Why do Forex traders lose money? There are many reasons why Forex traders lose money, but in this article i will give you 10 top tips on how to stop losing money in the Forex market.
Knowledge is power.
The most important thing that you need to be a successful Forex trader is knowledge. Knowledge is everything in Forex trading. The more you know about the market the more successful you will become at trading.
There are many websites available online that will give you a certain degree of knowledge to enable you to trade Forex, but 95% of these websites are run by marketing companies, or failed traders, so the knowledge you get from these websites will enable you to trade, but they will not give you the understanding you need to enable you to make money from Forex trading every week.
Its a fact that 95% of Forex traders consistently lose money. And the main reason for this is they do not understand how the market really works, because they have never been educated by a professional Forex trader. I am a professional Forex trader and i can teach you how to trade Forex, and make consistent profits week in week out from trading, but my time is limited so i cannot teach you for free. For more information on my Forex training course please click on the link.
If you do not have the funds available to pay me to teach you how to trade Forex, here are 10 top tips you can use to enable you to cut down on your losses.
1. Don’t trade with more money than you can afford to lose.
Putting pressure on yourself will cause you to make the wrong trading decisions, and trading with more money than you can afford to lose will add to that pressure.
2. Don’t over trade.
Over trading can lead to an emotional roller coaster. If you are taking too many trades you are trading emotionally. Trading should be as mechanical as possible. Emotional trading will lead to big losses.
3. Don’t be greedy.
If you have had a couple of nice trades and banked some pips enjoy them. Don’t think you are on a roll and chase after more pips. This often leads to more risk taking and you end up giving back the pips you made, and some.
4. Don’t revenge trade.
Getting back into a position straight after a losing trade is called revenge trading. When you trade this way you are trading purely on emotion, and you are chasing those lost pips. If you have a losing trade, just sit back and relax, and take some time out to re focus your mind.
5. Don’t over expose yourself to a losing position.
Chasing after a losing position is probably one of the worst things you can do in trading. Adding to a losing trade in the hope that the market will come back will cost you big time. Just admit that you got it wrong and close your trade, and move on.
6. Keep a record of all your trades.
Keeping a record of all your trades may give you some insight into your trading habits. Do you trade better in the morning, or in the evening? What is your average win loss ratio? How many trades are you taking per day? How long are you holding your trades for? Understanding your trading habits will enable you to become a better trader.
7. Trade with a lot size that you are comfortable with.
This is a mistake that a lot of traders can make that will dramatically effect their trading performance. If your lot size is too big, you are anxious when you trade, so you close trades too early, and you stop yourself out of trades too soon. If your lot size is too small the reverse happens. So you need to trade with a lot size that feels comfortable, but not too comfortable.
8. Devise a rules based trading method and have a reason for entering and exiting trades.
You have to have a method. You cannot blindly enter the market in the hope that you will get a winning trade. You have to trade based on a rules based method that has been tested over time and is proven to work.
9. Be patient and wait for the set ups.
When you have your rules based method in place, stick to it. Wait for qualified set ups before entering the market.
10. Don’t rely on indicators to give you trading signals.
The majority of Forex traders rely on indicators to give them trading signals. If trading was that easy everyone would be making fortunes from trading, but that’s not the reality is it. If you want to be successful in Forex trading you have to learn to read price action. Price is the most important thing in trading and it always will be. If you understand price action you will be a much more successful trader.
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