Key reasons to lose money in the Forex market

Last Updated on: 21st November 2023, 11:12 pm

Everyone wants to become a successful trader. However, learning the details of the Forex market is a very challenging task. Unless you prepare yourself properly you are most likely to lose money. According to recent statistics, more than 90% of retail traders are losing money. The new traders often think they can make a huge profit from this market without having any valid strategy. They simply execute low-quality trades against the long term market trend and blow up the trading account. Today we are going to discuss some of the key reasons why the retail traders struggle in the trading industry.

Lack of trading knowledge

You must work hard to understand how this market works. Never think you can make consistent profit by executing trades against the long term market trend. Try to master the three major forms of market analysis. Learning the technical part is relatively easy but when it comes to fundamental analysis new traders often become frustrated. Fundamental factors are often considered as the most powerful price driving catalyst in the Forex market. Once you learn the proper way to analyse the fundamental variables, you can easily make a profit at the complex market condition.

Trading against the major trend

You must trade the market with the major trend to make consistent profit from this market. The new traders are always losing money because they trade the market against the major trend. Instead of analysing the market variables in the lower time frame, you need to focus on the daily and weekly time frames. Try to use the simple trend line tools since it will help you to find the key support and resistance level. If necessary, use the price action confirmation signal to increase your win rate.

Taking too much risk

You must learn the proper way to manage your trade in the CFD trading industry. Those who trade the market with huge risk are always losing money. You have to understand the fact, trading is all about precision. Instead of taking a huge risk in each trade, follow the simple 2% rule of money management. No matter how good the trade setup is, never risk any amount that you can’t afford to lose. Even the pro traders in Singapore follow the 2% rule of money management to protect their trading capital.

Trading the market with the low-end broker

You need to choose the best broker to develop your trading career. The pro traders prefer broker like Saxo since they always offer premium trading environment. In fact, you will get free access to a robust trading platform like SaxoTraderGo where you can do the proper market analysis with an extreme level of ease. Never think you can make a profit with the low-end broker even though the associated cost of trading is very low.

Trading with emotions

Emotion can be very dangerous for retail traders. Regardless of the outcome of any trade, you should never trade the market with emotions. You might have to face a series of losing trades but this doesn’t mean you start taking excessive risk to recover the loss. Consider the losing trades as your business cost. Wait patiently so that you can find a quality trade in favour of the long term trend. Never follow an aggressive trading strategy since it will cost you a huge amount of money.

Developing yourself as a professional trader is a very challenging task. However, if you can follow the above tips, you can easily protect your trading capital. Being a new trader, try to follow the conservative trading technique since it will save your investment from the wild swings of the market. Try to learn price action trading strategy since it will help you to filter out the best trades in a higher time frame. Last but not least, never trade with the money that you can’t afford to lose.

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