Wondering why your forex trade always goes against you? This article will help you understand mistakes you are making while trading and that’s the reason why your trade always goes against you. If you keep on doing the same thing consistently, you should not expect different results.
Forex is not simple. Whether you should get into the forex trading or not is highly based on your mindset and mental resistance. When you don’t implement the trading strategies properly, there are high chances that you will end up losing your money.
So why does your Forex trade always go against you?
The market never goes against you or anyone. Maybe you are just talking about the spread which you will see that you are negative right as you enter a trade. Or you may be trying to trade reversals which is not for beginners. Give a trend trading system or strategy a try as the saying goes “the trend if your friend”. Then look for reversals as you get more experienced.
If you are a forex trader whose trade always goes against, then you must be making some mistakes. In this post, we have shared some reasons why trades of some forex traders go against them. This will help you understand what mistakes you are making so that you can correct those mistakes.
Reasons Why Forex Traders Lose Money
Do you know most of the forex traders end up losing money? It is found that around 96 percent of forex traders lose their money and end up quitting. What are the main reasons behind this? That’s what we have shared here.
1. Low Start-up Capital
One of the major reasons behind most forex traders lose money in the forex market is due to low capital. Many traders think that they can make a huge amount of money through low startup capital and through debt money. With limited capital, you may be able to make money for the short term. And, due to market fluctuations, it is hard to gain higher returns with low-startup capital.
2. Poor Risk Management
When it comes to gaining higher returns in the forex market, risk management plays a crucial role. When you have poor risk management, the chances are you may not survive in the market. There are various methods of managing risk. The best way is to place stop-loss orders. By placing stop-loss orders, you avoid facing huge losses.
3. Greed
Another major reason why most forex traders get into the loss is due to greed. As a forex trader, you must not be grabbing the last pip. Most newbie traders become greedy and try to grab till the last pip and which leads to loss. When you try to grab every last pip, it may lead to holding the positions for too long and in the end, you may end up losing money.
4. No Trading Plan
The traders who lose money in the forex market, the majority of them do not have a proper trading plan. Having a plan is very important. You must not be implementing random strategies of trading. After creating the trading plan, you must follow it properly.
5. Addiction
Treat forex trading as your business. You must be properly executing strategies just like a business owner does for his business. It can be dangerous when you get trading addiction. Overtrading will lead to losses for sure. When you start overtrading forex, it leads to trading addiction and it can be hard to get out of the trading addiction.
6. Not adapting market conditions
As we know, the market keeps changing. Not becoming flexible and not adapting the current market sentiments or conditions is another major mistake a forex trader may be making. The market never becomes static, it keeps changing. And with the changing market, you need to be flexible and learn to accept the current market.
7. Choosing the wrong broker
Forex brokers play a crucial role in trading. If you make the mistake of choosing the wrong broker, you may end losing money in the forex market. In order to achieve your trade goals, it is important to get the right broker. The important thing you need to keep in mind is that forex brokers cheat the traders via different methods. They use techniques such as stop-loss hunting, markups, slippage, re-quoting, leverage, swap, etc. to cheat traders.
8. Emotional Trading
No matter whether you are trading in the stocks, forex, or any other market, if you trade with the fear or excitement, you are going to lose. Emotional trading makes it hard to achieve your trading goals. Trading with the fear of losing will make your trading strategy ineffective and useless.
9. Lack of knowledge
You may have a huge amount of money to invest in the market, but what if you don’t know anything about the market? Obviously, you will lose money. For a newbie forex trader, it is important to focus on gaining knowledge about the market. To learn basic terms, you can use practice account. Though practice or demo accounts are not effective like real forex accounts, still you can use them for improving basic knowledge.
So these are the main reasons why the majority of forex traders lose their money in the market. If you are one of those traders, you may be making any of these mistakes. So how you can avoid losing money in Forex? This is what we have shared here.
Ways to Avoid Losing Money in Forex
When you don’t have any trading plan or strategy, the chances of losing money in the market will be high. Here are different ways to avoid losing money in forex:
1. Find the reputable broker
Finding a reliable and reputable broker is a very important part. Choosing a wrong forex broker can lead to huge losses. You need to make sure your forex account and deposits are in safe hands. Before choosing a particular forex broker, you need to consider some factors like broker’s account offering, commission, leverage, initial deposits, withdrawal policies, and account funding.
2. Use a practice account
If you are a newbie forex trader, it is advisable to get started with the practice account. Using a demo or practice forex account helps to understand basic concepts and terms of the forex. The majority of the trading platforms come with practice or demo accounts.
3. Use leverage wisely
Forex account leverages can be a blessing and a curse at the same time. If the forex leverage is used wisely, it can be really helpful. The major reason why people find forex trading interesting because here traders get a chance to make huge profits from a small investment. The important thing is using leverages wisely.
4. Treat it like a business
You need to treat forex trading as your business. Just like business consists of risk factors, same thing applies to forex trading. Short term gains and losses are common in the forex market. You should not get emotional because of short-term losses. Instead, you should concentrate on your trading plan and trading strategy.
5. Don’t just invest money, invest your time as well
Many newbie traders think that spending 10-15 minutes a day in forex will make them a millionaire, but this isn’t true. As we have discussed earlier it is important to treat forex as your business. To grow a business, it will obviously require consistent effort and a pretty good amount of time. In order to become a successful forex trader, you need to sufficient time and consistent effort so that you can learn market sentiments and prepare your strategies for trading.
Conclusion
So here we have discussed some major reasons why your forex trade always goes against you and some ways you can implement to avoid losing money. If you are one of those traders whose trade always goes against, then you may be making some mistakes. To become successful as a forex trader, always follow your trading plan and keep learning about the market.
