The Top Three Reasons Forex Traders Fail

by Andrew McGuinness     Jul 16, 2019

The Top Three Reasons Forex Traders Fail

If you're looking to get into Forex Trading, you should be warned that it’s not the get-rich-quick scheme that many faux "gurus" on the internet claim that it is. It takes time, education and knowledge to learn how to develop a strategy that works for you and is successful on the foreign exchange market. In fact, many Forex traders lose money and fail out because they wrongly believed that making money would be simple as soon as they stepped into Forex Trading. Here are the top three reasons why Forex traders flounder and fail on the international stage. Make sure you avoid these common missteps if you truly want to be successful.

Learning through trial and error. If you want a fast way to lose massive amounts of cash, the best strategy is to jump into Forex Trading with no plan and learn through trial and error. The Forex market is completely different from the US equity market, yet many investors believe that they can seamlessly jump from one to the other; as a result, the chances of a new trader suffering account-destroying losses are high. The best way to learn how to trade Forex is to spend time educating yourself, and developing a strategy void of actual currency. Some traders prefer formal online education, while other prefer to open a Demo Account that they can play around with using virtual funds, and still others prefer to speak to a trading professional and learn to mirror their moves after they've spent enough time studying. Whatever you prefer, don't make the expensive mistake of hopping into the Forex blind and hoping to learn how to tread water.

Letting their emotions control their trading. One of the biggest errors that beginner Forex Traders make is to get far too emotionally involved in their trading. And who can blame them? When they're thousands of dollars on the line from one's own pocket, it can be massively emotionally taxing to learn that a country whose currency you hold suffered an environmental disaster or terrorist attack and no one is denying that in these instances, it can be hard to maintain your cool and avoid selling everything off at a loss to save your account. However, smart investors know that trading Forex is all about a few big wins interspersed with seemingly countless tiny losses; they stick to their proven trading plan even when things get rough because they know that the markets will eventually turn back around.

Using a one-size-fits-all strategy. There are tons of fake financial "experts" out there selling the one simple trick to beating the market every day, but these are scams. The best way to profit from the Forex is through education, and maintaining your adaptability. Think about how much the world is changing. Just ten years ago, cell phones were held only by drivers and the wealthy. Today, over 93% of young children have a cell phone which constitutes a massive change. In the same way, the Forex Market changes on a daily basis as well. If you want to be a successful Professional Trader, every day should start with the formulation of a plan. By analyzing yesterday's Forex charts and planning for low-probability events, traders can remain fluid and creative as they make money through Forex Trading.

The bottom line? Don't be afraid to ask for help. There are plenty of successful investors out there happy to share what they know, all it can take is one connection to change your whole world.

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