Reasons Why Forex Traders Lose Money

[Ingot54 13]

Do yourself a favor and trade markets that give you a level playing field. Choose the ones that offer the highest profit potential with the least amount of risk in the shortest period of time. That will never happen in Equities, Options or the Forex but, trust me, they do exist.

For a moment there I thought you were going to add Commodities to your list of "most reviled."

 

I guess the mystery of it all will never be revealed ... and the mystique of the guru is perpetuated ... never to be fathomed, and always to be desired.

 

So we have the 5M's under control ... but we are now trading the wrong instrument.

 

Bummer.

 

What are we gunna do, Roger? I found nothing in your post that even addresses the topic in a constructive way, but plenty that adds to the confusion that gurus love to cultivate, before stepping in to salve their angst.

 

This is the first post I have read of yours, but already I can see that you and Steve46 share the same DNA.

 

I'll have to look around to see what else you have to say ... maybe I'm using the wrong paintbrush, but sure sure looks like some Steve46 feng shui to me

[Obsidian 10]

On the note of avoiding too big of a bleedout on a loss, what is a reasonable method to setting a stop loss? I could imagine it'd vary a bit from person to person based on their needs and funding, but are there some generally good rules?

 

that depends on your trading style for sure..anyway you can use fibo, support/resistance levels to help you determine your stop levels

[ForexTraderX 10]

On the note of avoiding too big of a bleedout on a loss, what is a reasonable method to setting a stop loss? I could imagine it'd vary a bit from person to person based on their needs and funding, but are there some generally good rules?

 

I can't speak for anyone else, but on thing I very often do once I have an opinion on which way the market will work, I look and find a point that I can say"

 

"ok, if price moves to this point, I can say that my idea is very likely invalid, and I no longer can justify believeing the market will my in the way of my trade."

 

At that price is where I put my stop. I may take several entries and even some partial exits before that point, but in general, I will stick with my trade until that point at which I can say "I am now wrong about direction" is hit.

 

On a seperate note, if you find yourself unable to determine a price that would invalidate your opinion on a trade, then you probably need more experience watching markets, price levels and reactions, etc.

[barako 10]

I was thinking more of the basic stuff like

 

- greed

- lack of knowledge

- over trading

- not taking trading seriously

- and the psychological pressure

- thinking forex is gambling

- no risk management

- to eager to make money

 

and so on, I had to learn the hard way after blowing an account and it did hurt but it makes people realize a couple of important things, and one of them is our own mistake and our own weakness.

[The Catabolist 10]

I can't speak for anyone else, but on thing I very often do once I have an opinion on which way the market will work, I look and find a point that I can say"

 

"ok, if price moves to this point, I can say that my idea is very likely invalid, and I no longer can justify believeing the market will my in the way of my trade."

 

At that price is where I put my stop. I may take several entries and even some partial exits before that point, but in general, I will stick with my trade until that point at which I can say "I am now wrong about direction" is hit.

 

On a seperate note, if you find yourself unable to determine a price that would invalidate your opinion on a trade, then you probably need more experience watching markets, price levels and reactions, etc.

 

 

This was actually super helpful. It's kind of what I had a hunch for as it was. If I was aiming to buy at a reversal from a downtrend when the prices are about to hit support, I'd make sure to set a stop loss just a small, reasonable amount below support because if It hits that point, it's probably going to drop through the support and continue downtrending rather than reverse like I thought. Small loss, no big deal. Then take the opposite approach for going short on a pair.

 

Unfortunately, there have been a few times where I didn't quite set the stop loss far enough and the price moved just far enough to trip it, but then still reversed like I planned it would. I guess I'll just have to learn to fine tune the exact details there.

 

I'm now intrigued, though, about how you'd set partial stops and things of that nature (like multiple entry points on the same pair)? Perhaps exactly for a situation like what I just described.

[Ingot54 13]

This lobbed in my email box just now, and may be of interest.

 

Raghee Horner discusses "10 Mistakes Most Traders Make"

 

[peterr89 10]

It would be more beneficial for beginners if you supply more detailed information.

[Ingot54 13]

It would be more beneficial for beginners if you supply more detailed information.

Hi Peter and welcome to the forum.

 

Most of the threads will address specific issues, and this one is about reasons traders fall short of their desires.

 

What kinds of things are you hoping to discover - perhaps if you expand on those, we can help.

 

I guess if I had to nominate a single issue, it would be "Attempting to trade a Time Frame and instrument before fully prepared to handle it."

[jefftimothy 10]

I think lack of controlling emotion is the main reason for the most of losses in forex trading. It is important to be disciplined for forex traders. Most of trader have a problem of over trading and greed of earning more profit. Many traders don't place stop loss and don't follow proper money management. These things can be major reason for having margin call and stop out.

[Raleigh Lee 10]

In my poll of 50 brokers, the most prevalent reason cited was under-capitalization / trading too big.

[soumailaadamou 10]

hi juda to avoid encountering this kind of problem I use forex robot.

it helps me manage the risk and prevent loss my money.

[Savant 10]

You are right. Most of the trader loss in the trading because of their lack experience or lack understanding the trade.

 

The problem is that people wanna have action instantly and feel like in the movies where someone gets a lot of money in very short time. But in reality that will not happen

[Angelnish 10]

Only one reason . Self responsibility.

[Roger Felton 10]

Here are just a few reasons why Forex traders lose money...and why I'll never trade it again:

 

1. Digging a hole to win a trade is always a bad idea. Would anyone bet on a Nascar driver that had to start off a lap or two behind everyone else? Natural slippage is bad enough without making it much worse on purpose.
   
2. Giving up your "edge" usually means giving up your chance of success. Never put yourself in a position where you could actually be in competition with your broker when your broker has control that you don't have. The lightly regulated Forex is manipulated and corrupt...always has been and probably always will be. If you can't trade with a level playing field to every other trader, find a better vehicle.
   
3. Any market, like the Forex, that allows a trader to open an account with just a couple hundred dollars is a total scam run by a bunch of bandits. Small account Forex traders NEVER win over time. Might as well go to Vegas and at least get free drinks while you get robbed.
   

[Angelnish 10]

I think:- poor planning is the key to failure.Poor money management follows.Taking high leverage could be a course too since it posses higher risks. Naked traders (those without indicators) especially newbies will loose a lot of cash. It is important to be knowledgeable about markets before trading.