Why do People Lose Trading Forex

March 30, 2012 by Adam Woods  
Filed under Investment

The failure rate in FX market is much higher than the success rate and this is the reason why do people lose trading forex. There are a number of factors which increase the failure rate to such high levels. It is estimated that out of every 100 new traders who enter the market, 96 of them fail and only 4 gain profit long term.

It requires a lot of practise to be successful in any field and so is the case with FX market but majority of the impatient traders don’t understand it and they step into real deal without practising on anything like demo account.

A trader fails because he may invest more or they invest too less. In first case if the exchange rate suddenly decline, the trader would lose a huge sum of money and in the second case when the exchange rate suddenly goes up, the trader earn very less profit as than he could have earned if the amount of invested money was chosen appropriately.

To get into a deal a trader should know about the market present state and any error in judgement directly leads to failure. Traders need to rely in both fundamental analysis and technical analysis for the judgement. Any strategy alone may not be very helpful as both have some loop hole.

Emotional involvement of a trader with some deal is the most dangerous part of it. Some traders make a big mistake by thinking emotionally as a result they are at wrong side.

In this field biggest enemy of success is greed which provoke trader to withdraw too early or too late from a deal as a result they miss the correct time and market may go against him.

The success or failure depends on exchange rates which depend on time and thus the time of initiating and ending a deal becomes important. Traders should keep in mind the current trend of market and when the market is in range it is considered to be the right time to initialise the covenant.

Success may take time to come and the trader should be tough enough to face the challenges. Most traders don’t have enough courage to withstand failures that why do people lose trading forex. One may need to face a number of problems before gaining profit and from every failure one should learn something.

forex trading is the most volatile market in the world. There are certain times that the market is more sensitive than others, the World Forex Clubspecializes in teaching beginners.

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