The forex market is the largest financial market in the world with an average trade of five trillion U.S. dollars each day.
However, while a large number of forex traders invest in the market, only few are truly successful. According to an eye opening report, 95% of The forex traders lose money and there are only 5% of the traders who manage to become successful traders.
These statistics may demotivate someone who is trying to succeed in forex trading. But, you do not need to worry if you are striving to be successful in the forex market.
In this article, we will share the reasons why most of the forex traders fail. So keep reading this article and avoid these mistakes that we mentioned here.
Below are some of the common loopholes that cause most of the traders to fail.
- Trading without a Plan
Trading the forex or any other markets such as stocks, the first step of a trader should be creating a proper trading plan and following it in order to get success.
Most of the traders just start out without making a plan. A successful trader is one who works within a documented plan.
A good plan is one that specifies the expected return on investment (ROI) and includes risk management strategies.
Sticking to a good trading plan increases the chances of success of a trader. Therefore, if you do not have a strategic trading plan, it would be very difficult for you to accomplish your trading goals.
- Letting Emotions Control the Trading Decisions
The biggest mistake any forex trader can make is not overcoming the emotions while taking trading decisions.
A successful forex trader is one who achieves big wins while bearing many small losses.
Handling many consecutive losses is very difficult, mentally and emotionally. This is a point where a trader’s confidence and patience is being tested.
So, if you want to become a successful trader, never ever let emotions control your trading decisions.
- Learning Through Trial and Error
Without any doubt, the riskiest way to learn forex trading is through trial and error. Exploring the suitable trading strategy by learning from your own mistakes is not an effective way to trade forex.
The excellent way to become a successful currency trader is to learn from the experience of successful traders. You can access a successful trader through a formal trading education or try to find a mentor who has a notable track record.
The best way to polish your skills is to shadow a successful trader, while adding hours of practice on your own .
- Poor Money and Risk Management
Traders do not put as much focus on risk management as they focus on building a strategy.
Some novice traders, and even experienced ones, trade without any security measures and refrain from using stop losses. Windsor brokers is a good platform for such beginners to start their trading journey.
Therefore, a successful trader is one who knows at any given time exactly how much of their investment is at risk.