindset to embrace the losses. Trading CFDs is one of the most sophisticated business in the world. Even after doing the advanced technical analysis, you will have a tough time in the trading profession to manage the losing trades. This is where the term risk management policy comes into action. If you trade with low risk, chances are very high you can easily recover the loss without having any stress. On the contrary, if you trade with high risk, you might lose a big portion of your investment. And after losing a few consecutive trades, you will become frustrated and try to increase the risk factors to a great extent. And this will eventually make things worse in the trading profession.

Lack of knowledge

Without having a precise understanding of this market, it’s almost impossible to make a profit from this market. Being a currency trader, you should understand the importance of proper education. Unless you can demo trade the market successfully, you should never trade with real money. Managing the losing trades requires proper knowledge on Forex trading profession. Learn about the technical and fundamental parameters of this market so that you can find the best possible trades at any market condition. Think twice before you execute any trade. Use your knowledge to find the best possible trades at the complex market condition.

Failing to control your emotions

Emotions are very dangerous in the trading profession. You might have a huge amount of money but by following your emotions, you will wipe the entire trading account. Being a fulltime trader, you must learn to control your emotions. Learning to control your emotions is a very challenging task. Most of the time you will feel the urge to make a big profit from this market. This is where you need to have complete control over your greed. Try to be a conservative trader so that you can easily make profit change your life without having any stress.

Trading with EAs and bots

If you trade the market with EAs and bots, you will lose a big portion of your investment. You need to understand the sentiment of the market and stay in the sideline based on the market condition. When it comes to EAs and bots, it completely fails to analyze the market sentiment. So, never rely on such tools if you truly want to become a successful trader.

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