While the forex market offers great potential for making money, many traders struggle to make significant gains. Only 10 percent of traders are a success, the rest 90 percent end up losing money. So, why is it so difficult to make money as a forex trader. We have provided why in this article and equally advised on how you can improve your trades to boost your potential for profit.
Why 90 percent of Forex traders fail
There are a lot of reasons why 90 percent of forex brokers’ clients fail. The primary reason is probably as a result of impatience and also because forex trading has fewer regulations compared to other financial markets. Also, the minimum amount to open an account as a forex trader is significantly lower than those other financial markets like stock
Because of this forex traders tend to trade with leverage and most of them due to quest to make money fast overleverage their account to the extent that when they happen to lose a trade they face the significant loss that could wipe the entire amount they have in their account. Also, some traders are not patient enough to learn the rules of trade and fully grasp how the market works before they start to trade with real money.
The key to success in every business is patient and this equally applies to the forex market. You must be patient and move according to your level of experience. While you could take a month to begin making money with a demo account, it is no guarantee that you could make the same amount of money when you begin live trading
Apart from the fact that every trade is different, trading with real money involves some form of emotional attachment that is not there when you trade demo because of a lack of monetary commitment. So, success as a trader defeats logic. Your best tool, therefore, is to properly learn the rules of the trade before you start to trade with real money.
Let’s see a few things you can do to trade safely on the forex market:
How You Can Boost Your winning potential as a trader
#1: Reset Your Expectations
Many beginners in forex traders have rather unrealistic expectations. They want to make quick gains without first understanding the market or learning the rules of trade. If you’re coming into the market with the hope to get rich quickly, you may be setting yourself up for failure. Although it is possible to build wealth trading forex, you must work hard for it just as you’ll do with any other business Success doesn’t just come suddenly like that. It comes with hard work, dedication, and perseverance. So, having said this, you need to have realistic expectations.
#2: Implement proper risk management
Remember that forex trading involves risk. You need to properly manage your risk if you hope to stay in the market long enough to meet your goals. The best strategy is not to risk more than 2 to 5% of your open position you open. Also, you must never risk more than any amount you’re comfortable with.
#3: Stick With your trading plan
Every forex trader needs to have a forex trading rules. You must stick with your trading plans and never deviate from it. This like shifting your stop loss and allowing your position to run beyond your targets can ruin your trades and wipe your account within seconds if the trade works against you. So, devise your trading strategy, write it down, test them out and once you confirm that they are functional, stick with it and never change the terms when you open a position.
#4: Negative balance protection
Another caution you need to observe especially if trading with margin account is to know that it comes with an equal potential for loss or gain. While a margin account can allow you to trade with 100 to 500 times the amount you have your account, it can lead to a huge loss if you place a negative trade.
So, check that your broker has a negative balance protection policy in place before you trade with margin account and leverage.
If there is such a policy, a broker will place you on a margin call and routinely close your trade before you incur a loss more than the money you have in your account.
#5: Use Stop Loss Order
Implementing Stop Loss Order ensure that your open position will automatically close when the market moves to your present position. It ensures that when you lose, you only make a calculated loss and within the amount limit you’re comfortable with.
There are enormous potentials to make money as a forex trader but you must do things rightly. If you are patient enough to learn the rules of trade, you would be among the few who succeed in the market. However, if you make reckless moves in the market, you’ll likely not only lose the entire money in your trading account but end up with a negative balance. So, beware and remember to tread safely!