Trading is not a fun game. Remember, if you have no sound knowledge about the investment industry, you can’t trade for a long time. Some investors take trading as gambling and start their journey in Forex with a big amount of capital. For this reason, they fail to protect their account and face failure. However, bear in mind that if you want to survive in trading, you have to ensure the safety of your capital. Otherwise, it will be tough for you to trade in the Forex market.
Now, in this post, we are going to discuss the factors responsible for the failure of novice traders. Let’s see what these are.
If you assess the portfolio of successful traders, you will see, they never overtrade. Successful investors use strategic steps and they hardly lose money in the market. On the other hand, newcomers think that by trading more, they will become a millionaire in a short time. But, after starting over-trading, they might blow up their account and face problems to open the new position. To become successful, being a trader, you need to limit your trades. Remember, you need to choose the trade which will help you to make decent profits. For example, in a month, if traders can execute four or five good trades, they do not need to trade more to make profit. That’s why, as a trader, you have to focus on the quality of the trades rather than quantity.
Not following the trend
Most of the newbies try to do something unique and start trading against the trend. But, by ignoring the trend, they create huge complications. You have to understand, if you go against the trend, you might not make profits. This is because, in Forex, you need to go with the market to become successful. Sometimes, newcomers make mistakes to identify the right trend. As a consequence, they take the wrong steps. To identify the trend of the market, newcomers must improve their technical knowledge. Because, without analyzing the daily time frame and using the appropriate indicators, they can’t trade with the trade. Bear in mind, most of the elite traders at Saxo go with the major trend. It is one of the key reasons for which they are making a serious profit at the end of every month. So, work hard and learn to trade with the key trend in the market.
Having Immediate high profit expectations:
Before evening going through and analysing their last mistake they assume that they got the key to their success and can now earn Unrealistic profits like no one before. The dream of becoming rich in a short period of time makes them do silly mistakes and then avoid them. They try to force the market to provide them with results of unrealistic returns they want on their investment. To get to those expectations they risk in investing high capitals which they think is proficient enough to give them unrealistic results. They forget it is not a hundred meter sprint to finish it with best speed, it is like a race or marathon of Tortoise and the rabbit in which slow, smart and steady always wins the race and gets the desired return for their investment. You should learn from the market and prepare yourself for every possible market situation you can face in order to not get too excited about gaining unrealistic high profits. It reduces the risk of the unexpected and cuts down the possibilities of random losses.
Taking high risk
Before taking leverage, traders must develop good risk management skills. Because, if you do not know how to manage the risk, you might start to trade with a high leverage trading account and thus, you will face a huge loss. In the Forex industry, newcomers can’t save their funds because of taking a high risk. Remember, as a newcomer, you should not take a risk of more than 2% of your capital. To keep a balance in your trading, you need to maintain the risk management rules which will aid you in getting trades with a high-risk reward ratio. And while taking trades in the cross pairs like GBPAUD, the risk factor should be less than 1% of the capital. The best way to learn about the trading market is through participating in it and learning from your trials and the errors made by you. So, instead of taking high risks just in order to satisfy your greed can lead you towards unsuccessful traders. But learning from the stories and mistakes of successful traders experiences can improve your skills and provide you benefits as a new trader with lots of practice and learning.
Lose the patience
Newbies struggle a lot to keep their patience in trading. But, the majority of them fail to wait for the right time and can’t reach their target. To succeed as a trader, you have to give at least five years to learn about trading. Otherwise, you can’t face a winning streak in the market. During this time, you have to gain theoretical knowledge and practical knowledge about the trading industry which will assist you in taking the correct measures. But, many traders do not want to give time and adopt shortcuts. If they do use shortcuts they face a big loss and fail to survive in the industry. the traders should always plan before investing, they should plan both developing and risk management strategies with equal attention, as shortcuts and tricks here can cause them unfixable loss, which gradually breaks the confidence of the trader and devastates them. In order to maintain balance the amount of risk taken and capital should be balanced and well planned.
We hope, after reading this article, you have already identified the key facts which are accountable for your failure in Forex. To avoid these mistakes, you need to maintain a diary that will include the details of each trade. If you do the task properly, you might reduce the number of errors you make.