Why You Lose Money in Forex
Reason # 1 - Repeating the same actions will not lead to success
If you have lost money, then repeating the same actions with the expectation of a different result is at least silly. Einstein called this behavior insanity, and it's hard to disagree.
If you spent money trading according to some indicator strategy found by the network, then where did you get the idea that with a new deposit the same TS will correct itself and start bringing money? Stop deceiving, if you did not violate the rules of the strategy, but leaked money at the same time, then look for a new tool for making money.
The same applies to the habits of the trader, his style of work. If, for example, you can't work on M5-M15, switch to higher timeframes.
Reason # 2 - Bad habits
Professional in the market:
- always has a trading plan, ready for market surprises;
- the rules of strategy are the law, they are never violated;
- entry points are filtered very tightly;
- the focus is on long-term reliability.
The player is the complete opposite:
- works by relying more on emotions, much like gamblers do in a casino hoping to catch their luck by the tail;
- try to take the number of transactions, not their quality;
- there is no trading plan;
- no risk management, can easily enter the market for the entire deposit.
Don't play Forex, don't join the army of losers.
Reason # 3 - Excessive zeal harms trading
This problem arises for those who trade with the last money or immediately expect to get significant returns. Such traders can sit at the monitor for days and look for points of entry into the market at almost every new candlestick.
I am not saying that you should not give a damn about money, but you should not dwell on it. In the first months of trading, I would not recommend counting on quick earnings at all. Try to ignore the money transferred to the broker's account.
You do not need to constantly sit at the monitor. We made a trading plan, outlined potential points of entry into the market, and that's it. Just check periodically to see if the conditions for the deal have been met. The Sniper X strategy, for example, allows you to earn even with temporary expenses of the order of half an hour a day.
And in no case make plans for the money that you have in your account. If you lose them, it won't be so offensive.
Reason # 4 - The trader himself gives his profit
This is a consequence of the trader's psychological immaturity. Events develop like this:
- the trader makes several profitable trades, gets a profit;
- being in a state of euphoria decides to slightly violate the rules of money management. Increases the risk and immediately starts looking for a new signal.
Signals rarely go one by one, so when you re-enter the trader gets a loss. And due to the increased lot, it loses not only the previously received profit, but also part of the deposit.
The recipe is simple - after you have closed a trade, do not open the next one unless you see a strong signal. And do not forget about risk management in such situations, learn to mentally pull yourself back. A couple of trades closed by take profit do not mean anything yet.
Reason # 5 - Do not strive to get profit on every trade
There is such a thing as winrate - the share of successful deals from their total number. And this indicator will never be equal to 100%.
In other words, losses are inevitable in any strategy, and the pursuit of perfectionism will only hurt you. If you got a loss, but you followed the rules of the vehicle exactly, then don't worry. Forget about your triggered stop and keep trading.
The picture above shows the result of trading by one of the students of the Forex Academy. This is a great report, but it also contains a losing trade, so a triggered stop is the norm in any trader's work.
I think at least for a couple of the reasons listed above, you recognized yourself at the start of your career as a trader. If so, write in the comments what mistakes you made and how you dealt with them.
Being a trader means not only making deals in the terminal. It is also work on yourself, giving up some habits, and sometimes changing your lifestyle. So, although today we did not analyze trading strategies, I recommend that you listen to the listed tips.