Why do 95% of forex traders fail?
I see this 'fact' everywhere, but why? I'm 17 myself, I'm into forex trading and I had been studying it on and off since I was 15, I didn't understand it but in the past 2 months I have really gotten into it. I was pissing around on demo accounts for 1 month and kept losing, then exactly 1 month ago today I made an account and decided to be serious (demo). I had made my own little strategies and formulas, did a little bit of extra studying and knew all my terms inside and out. I haven't yet used any tool like Fibonnaci apart from that MACD trend tool, thats all!
This is my 1 month progress (in pounds £) http://postimage.org/image/d2sey3rvj/
I know in a live account i'd have psychology factors and spread costs but I'm treating this seriously with good risk/money management techniques. I didn't find it that hard to come to terms with, I tend to make 1-3 trades per day via either a scapling method or by holding a position and setting a reasonable take profit setting following a trend/in accordance to my formula.
HOW DO LOADS OF TRADERS FAIL!?!?!? It's bugging me! Thanks!
- JerryLv 77 years agoBest answer
Here are a few reasons.
1) Retail forex is full of frauds. Please read the CFTC (US regulator) link below.
2) Forex is a negative sum game. For every winner there is a loser, minus commissions.
3) The winners are multinational banks and hedge funds that have huge advantages in experience, data, systems. Small investors can't compete.
4) Rubbish like binary options where the odds are truly horrible.
Anyone who tells you that forex is easy is lying.
EDIT: A spammer found your question and added a great example of the kind of rubbish to avoid. Claims of 2500% returns over 2 is better than the best investors on the planet, which is not even remotely believable.
- Anonymous7 years ago
Because Forex trading does not GENERATE any new money, the only way you GAIN is if some other trader LOSES.....and on every trade the Broker still gets a cut!
When you trade stocks, the overall value of the underlying company may improve, so both buyer AND seller can make a profit....
When you trade Bonds, the buyer can profit from a favorable rate, the underlying agency can invest the original deposit (improving their business), AND the seller knows if there is a higher yielding place to put their funds....
In Forex, none of this is true.....the ONLY way you can make money is for some other poor sucker to lose that amount of money....minus commissions!
- Anonymous7 years ago
Traders fail beacuse of emotions and not having a plan. If you can handle your emotions and you have a plan which you respect all the time, things wont get so hard. I have 4 years experience with trading and i must say my first 3 years were the learning part. Lost enough on this learning part, till i decided to switch to automated trading in order to get rid of the emotions and errors in my plan. Currently trading with an automated program which brought a 2500% return on the past 2 years and some. I trade only since 1 year with it and i must say that on top of the profits which i already have, i'm also in a healthier state of mind as the trading emotions dont disturb me anymore. Drop me an e-mail at vali_seo at yahoo dot com if you're interested in the program (with proven track record) as i wont post links in here, beacuse it can be considered spam.
- 7 years ago
I have traded forex for over ten years and what you say is true. From experience I have found that technical indicators cannot be relied on most of the time.
Scalping trades can be quite stressful. Holding trades more relaxed but you need deep pockets as the Stop Losses have to be quite wide .
Someone once said to me that the best way to learn forex is from someone who does it for a living and has been doing it for a long time.
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- 5 years ago
the best trading software http://tradingsolution.info
i have attended a lot of seminars, read counless books on forex trading and it all cost me thousands of dollars. the worst thing was i blew up my first account. after that i opened another account and the same thing happened again. i started to wonder why i couldn,t make any money in forex trading. at first i thought i knew everything about trading. finally i found that the main problem i have was i did not have the right mental in trading. as we know that psychology has great impact on our trading result. apart from psychology issue, there is another problem that we have to address. they are money management, market analysis, and entry/exit rules. to me money management is important in trading. i opened another account and start to trade profitably after i learnt from my past mistake. i don't trade emotionally anymore.
if you are serious about trading you need to address your weakness and try to fix it. no forex guru can make you Professional trader unless you want to learn from your mistake.
- 7 years ago
The most of the common reasons for fail :
1. They trade with the aim of getting lucky to make money.
2. Their greed exceeds their need.
3. They think trading is a game of chance and luck and do not get the proper education to succeed.
4. They don't favor to invest enough time and amount for education and mentor-ship.
5. They have Poor focus.
6. They are more emotional than intellectual.
7. After failing, they want to make up their loss; therefore they may further incur loss.
The 95% sit there passive like a rabbit in front of a snake so to speak and watch the market prove them wrong..pip by pip...by pip...by pip. Over and over and over again.
The 5% don't do that. They are active and not passive.
Speak to any one of the 5% group and ask them what their biggest trading accomplishments are.
They are not going to tell ya about their big wins...they tell ya about how they actively got out of positions that reversed against them before they turned into a major loss.
Averting disaster so to speak and actively protected themselves.
In my experience...any trader that brags about his/her wins and hides his/her losses needs to be taken with a grain of salt so to speak.
Really though basically it comes down to the fact that they begin trading, fail, THEN look into education when really you should EDUCATE yourself FIRST. It's usually that simple.
People really take the internet forgranted. We have access to great tools but just choose not to use them for one reason or another.
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