There are many reasons why forex traders lose their deposits while trading currencies.
There is no doubt that many people who work online including forex traders work from home. It is one way of saving funds we can invest in our businesses.
I have categorized these reasons into 3 because the rest of the reasons are off shoot of these ones.
1. The psychological effect of the difference between demo trading and live trading.
2. The impatient factor in reading and interpreting the daily chart correctly.
3. The problem of wrong application of trading rules.
In the first reason, forex trading platforms provide free virtual funds for new entrants to use and learn how to trade. These practicing forex charts usually have between five thousand and ten thousand dollars for demo trading. Therefore when new traders make losses while learning, it hardly affects them psychologically, even when they use high lots to trade. They know that the money is not real fund.
From my personal experience I only feel bad for a short time when I lose money while trying to develop a new trading strategy that will protect my live funds, while using my demo account. In this case you can then imagine how new entrants who have never traded live will feel when they lose money while figuring out how to trade forex with demo account.
When they begin to trade with live funds, the feeling becomes different. They keep remembering that their hard earned money is at stake. They begin to get fidgety and panic whenever there is a draw down. This often leads to erratic decisions which eventually produce negative results.
What then is the solution to this problem? It is simple. Trade with smaller lots in your demo account as you will do with your real money or live funds. Regard your profit as real profit and your loss the same way and trade with only 10% of your fund as in live funds. Get used to it. It will pay you off at the long run.
In the second reason, some traders can not be patient enough to read and interpret the daily charts correctly. This often leads to wrong trade decisions, which eventually lead to losses. Correct reading and interpretation of daily charts helps you to find out the possible direction of trade for the day. Forex traders lose their deposits when they enter trades in a wrong trade direction for a particular currency for the day.
The solution to this problem is that forex traders should patiently read, understand and correctly interpret the chart for the day
The last reason why forex traders lose their deposit is the problem of wrong application of trading rules. Sometimes, it will not be enough to read and interpret the charts correctly. The result has to be applied correctly too.
Once I made such an error and paid dearly for it. I patiently read the chart. However I noticed that there was a difference in trade direction as predicted by higher time frames as against the lower ones. I followed the lower time frame and made my entry. When the direction of the lower time frame completed its runs, I failed to take action to close my trades and take profit. The result was bad for me.
MAXIMIZE YOUR FOREX TRADING PROFIT WITH THIS SYSTEM
To solve this problem, I developed a chart for the time frames with arrows showing the directions of each in the morning. I make reference to this chart as my trade progresses in the day. This got that problem solved.
To you who work at home trading forex, make the best of this information and improve your trading strategy. This is to your success in forex trading.
There is no doubt that many people who work online including forex traders work from home. It is one way of saving funds we can invest in our businesses.
I have categorized these reasons into 3 because the rest of the reasons are off shoot of these ones.
1. The psychological effect of the difference between demo trading and live trading.
2. The impatient factor in reading and interpreting the daily chart correctly.
3. The problem of wrong application of trading rules.
In the first reason, forex trading platforms provide free virtual funds for new entrants to use and learn how to trade. These practicing forex charts usually have between five thousand and ten thousand dollars for demo trading. Therefore when new traders make losses while learning, it hardly affects them psychologically, even when they use high lots to trade. They know that the money is not real fund.
From my personal experience I only feel bad for a short time when I lose money while trying to develop a new trading strategy that will protect my live funds, while using my demo account. In this case you can then imagine how new entrants who have never traded live will feel when they lose money while figuring out how to trade forex with demo account.
When they begin to trade with live funds, the feeling becomes different. They keep remembering that their hard earned money is at stake. They begin to get fidgety and panic whenever there is a draw down. This often leads to erratic decisions which eventually produce negative results.
What then is the solution to this problem? It is simple. Trade with smaller lots in your demo account as you will do with your real money or live funds. Regard your profit as real profit and your loss the same way and trade with only 10% of your fund as in live funds. Get used to it. It will pay you off at the long run.
In the second reason, some traders can not be patient enough to read and interpret the daily charts correctly. This often leads to wrong trade decisions, which eventually lead to losses. Correct reading and interpretation of daily charts helps you to find out the possible direction of trade for the day. Forex traders lose their deposits when they enter trades in a wrong trade direction for a particular currency for the day.
The solution to this problem is that forex traders should patiently read, understand and correctly interpret the chart for the day
The last reason why forex traders lose their deposit is the problem of wrong application of trading rules. Sometimes, it will not be enough to read and interpret the charts correctly. The result has to be applied correctly too.
Once I made such an error and paid dearly for it. I patiently read the chart. However I noticed that there was a difference in trade direction as predicted by higher time frames as against the lower ones. I followed the lower time frame and made my entry. When the direction of the lower time frame completed its runs, I failed to take action to close my trades and take profit. The result was bad for me.
MAXIMIZE YOUR FOREX TRADING PROFIT WITH THIS SYSTEM
To solve this problem, I developed a chart for the time frames with arrows showing the directions of each in the morning. I make reference to this chart as my trade progresses in the day. This got that problem solved.
To you who work at home trading forex, make the best of this information and improve your trading strategy. This is to your success in forex trading.
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