Forex is a highly volatile market, where there really are no guarantees of winning or losing. While some traders rake in millions of dollars, there are many others who lose money.
It is mostly the beginners who lose money in the currency trading market. Sometimes, the investors suffer initial loses, but they go on to earn consistently after a few months or years of experience.
Unfortunately, it is not the case with most investors, because the losses will push them to give up trading altogether.
Why do People lose Money?
Lack of Experience
Most of the beginner traders tend to lose sight of the fact that there will be a learning curve involved. To get started with Forex trading, you will need to educate yourself about how the market runs, and also about the factors that impact the currency strengths. You will also need to familiarize yourself with the tools and the various measurement matrices that are needed for making accurate speculations.
Even if you have some experience of trading by using the demo accounts, it is not really the same as putting your real money, and forecasting the currency market. One of the best ways to gain experience in the currency market is by subscribing for daily signals from the experienced traders.
Expecting Unreasonable Results
Investing in Forex market is not for those who are expecting to get rich overnight. If any of the dealers or brokers make you such promises, then it is clear that they are simply playing with your expectations and emotions. Players lose money on trading by having unreasonable expectations.
Learning about the basics of trading is one thing, but putting your hard earned money in the unpredictable market is a different ballgame alike. Never make the mistake of thinking that you will always be making money on each trade you join.
Lack of Sound Trading Plan
Forex trading is always associated with both positive and negative results. Entering into the game without a sound trading plan, is as bad as increasing your chances of losing.
Every plan should address these two aspects:
- A perfectly planned strategy for every move you make
- The overall objective of all the strategies.
Lack of Discipline
Any plan can become successful only if you patiently follow it till the end, with strict discipline. You might get tempted to break the plan to make quick bucks. The best advice on trading Forex for beginners is, “Do not let your greed override your plan”.
Forex trading is not a game of lottery. You should consider it more like a long term elearning opportunity.