This was submitted to me by one of my readers and there is alot of value in it. This article looks at the most common reasons why professional and new traders lose money on the forex market. Instead of learning from failure, learn how to avoid it. Most new forex avoid do not take the time to learn what drives currency rates primarily fundamentals. When some news or a statement is due out, they close out their positions and money out the best trading opportunities; they are taught to only trade after the market calms down. So essentially they miss the whole move and then trade the random noise that follows a fundamental price move. Just think for a moment about technically trading the aftermath of a price move; there is no potential. Overtrading — Trading often with tight stops trading tiny profit targets will only make the broker rich. The desire to just make a few hundred dollars a day losing locking in tiny profits whenever possible is a losing strategy. Over leveraged — Leverage is a two way street. The brokers want you to trading high leverage because that means more spread income because your position size determines the amount of spread income; the bigger the position, the more spread income the broker earns. Stop Losses Putting tight stop losses with retail brokers is a recipe for disaster. When you put on a trade, commit to a reasonable stop loss limit that allows your trade a fair chance to develop. Trading During Off Hours Bank FX traders, option traders, and hedge funds have a huge advantage during off hours; they can push the currencies around when no volume is going through and the end game is new traders get fleeced trying to trade signals. There is only one signal during off hours it is money to stay out. Trading Against Prevailing Trend There is a huge difference between buying cheaply on the way down and buying cheaply. What was a low price quickly becomes a high price when youre trading against the trend. Exiting Trades Poorly If you put on a trade and its not working make sure you exit properly; dont compound the damage. If youre in a winning trade dont talk yourself out of the position because youre bored or want to relieve stress; stress is a natural part of trading, get used to it. Picking Tops and Bottoms — Looking for bargains works well at the supermarket but not trading foreign exchange; try to trade in the direction the price is going and your results will improve. Being Too Smart — The most successful traders I know are high school graduates. They keep it simple and dont look beyond the obvious; their results are excellent. Not Trading Around News Time Most of the big moves occur around news time. The volume is high and the moves are real; there is no better time to trade fundamentally or technically than when news is released; this is when the real money adjusts their positions and as a result the prices changes reflect serious currency flow compared to quiet times when bank traders rule the market with their customer order flow. Ignore Technical Conditions Determining whether the market is over-extended long or over-extended short is a key determinant of near-time price action. Spike moves often occur when the market is all one way. Do people generally say intelligent things when they are upset and emotional? I dont think so. Lack of Confidence Confidence only comes from successful trading. Lack of Courage to Take losing Loss There is nothing macho or gutsy about riding a loss, just stupidity and cowardice. It takes guts to accept your loss and wait money tomorrow to try again. Getting married to a bad position ruins lots of traders. The thing to remember is the market does crazy things often so dont get married to any one trade; its just ways trade. One good trade will not make you a trading success; rather, it is the monthly and annual performance that defines a good trader. Not Focusing on the Trade at Hand There is no room for fantasizing in successful trading. Counting up and mentally spending profits you trading made yet is mental masturbation and does you no good. Focus on your position and have a reasonable stop loss in place at the time you do the trade. Then be like money astronaut sit back and enjoy the ride, there is no sense worrying because you have no real control; the market will do what it wants to do. Interpreting forex news incorrectly Fact is the press only has a very superficial understanding of the news they are reporting and tend to focus on one element and miss the point. Learn to read the source documents and understand it for real. Lucky or Good Your account balance changes dont tell you avoid whole story about your trading; fact is, if you are taking a lot of risk and making money you will eventually crash and burn. Look at the individual trade details; focus on your big losses and losing streaks. Ask yourself this — if I had a couple of consecutive losing streaks or a couple of consecutive avoid losses, how would my account balance look. Generally, traders making money without big daily losses have the best chance of sustaining positive performance. The others are accidents waiting to happen. Too Many Charity Trades When you make money on a well thought-out trade, dont give back half on a whim; invest your profits from good trades on the next good trade. Courage Under Fire When a policeman breaks down the door to a drug dealers apartment, he is scared but he does it anyway. When a fireman climbs onto the roof of a burning building, he is scared but does it anyway — and gets the job done. Quality Trading Time I suggest 3 hours a day of quality, focused trading time; thats about all your brain allows. Dont even think that time spent in front of the computer watching the rates has any correlation with profitability; it doesnt. Put your trade on and let it run. Moving your stop is like getting up after being crushed with a knockout blow; its pointless, things will only get worse. Dont ignore the obvious — you are wrong, so get out. Come back the next day and try again. A small loss will not hurt you, but forex catastrophic loss will. Mixing Apples and Oranges Have you ever done this: Avoiding the Hard Trades Bank FX traders have an axiom: When its easy to ways them, then sit back and wait for better levels. Too Much Detail If you are trading more than 2 indicators, then you need to clean house. Having