Many beginners don’t pay attention at the cause of forex trading failure. Forex is often seen as a quick way to make a profit. Because of this, it has experienced a booming trend in the last few years in Indonesia.
Of the many new traders who are involved in the world of foreign exchange trade, most of them have failed. The following are some of the common factors that cause a trader to fail. Not only novice traders, many fellow traders who have been in the business for long time experience obstacles by the factors below.
The big mistake that many traders make is letting the emotional factor take over your control when trading. Being a trader means that you must be prepared to face losses in transactions. It is not uncommon for transactions to lose 2, 3, 4 times in a row.
Experiencing big losses, or losses in a row will really test your mental and patience and emotion. That's why the system and the plan must be executed in a disciplined manner, to avoid excessive emotional factors. Other than that, you should also choose the best forex broker for your trading.
Trading without a Plan and Failing to Adapt to the Market are the Cause of Forex Trading Failure
One of the first steps in investing is having a clear plan, including in foreign exchange trade. Compiling a perfect plan followed by the disciplined execution of the plan is one of the main keys to your success.
A good trading plan has a good system, clear profit projections, as well as clear money management arrangements. This is how all the steps in trading will be more planned and focused on achieving the target.
The foreign exchange market is a volatile place. As a trader, you must be able to see the market situation and adjust to it. The easiest example is in the system. Let's say you are a trend follower type. The cause of forex trading failure is that you’re not aware of the market condition.
In 2008, the condition of price movements in the GBP / JPY pair tended to be trending with an average daily price movement of 200-300 pips per day, with a daily retrace that could reach 50% of the daily range.
Of course, this is ideal for you to save 50-100 take profit. However, if you look at the current daily range of GBP / JPY is much reduced, so to get TP 100 pips for one transaction in one day tends to be more difficult. Failure to adapt the strategies used in 2008 to current conditions will result in failure.
Unrealistic Targets and Poor Risk Management
No matter what people say, forex is not a fast way to get rich. It is because of this that you need to set realistic targets. Many traders are stuck in a state of wanting to get big profits instantly. Setting unrealistic target is the cause of forex trading failure.
This is why they use large lots without calculations, and in the end, they end up losing all their capital (margin call) over and over again. Forex can indeed provide big profits, it's just that it requires clear financial processes and arrangements.
Please arrange a good plan and money management, along with capital compounding if needed. If done with discipline, chances are you will reap the sweet results in less time. Forex exchange trade is synonymous with money management. You can learn before starting your own trading by joining Didimax forex broker.
The size of the lot you use, the expected profit that may be achieved, what is the risk value you set, are familiar things that you will continue to manage and use every time you trade. The cause of forex trading failure is the failure to regulate this can cause the process to be not optimal.
