After my first year of trading, I was on the verge of quitting because I was making profits one day and losing even more the next. It almost exhausted me and depleted my bank account.
However, I persisted, and today, I am living the life of my dreams, travelling from one destination to the next, and having fun while printing money.
Here are some reasons that almost made me fail and that are still making lots of people fail in the forex industry:
Lack of Education and Preparation
Trading necessitates a thorough grasp of how the market operates and the best tactics for navigating it. Many people enter the market without this expertise, resulting in poor trading decisions that harm them.
Underestimating the impact of trading psychology
Emotional control is essential in trading. Fear of missing out (FOMO), fear of losing, a lack of patience, and greed are common causes of rash decisions and costly blunders.
Ineffective Risk Management
Failure to manage risk properly, such as putting too much money at risk in a single trade, is a common cause of failure.
Some traders join the market with unrealistic hopes of immediate gains. When these expectations are not satisfied, they may take unnecessary risks or quit too quickly.
To increase profits, some traders enter into too many trades at the same time or trade with sizes that are too large for their account, resulting in significant losses.
Lack of a Trading Plan
A lack of a trading plan leads to haphazard and inconsistent decisions and results. Success necessitates a well-thought-out strategy with distinct entrance and exit points.
Failure to Adapt
Markets change at any time, and techniques that worked in the past may not be useful in the future. Failure to adjust to changing situations frequently leads to financial losses.
Ignoring Market Conditions
Some traders fail to consider broader market conditions or fundamental events that may have an impact on their trading, resulting in unexpected losses even after conducting thorough technical analysis.
Poor Money Management
Inadequate management of trading funds, such as a lack of a sufficient buffer to withstand market falls, can swiftly destroy your trading career. Trading is not a simple activity, but it can be incredibly lucrative after you have received good mentoring and mastered the game. Congratulations on your accomplishments.