Why Forex Traders Lose Money

Quite commonly known fact is that most of the forex traders fail. In fact, it is estimated that 96% of forex traders lose money and end up quitting trading in forex market. DailyFX found that many forex traders do better than that, but new traders still have a tough timing gaining ground in this market. Following list shows you some of the most common reasons why forex traders lose money.

Starting with Low Capital

Most currency traders start out looking for a way to get out of debt or to make easy money from Forex Market. It is common for forex market brokers to encourage you to trade big lot sizes and trade using high leverage to generate large returns on a small amount of initial capital.

You must have some money to make some money, and it is possible for you to generate outstanding returns on limited capital in the short term. However, with only a small amount of capital and outsized risk because of too-high leverage, you will find yourself being emotional with each swing of the market's ups and downs and jumping in and out and the worst times possible.

You can resolve this issue by never trading with a too-small amount of capital. This is a difficult problem to get around for someone that wants to start trading on a shoestring. $1,000 - $2,000 is a reasonable amount to start off with micro lots. Otherwise, you are just setting yourself up for potential disaster.

Poor Risk Management

Proper Risk management is key to survival as a forex trader as in life. You can be a very skilled trader and still be wiped out because of poor risk management. Your first job is not to make a profit, but rather to protect what you have. As your capital goes decreased, your ability to make profit goes lost.

To counteract this threat and implement proper risk management, place stop-loss orders and don't forget to move them once you have a reasonable profit. Use lot sizes that are reasonable compared to your account capital. Most of all very important thing to be followed, if a trade no longer makes sense, get out of it and make a fresh start

Trying to Rule the Market

Forex Market is not something which you can beat upon, but its something you understand and join as per trend of the market. At the same time, market is something that can beat you up if you are trying to make too much with tiny capital. Sometimes beating the market concept often cause traders to become too aggressive or go against trends, which is a sure recipe for disaster.

Becoming Greedy

Sometimes traders do feel that they need to squeeze every last pip out of a move in the market. There is money to be made in the forex markets every day. Trying to grab every last pip before a currency pair turns can cause you to hold positions too long and set you up to lose the profitable trade that you are trading.

The solution is too obvious here, just don't go greedy to earn each and every move of market. It's fine to shoot for a reasonable profit but there are plenty of pips to go around. Currencies continue to move every day so there is no need to get that last pip; the next opportunity is right around the corner.

Refusing to Be Wrong

Some trades just don't work out. It is human nature to prove yourself to be right, but sometimes you just aren't. As a trader, you just have to accept that you're wrong sometimes and move on, instead of clinging to the idea of being right and ending up with a zero-balance trading account.

It is a difficult thing to do, but sometimes you just have to admit that you made a mistake. Either you entered the trade for the wrong reasons, or it just didn't work out the way you planned it. Either way, the best thing to do is just admit the mistake, dump the trade, and move on to the next opportunity.

Auto Trading System

There are many automated forex trading systems on the internet. Some traders are out there looking for the ever-elusive 100-percent accurate forex trading system. They keep buying systems and trying them until finally giving up, deciding that there is no way to win.

As a new trader, you must accept that there is no such thing as a free lunch in forex trading market. Winning at forex trading takes work and efforts just like anything else. You can find success by building your own method, strategy, and system instead of buying worthless systems on the internet from less-than-reputable marketers.

If you still feel its too risky to handle and make money through Forex Trading and you don't even have enough time to analyse and trade in Forex Market - it would be better to take an assistance from professional money managers or Forex Fund Managers who are specialized in these kind of works and are handling some good number of satisfied clients. As a simple thing to say Astronauts are best to be placed in NASA and they cannot beat the professional Forex Fund manager in handling the forex market. Talking about the fees - such Fund Managers will charge you small portion of profits as their Performance Fees so if they make money for you then only they will get paid otherwise they will not claim anything.

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