Why You Will Never Make Money In Forex! Hard Facts!
What is it that successful traders have, that 75% of retail traders do not?
Regulated forex brokers are now required to advertise the percentage of losing accounts, and where this information can usually be found at the bottom of the broker’s website landing page.
If you have the time to flick through a few of these, you will notice that the average amount of retail traders who lose their funds trading CFDs or spread betting runs at well over 70%.
So just what are these people doing wrong?
Well, there is no single formula for success in trading Forex, but most new traders do not appreciate that there is a steep learning curve before one can jump in and start trading. Many of them will see a couple of videos on YouTube about trading and think that they are off to the races.
When, in fact, trading in the financial markets requires great skill and knowledge.
There is an old adage that: failing to prepare is preparing to fail, and never has that been more true than in the forex market.
But let’s say that you have learned about fundamental analysis and how economic factors can affect the value of a currency, and whereby economic data releases can also cause extreme exchange rate fluctuations and where you have done your homework and learned about some technical indicators, and yet you have hit a brick wall and are not trading successfully.
What are the professional traders doing that you are not?
Professional Traders are rigid in their approach to trading.
They will have developed a trading methodology, and they stick to it like glue.
And this is one of the biggest mistakes that new traders fall into: they chop and change their routine, they do not have a designated methodology, developed through trial and error and use many different technical indicators and timeframes, and flit from one currency to another and even one asset class to another such as turning from Forex to stock indices and oil, etc.
It is essential that you choose a time frame to suit yourself and your lifestyle.
If you have a busy life and are looking to trade Forex as a supplemental income, do you really want to be trading on a long-term timeframe, such as daily, weekly or monthly charts, where positions could run against you for weeks at a time and cause you stress, worry and sleepless nights?
If you do not have a problem with this, fine. But if you are looking for quick in and out trades, on an intraday basis, then you need to be looking at a 5-minute or 15-minute timeframe and certainly no longer than an hourly chart.
And therefore, psychology really does play an important factor in your trading. This is another key area that new traders do not take into consideration when they start their journey into Forex.
Professional traders make money In forex because they have discipline, where new traders tend to be eager and haphazard in their approach to trading.
A professional trader will be patient and wait until the price action reaches an area that he or she has defined as being the correct level to instigate a trade in order to maximize their profits.
Professional traders will have tested their methodology and tuned it to perfection and stick to it without deviation.
Therefore, what new traders must do is to find a trading formula that works for them, having first tested it on a demo account.
Because if you cannot make money there, you will not be able to make it on a real money account. Once your methodology is working consistently, only then should you consider risking your real money trading Forex.
But the number one key feature that professional traders use consistently is risk control, by implementing stop losses.
And the number one feature where new retail traders lose their money is because of poor risk control, and where a lack of stop losses will see account balances wiped out.