Does Forex trade seem like brain surgery to you? You put in all your sweat, time, money, and effort yet you keep bleeding money. You know it’s a risky venture so you read books, took courses online, and attended seminars yet, nothing. Forex trade has a risk/ reward ratio but you’ve got no reward, well, not in the way you’ve acquired losses.
I’ll tell you this for free, pal. Your mistake is you. Yes, you heard correctly. And I have this article to prove it.
In my early years in the Forex trade, I encountered so many losses. I almost gave up in my first year as a Forex trader. However, for some reason, I don’t know, so I decided to stick around. It wasn’t long before I noticed what I was doing wrong. You’ll also notice it too if you continue to trade(and lose), but the seven reasons in this article will help you prevent that.
Let’s dive in.
7 top reasons why you lose money in Forex trade
1. You trade too much
Gotcha, right? Your overtrading has caused you a lot of money and maybe, tears and pain. Do you want to know why you trade too big or too often? It’s because:
- You are addicted
- You’ve got little capital so you keep trading on and on.
- You want massive cash out ASAP
And it doesn’t work that way.
2. You invest little all the time
I mentioned that little or insufficient capital is a reason why you lose money in Forex trade. The availability of leverage in Forex trade is a big advantage, however, it isn’t 100% reliable or profitable.
The truth is that when you trade with a sufficient amount of money, it increases your chances of making profits on the long run.
3. You’ve got an addiction to be free from
Perhaps as a newbie who’s excited about chasing the price, you’ve failed to realize that over-trading can lead to losses.
Every Forex trader should have a clear plan. Without a plan, you no longer trade, you gamble. And chronic gamblers are known to lose most of the time.
When you notice market changes and high risks, it’s common sense to avoid trading. The market will always be there, with better opportunities, but money may not.
Successful Forex traders are patient. They know when to lie low, and when to go for the big kill. It may not be easy being patient when you’re addicted to trading. It takes willpower and good coaching to help.
That’s why I recommend Markus Gabel’s free webinar on Forex. Gabel is a successful Forex trader and coach. By attending his webinar, you are likely to get rid of your trading addiction. I say this from experience.
4. Your inability to adapt
The market is never stable. And that’s a good thing because stability would require no trading at all. You lose money because you can’t adapt to market fluctuations. The ability to adapt and thrive during this unsteadiness is a skill every Forex trader should have.
Market instability poses new risks, as well as new opportunities. Smart traders flow with the change rather than hating it. They track average volatility by thorough research on financial news and info. Because of the importance of market volatility in trading, you should be cautious about the strategy you intend to use when trading. It must be consistent with the volatility that occurs in market conditions.
Reading financial news is also essential. Take notes of economic changes. To crown it all, be able to tell between a ranging market from a trending one. Know the right trading tools to use at all times.
5. You can’t handle risks
If you cannot manage risks, you cannot succeed in Forex trade. Today, a lot of trading platforms have options like automatic take-profit and stop-loss mechanisms. The implementation of these options is necessary for a trader to reduce their chances of losses.
6. You don’t have a plan
You just want to trade on and on. You don’t plan or strategize. You don’t follow the new market trends and know when to enter the trade, to exit, and re-enter.
Forex trade is like a business. And any business without a plan fails automatically. Start by developing a trading strategy for yourself. And do it today.
7. You want a big score ASAP
That’s where you get it all wrong. In fact, this is the worst reason why you lose money in Forex trade. Forex trade is no get-rich-quick scheme.
One reason people succeed in Forex trade is that they have realistic expectations of the business. They know about the stock market and other financial markets. They don’t chase the price. Even in the face of defeat, successful traders don’t get emotional. They know it’s a business, and in businesses, there are profits and losses. However, they continue to strategize, knowing when to trade and not, making good decisions for themselves. Slowly, they hit it big, but that didn’t happen overnight or in a short while.
These are all you should do…
Make patience and perseverance your allies.
There you have it; 7 reasons why you lose money in Forex trade.
What other mistakes have you noticed in yourself (or others) that cause losses in Forex trade?
Make a decision to correct such errors and strive for better and more profitable trading.
We’ll love to know how your trading fares when you apply all the tips in this article. Subscribe to our newsletter for more juicy content on Forex trading.