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Why Do Forex Traders Lose Money

The statistics show that most forex traders experience losses more often that wins. If you want to avoid losses, keep on reading this article as there are most common reasons why people fail are contained in it.

1. Low start up capital
Many forex traders begin searching for a way to settle their debt or to make a quick buck. Forex market will encourage you to trade large sums of money at high leverage to accumulate great returns on a small amount of initial capital. Of course, you should have some money to make money. You can make steady returns on limited capital in a short period of time. Nonetheless, with just a small amount of money and small risk you will find yourself being overwhelmed by emotions with every fluctuation of the market.

Solution:
If you are a beginner in forex trading, it is recommended to trade with a small amount of money. It is a hard problem to solve for some traders, but start trading at least from $1000.

2. Failure to manage risk
You should have a sound risk management to survive in forex market. You can be an experienced forex trader, but your skills could be wasted because of bad money management. Your first task should not be to make money, but to protect your savings, what you already have. When your capital is low, you have lost an ability to make money.

Solution:
Apply stops and move them when you have a reasonable profit.

3. Greed
Some traders think that they should squeeze every last pip out of a move. There is a lot of money being traded every day in the forex market. If you try to grab every last pip before currency pair turns can set you up to lose the lucrative trade that you set on.

Solution:
It is obvious, but not greedy. Well, you can aim to make a good profit, but there are many pips to go around. Currencies turn every day and you do not need to get the last pip. The next opportunity will appear soon.

4. Attempting to take tops or bottoms
Most new traders attempt to choose turning points in currency pairs. They will set a trade on a pair and as it goes in the wrong direction, they keep on adding to their position making sure that they should turn around this time. Trading in such a way, you will get more exposure that you planned and an awful trade.

Solution:
It is recommended to trade with the trend.

5. Not accepting that you are wrong
Some traders do not work out. We are humans and we want to be always right, but sometimes we are not. As a trader, sometimes you can be wrong.

Solution:
It is not an easy thing to be done, but sometimes you just need to acknowledge that you have committed a mistake.

Due to troubles in the economies of many countries Forex has become a very popular way of making money. Those who are searching for effective strategy, might be interested in managed forex accounts. But please make sure to read about forex trading scam before dealing with forex trading.

It is a must to read reviews to decide “is forex trading a scam?” before you invest money into trading activity. This is important, don’t forget that we live in the world where knowledge quickly enhances the quality of our life.

That is why if you are properly armed with the knowledge in your sphere of interest you can rest assured that you will in any case find the solution to any bad situation. So, please make sure to track this web site on a regular basis or – the least time consuming way of doing it – sign up to its RSS feed. In such an easy way you will have your hand on the pulse of the latest informational updates here. Blogging can be helpful, you just need to know how to use blogging for the currency exchange market.


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