The sad statistic is that more than 90% of all traders including forex traders fail.
Are you going to be one of them?
Here is my list of facts that causes this high failure rate in forex trading:
- Lack of a proper Trading Education
Buying the latest forex trading robot does not make you a trader.
It astounds me that so many people think that they only need to buy a system and demo trade for about a week, and then they are ready to trade.
The market does not have any sympathy, and will hand you your backside every time if you do not know what you are doing.
- Lack of a trading plan
Every business has a business plan. You should have a detailed and documented trading plan.
Without a trading plan guiding your trading every step of the way you are sure to fail.
- Position sizing
Ever heard of forex traders or forex trading systems who makes 500% or some similar outlandish return in a short amount of time?
Well – in order to do this they have to risk 10% or more of their trading capital on every trade.
Risking that much when you have one losing trade you are rattled, two losing trades and you are panic stricken, three losing trades and you are toast.
You have now lost almost half of your trading capital in three trades, and you have traumatized yourself to such a degree that it will take some time before you are mentally sound to trade again.
It should not feel like you have had a death in the family when you have a losing trade or that you have won the lottery when you have a winning trade.
You should never risk more than 2% of your trading capital on one trade. That way if you have a losing trade you do not traumatize yourself, and the loss is small enough that it does not hurt your trading capital as such.
You can then just move on to the next trade.