Here’s the truth – most forex traders lose money trading forex. And, if you have tried it on your own you have probably lost money too. I don’t know what happened in your situation that caused you to lose money but I do know, in general, what causes most people to lose money with forex.
There are three factors that I find with failing forex traders and I want you to do a “self analysis” to see if this is happening to you too:
1. Greed – this is a tough one because none of us want to admit to being greedy. However, MOST of us are to some degree! If you find yourself making money with forex but always wanting to “make more” only to find yourself eventually losing money then you are struggling with greed!
2. Unrealistic Expectations – Most people like forex because of the volatility and quick movements throughout the day. For some, this is no different than the thrill of gambling in a casino. If you are expecting to turn $1,000 into $10,000 in 30 days or less then you have VERY unrealistic expectations.
Your goal should be to steadily make positive gains day after day and let your account grow through compound interest. Give yourself a LONGER timeline to become successful and the pressure will drop and your chances of success will increase!
3. Poor Money Management – Put simply, this means trading too large of a position for your account size. If you are risking more than 1% of your account on any one trade you are trading too large. I personally trade MUCH less than 1% per trade because it helps to lessen my risk even further. I recommend you do the same!
And while we are on the subject …
Is Forex Trading Gambling????
Many people who don’t understand forex immediately label it as “gambling” and guess what, most of them are right! And the reason they are correct is because traders violate the rules that professional gamblers follow EVERY DAY without fail.
What are those rules? Here are just some of the pro tips I’ve learned over the years.
1. Never trade based on emotion – If you “feel” like a trade is going to go in a certain direction based on feelings alone then WALK AWAY. Leave emotion at the door! Pro traders place a trade for one reason only – they see an event unfold and they know with a high level o certainty that an outcome will repeat after that event (most of the time). They are playing an edge based on TESTING.
2. Never trade outside of your plan – This means you should trade the HOURS, the FOREX PAIRS and the TIME FRAMES you have decided that are best for your trading style. When you trade outside of that bad things happen. Don’t do it!
3. Walk away from your computer – Forex is not a “game” that rewards you for long hours. In fact, it usually works just the opposite. I guarantee that the more time you spend on your computer the more trade setups you will magically “see” and take. Taking MORE trades in forex will not reward you. Take just enough to make your profits and then WALK AWAY!!!!
Now it’s your turn. Look in the mirror and decide if you want to trade forex for a living or let fear hold you back! Then, make a decision to take a first step to a life of freedom!
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