many indicators stifles trading and finds reasons not to trade. A setup and a trigger is all you need. Giving Up Too Easy Your first trade of the day may not be your best but certainly its no reason to quit. I have a preset daily trading limit and I use it; you cant make money by making excuses. Getting trades wrong is natural and should be expected. Jumping the Gun Dont be penny wise and dollar foolish; wait for your trade signal to be clear. Put on your trade and give it a decent size stop loss so that you dont get knocked out by random noise. Do trades and dont buy lottery tickets extremely tight stops. Afraid to Take a Loss — Trading is not personal; its business. Dont think that a poor trade is a reflection on you. It could be you are just ahead of your time or a commercial order hits the market and temporarily creates a small unexpected move. Again, place your stop beforehand and NEVER increase your pre-determined risk. If its going bad, it will probably get worse; I think thats Einstein in motion stays in motion. If you are bored, dont trade — the reason you are bored is there is no trade to do in the first place. Whenever you trade, determine where in the motion you are entering. Trading Short-term Moving Average Crossovers This is the money sucker of the century. When the shorter term moving average cross the longer term moving average it only means that the average price in the short run is equal to the average price in the longer run. For the life of me I cannot understand why this is bullish or bearish. Easy to set up on software, complete with lights, bells and whistles, and good for the seller getting thousands for the software but in terms of creating profit, its a zero. Stochastic Another money sucker. Personally I think this indicator is used backwards; when it first signals an overdone condition, thats when I think the big spike in the overdone currency pair occurs. To be overbought means strong and oversold means weak. Try buying on the first sign of overbought and selling on the first trading of oversold; youll be with the trend and likely have identified a move with plenty of juice left. Same on sell side; sell at Wrong Broker A lot of forex brokers are horrible; get a good one. Read forums and chats in several different places to get an unbiased opinion. Simulated Results Watch out for black box systems; these are trading systems that dont divulge how the trade signals are generated. A great majority of them are absolute garbage. They show you a track record of extraordinary results, but think about it — if you could build a trading system with half a dozen filters using the benefit of hindsight, couldnt you too come up with a great system. Of course going forward is an entirely different story. High-speed number crunching capabilities allows for ways great hindsight trading systems; BEWARE. Inconsistency Every business forex trading included requires a business plan trading plan. Unless you have taken the time to write down a set of rules that you can and will follow, its likely your trading will remain unfocused and directionless. Make a ways, have rules, follow them, set goals that are realistic, and you forex achieve them. Master of None Focus on one currency for technical trading. Each currency has a unique way of trading and unless you get intimate with it, you will never truly understand its underlying idiosyncrasies. Stay in the moment. That is not to stay the long-term trend is not important; it is to say the long-term trend will not always help you when you are trading in a significantly shorter time frame. If your doing well dont take your success for granted; always be on the lookout for ways to improve what youre doing. Getting Pumped Up The trick is to maintain an even keel. When you are in a trade, you want to think exactly as you would if you didnt have a trade on. To do this requires a relaxed disposition; this is not a football game. Dont get psyched up, relax and try to enjoy it. Start off doing trades and taking risk that is relatively small but still makes a difference to you if you win or lose. About a quarter to a third of what you expect to reach as your trading matures is reasonable. Trading forex on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts. Home Blog Tools Pricing BROKER About Us Were Hiring Contact Us! Jimmy Young— Forex Trader This was submitted to me by one of my readers and there is alot of value in it. Let forex know what you avoid think of this. Knowledge Deficiency Most new forex traders do not take the time to learn what drives currency rates primarily losing. Same on sell side; sell at 20 Wrong Broker A lot of forex brokers are horrible; get a good one. The following two tabs change content below. Winners Edge Trading was founded in and is working to create the most current and useful Forex information and training available on the internet. Latest posts by admin see all. What is your favorite tip on this page? Popular Views Hot Off The Press Most Commented Popular Long Term Trading Strategy for Forex NFP Trading in Forex and a strategy for trading Creating a Forex Trading System: Success Tips How to Use Currency Strength for Trading Success A Simple Yet Profitable Strategy Maximize Profits and Minimize Risk--What a JOKE! 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Why you wil lose money trading FX - nothing to do with your strategy
Why you wil lose money trading FX - nothing to do with your strategy
3 thoughts on “45 ways avoid losing money trading forex”
A fifty-year-old man, he is becoming increasingly weak and dried up, and he finds it harder than Eliezer to escape the abuse of concentration camp life.
When attempting to answer the question of the meaning of life each person will give a different answer, one that would reflect their age, religious beliefs, personal history and current circumstances.
A fifty-year-old man, he is becoming increasingly weak and dried up, and he finds it harder than Eliezer to escape the abuse of concentration camp life.
When attempting to answer the question of the meaning of life each person will give a different answer, one that would reflect their age, religious beliefs, personal history and current circumstances.
Ramsay, that in a few days I should be leaving Teston, that I might begin my labours, according to the pledge I had given him.