Forex is the largest financial market in the world. Every day more than 4.5 trillion dollars is traded across the globe. In the past, very few people could trade the live asset as no leverage trading account was available. But things have changed a lot over time. People now do have the access to high leverage trading accounts and they can easily execute trades with a small amount of money. But having an easy access doesn’t mean the success rate is very high. Only 5% of the traders are able to change their life based on the trading profession. Now we will highlight some of the key reasons for which the retail traders lose money in the Forex market.
You must be a disciplined trader to earn a consistent profit from this market. The biggest mistake any trader can make is trading without discipline. You have a solid trading strategy and you need to follow the rules at any cost. Even if you lose trade you should stick to your system. Learning the proper way to embrace the losing trade is an art. It requires complete control over your emotions. Things will be very tough at first, but if you focus on the core factors of risk management, you can easily make money by following strict discipline.
Backtesting your trading strategy
Being a novice trader, you won’t have a clear understanding of the Forex market. You need to start using the demo accounts to develop your skills. As a new investor, you will make lots of mistakes but this is very normal. Try to assess your past trade result and you will be able to find your mistake. Take your time and follow a trading journal. Being an aggressive trader means you can’t learn anything. Spread betting UK is nothing but the most sophisticated profession in today’s world. A small mistake can cost you a lot of money.
Setting unrealistic goals
You should have a proper milestone when it comes to spreading betting profession. Taking too much risk is nothing but ruining your career. Some people often want to double their account size within a week. Theoretically, it’s possible since you can use a high leverage trading account. But in real life, this is nothing but a suicide mission. A few big losers can wipe your total investment. You have to consider trading as your business. Stop thinking about the big winners in the Forex market.1-2% gain per month is considered to be an excellent return for retail traders.
Money management is the most important element in the spread betting profession. If you take too much risk to secure big winners, you might lose your investment. Regardless of the quality of the trade setup, you should never risk more than 2% of your account balance in any trade. Always remember, trading is nothing but finding the best trades in the complex market. You should always aim for high-risk reward trade setups in favor of the long-term trend. Trading against the trend or trying to win all trades is nothing but one of the biggest mistake in your trading career. Try to use your intellect and trade with discipline.
Ignoring the fundamental news
Fundamental news plays a great role in your trading success. You can’t understand the sentiment of the market based on technical data. You have to know about the impact of high impact news release. For instance, many people have lost their entire investment during the Brexit event. They didn’t even realize why such big drop occurred in the British Pound. But those who had a clear knowledge of fundamental analysis managed to save their investment despite this insane volatility. Learning the art of fundamental analysis is not rocket science. Start learning about the major news release and see its impact. If you feel confused about a certain news, take help from senior traders.