The most common statistic thrown around about the forex market is that something like 95% of people that start in it will inevitably lose their money and fail. I think that the reasons are many, personally. Here are some of the most common ones.
1. The Trader Has Unrealistic Expectations
They have been talked up by marketing material or think that they can create a fortune overnight with forex trading.
The lack of experience and insight into what makes a successful trader facilitates their fall that much faster.
They don’t have an appropriate plan or the knowledge they need to be successful in forex.
2. The Trader Overestimates Their Ability
Many, many people go from a demo account straight to blowing out their first trading account.
The smart ones only used a fraction of their desired starting capital. The others manage to lose thousands in the transition.
For some, there isn’t a great difference between demo and live trading.
For most, it is drastically different from a psychological angle.
There’s a world of difference from putting fake money into the markets and putting your hard earned money out there.
The smart approach is to start Live with a small amount and add to it later once you have results.
3. They Do Not Solidify Their Trading Edge Through A Solid Plan
A trading plan is an essential part of successful forex trading.
No trader can succeed if they do not a concrete, repeatable methodology.
Every trade will not be a favorable one but we must strive to maximize as many favorable trades as we are able to make.
We must have a clear definition in mind to spot the potentially profitable trade that is manifesting on the charts.
The trader should also have their risk management, entry, and exit criteria clearly defined.
Really- it all boils down to a lack of respect for the potential of the forex market. It is a fool’s errand to enter any business transaction without your mind clear, information researched, contingencies covered, and a solid plan on how to succeed and minimize loss.
Even then, there’s still a significant amount of luck involved.
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Only 5% Forex Traders are Able to Make Money on “Consistent” Basis
As per Stats only 5% traders are able to make money on “consistent” basis in the market in long run. So what makes trading so fascinating that only 5% traders are able to learn lets look into the reasons:
1. They will never trade for living for initial 5 years of trading,
They use this time to get acquainted with all kind of market situation understand the value of 3 M in trading .
The need for steady money like a weekly paycheck will corrupt your thinking and force you to deviate from your plan of action that was so well thought out prior to the heat of the battle.
2. They will trade only with money they are willing to loose.
They do not need the money that they loose.
Even if the account goes bust their retirement planning and other necessities goes unaffected, The enormous amounts of money that it requires to learn to daytrade would exceed most people’s lifetime income.
What makes the number of successful day traders so low is that even the few who could make it, dont have enough capital to endure the learning curve.
3. They never rely on other people opinion.
With the initial learning curve they make sure to build habit of trusting the system!! They do not worry what FII’s are doing or believe in some insider news
4. They do not follow the crowd, and there is no pressure on them to conform or perform.
One absolutely must not be in a position to be held responsible for anything that you do. Total freedom from both personal and monetary obligations are a MUST, this alone eliminates 99.9%
5. They have incredible discipline to not buckle under pressure.
They have a perfectly clear head and understand fully what they do and how they do it. Battle wounds and memories of defeat are more valuable to them than the money.
6. They do not trade with the goal of making money.
Quite the opposite, they would be just as happy in any type of intellectual challenge that requires the extraordinary inverted thinking and brilliance required to win at an individualized sport.