I thought I’d talk about the top 5 reasons that you are failing at forex. There are a lot of people with the best intentions that are failing. It’s really sad. I see more and more people being laid off in this economy turning to forex to help supplement their income. They end up losing even more money and fall into a deeper trap. Here are the top 5 reasons that you are failing at forex.
1. You Don’t Understand the Fundamentals
I think people run into this business with the wrong frame of mind. If you were to learn a sport like hockey, you’d want to learn how to skate before you tried to score goals. The same thing applies with forex. I see people trying to make big money, but they don’t understand the fundamentals of protecting your money, assessing risk, stop-loss points, and sometimes even properly reading a candlestick graph. If you can’t read a candlestick graph than you are going to be in a world of hurt.
2. You Play With Too Much Money
When you deposit money into a broker account you’re going to notice that you can play with a lot more money than you put in. The deal is that you can play with the extra money as long as you make money. If you put in $100, you can’t lose more than a hundred even if you’re allowed to trade $10k. That’s how brokers protect themselves. Once your loss comes close to a hundred, your positions will be sold and you’ll be finished trading.
Only play with 10-20% of what you have available. A small fluctuation in $10k will eat up your $100 in a minute, but if you’re only playing with a $1000, you don’t have to worry about such things.
3. You’re Far Too Emotional
Emotions are the worst thing to act on when it comes to forex. We’re talking about money here and the only thing that you should act on is logic. The fact is that you’re going to have a real tough time if you can’t control your emotions. If you get a ‘gut feeling’ about something, don’t act unless you have evidence. If you experience a loss, walk away. You can lose a lot of money when you’re upset about a loss. Typically after someone loses, they try to win back what they lost… losing even more.
4. You’re Using The Wrong Broker
Everyone seems to start out with brokers that have been recommended to them. That is completely fair, but you need a broker that is going to meet your needs. As you develop as a trader you’re going to find that you have certain needs your broker can’t meet. You’d be surprised how many brokers don’t even have a toll free number you can call for support. Imagine there being a problem with your account, which is full of your money, and there is no one to call for help. You just have to wait for an email.
5. You Don’t Have Software Working For You
It is how the pros do it, so you might as well emulate their example. I’m not saying that trading software is going to make you any better, but it gives you the means to improve. It has the ability to identify potential profits. That’s big. I find that people who start out really don’t know where to look. The software will help you along in that manner. You can learn more about that here.
