Trading is not complicated
These days, there are many free online tutorials along with special tutorials on everything related to global markets, including Forex trading, investing in corporate stocks and other trading tools, so the most important question on our minds is why so many traders fail?
Let's find out some of the main reasons why most Forex traders fail to make any profits from the market:
Trading without a plan
Many Forex traders trade without making a plan in advance, opening the chart and starting trading
immediately and other times they are content to trade based on their reactions to certain economic reports, which in their view justify entering quickly into some trades.
It is possible to achieve some winning trades without using a specific trading plan, but you will eventually discover that your losing trades will exceed the winning ones, and the result at the end of the year is that you get the title of "losing trader".
Lack of discipline and adherence to the trading plan
The failure of most Forex traders is that they do not adhere to the trading plan set to the letter, which often leads to emotional decisions, and many traders rush to open high-risk trades due to the lack of their winning trades.
Other traders become greedy, which pushes them to maintain their losing positions even after the price reaches the stop loss level in the hope that the market will reverse in their favor at any moment, and many rush to close their winning positions prematurely for fear of turning into a loss.
Failure to adapt to changing market conditions
Most traders do not like the idea of changing the trading plan to be in line with the prevailing conditions in the market, so they must have more flexibility to deal with changing conditions, and most losing traders overlook the fact that their main goal is to "make profits" and not to be right all the time, which amplifies their "inner ego" and pushes them to stick to their initial analysis even if market conditions change upside down!
The importance of developing alternative plans to deal with the worst possible scenarios and seek to take advantage of unforeseen events must be understood.
Building expectations that are far from reality
One common feature among losing traders is the existence of expectations and perceptions that are far from reality throughout their journey in the world of trading, most of which boil down to the ability to make huge profits immediately after starting to trade, these unrealistic expectations usually lead to taking unnecessary risks that quickly turn into huge losses due to the lack of experience necessary to make profits.
Forex trading is akin to running a marathon, you can't suddenly wake up one morning and run 42 kilometers, passing a marathon requires training for many months, which also applies to trading in the Forex market, as the only way to achieve success is to keep applying the trading plan for at least several months.
Lack of capital management
One of the main reasons for the failure of Forex traders is to overlook the importance of managing capital in a correct way, i.e. poor risk management skill and most professional traders recommend that the value of risk in one trade should not exceed 2% of the account balance and this rule makes it impossible for any losing trade to lead to zeroing the account as may happen when risking large funds.
Professional traders usually divide the capital according to the strategy used in each account, where the balance meets various objectives such as hedging, speculation or making profits.
Not learning from the experiences of others
The best way to learn is through the experiences of successful traders who will definitely help you avoid
making common trading mistakes, you can benefit from the experiences of more experienced traders by attending their seminars, reading their books, or even studying the many explanations available online as articles and educational videos.
Abuse of leverage
Leverage is to increase trading volumes, a trader should use this tool with the utmost caution and prudence, as currency traders need to scrutinize the choice of trade sizes and avoid falling into the trap of misusing leverage.
Blindly following other people's recommendations
A trader should not rely solely on the recommendations of others who do not have a proven track record of success! It will make the trader unable to know the reason for the loss because he did not intervene from the origin in the decision to enter and therefore Forex traders who insist on entering their positions based on the recommendations of people who are not qualified enough will continue on the path of loss until the end.
Do not use pending orders
All traders know how important pending orders are, especially stop loss orders, it is usual to see some traders complaining about hitting stop levels due to sudden price jumps and here comes the role of "capital management" and only practice will enable the trader to determine the appropriate levels of stop loss, the trader who ignores placing pending orders will find his account balance sooner or later at zero.
Remember that you will not fail unless you give up achieving your dreams in the world of Forex, and that you can win this game if you avoid common mistakes and maintain your calm and wisdom in all the steps you take as a trader and you must continue to learn to achieve lasting success, as all traders face losses but only experienced traders can avoid falling into the trap of repeating mistakes, and analyzing past performance is one of the virtues that all of the He wants to achieve success in this market.
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Forex