Foreign exchange trading can be extremely competitive and complex, making success challenging to attain. Most US forex brokers involved with online forex trading experience losses; simply contact any forex broker to inquire whether any empty or dormant trading accounts exist in their file.
Online, the failure rate for those attempting trading and failing is reported at between 8-95%. Although no official figure exists for this statistic, it can still be stated as being extremely high.
Why does this situation exist? It is believed that it has many important variables, which will be explored further below.
Unreasonable hopes of a trader
There’s an assumption that novice traders tend to overestimate what it takes to become successful traders, overestimating expectations about time and capital commitment needed for success in trading FX. There may be various reasons for this misconception; clever marketers may focus their marketing on newcomers as an attempt at persuasion that their product can help novice traders earn significant sums with just a couple of mouse clicks.
Lack of knowledge about currency
One issue facing traders on the Forex market is their lack of knowledge or expertise on it; when confronted by its harsh conditions they succumb and die. Currency trading resembles any career or profession in that it requires proper knowledge, experience, or education before one can start successfully trading forex; many think they can trade without this, only to find out later they were wrong; therefore one must always prepare as this world remains at war – find more out on Fxaudit.com about Forex trading!
Too much emotion
Many traders trade emotionally charged trades using only their hearts rather than using logic, the common sense, or experience when making trading decisions – an additional cause of failure in forex trading. Since it’s all based on numbers, success requires making use of variables such as knowledge, logic, the common sense and experience to achieve success instead of allowing dangerous emotions like greed, fear or pride sabotage their accounts for trading. Money matters require people with certain personalities who remain calm when things begin going south in terms of trader dealings!
Mismatched trading strategies
One of the primary factors underlying forex traders’ failures is ineffective or inappropriate trading strategies (or “strategies,” as some may incorrectly refer to them). By employing statistical data to help traders assess risk or probabilities more objectively and effectively, trading systems have been developed or are currently in place or being developed in order to facilitate more objectively doing business.
Certain strategies for trading forex may be more advantageous than others; however, to make these strategies beneficial to a trader’s individual needs. What may work well for one trader may not suit another.
