This post is also available in: Indonesia
Forex trading is often considered a quick way to profit. Because it is also forex trading has experienced a booming trend in recent years in Indonesia.
Of the many new traders who have jumped into the world of forex trading, most have failed. The following are some of the common factors that cause a trader’s failure. Not only novice traders, fellow traders who have been dabbling for a long time are also many who are obstacleed by the factors below. Here Are 5 Causes of Failure in Forex Trading And How to Solve It
1. Do not maintain discipline in trading.
The big mistake many traders make is to let the emotion factor take over your control when trading. Being a forex trader means you have to be prepared to face losses in transactions. it is not uncommon for losses to be experienced 2,3,4 times in a row.
Experiencing major losses, or losses in a row will greatly test your mental and patience and emotions. That’s why one trading system and trading plan must be executed in a disciplined way, to avoid excessive emotional factors.
2. Trading without a plan / trading plan.
One of the first steps in investing is to have clear planning, including in forex trading. Putting together a trading plan that is then followed by the implementation of the trading plan with discipline is one of the key to your success.
A good trading plan has a trading system. clear money management arrangements, as well as clear profit projections as well. Thus all your steps in trading will be more planned and focused on achieving the target.
3. Failed to adapt to the market.
The forex market is a volatile place. As a trader, you should be able to look at the state of the market and adjust to it. The easiest example is in the trading system.
Let’s say you’re a trend follower type. In 2008, price movement conditions in the GBP/JPY pair tended to trend with an average daily price movement of 200-300 pips per day, with daily retraces that can reach 50% of the daily range. Surely it is ideal for you to save a take profit of 50-100. However, if you look at the current daily range GBP/JPY is much reduced, so to get TP 100 pips for one transaction in one day tends to be more difficult.
Failure to adapt the strategy used in 2008 under current conditions will lead to failure.
Another example is gold. Remember when 2 years ago transactions in Gold were quite easy? you simply buy and most likely profit. Right now it’s no longer like that.
4. Unrealistic targets.
No matter what people say, forex is not a quick way to earn wealth. This is why you need to set realistic targets.
Many traders are stuck in the condition of wanting to make a big profit instantly. This is what causes them to use large lots without calculation, and ultimately leads to the loss of all capital (margin call) repeatedly.
Forex trading can indeed provide great advantages, it just requires clear financial processes and arrangements. Please arrange a good trading plan and money management, accompanied by capital compounding as well if needed. If implemented with discipline, you will most likely reap the sweet results in a faster time.
5. Poor risk and capital management.
Forex trading is synonymous with money management. The amount of lots you use, the profit expectations you may earn, how much risk you set, are familiar things that you will continue to manage and use every time you transact.
Failure to manage this can cause your trading process to be not maximal. Have you ever experienced this; The profit amount of 5-10 times your transaction is lost only because of one loss transaction? If ever, then it is the most real example of the lack of risk management and money management.
The above 5 things are a common cause of failure experienced by a trader. If you’re experiencing one or more of the above, it’s a good idea to start thinking about trying to fix it.