Do you have a minute?
Good. Because that may be all it takes to save your Forex trading business from going bankrupt. A study by Finance Magnates reveals that 95 percent of all traders fail and 80 percent quit Forex trading in the first two years.
Understanding the causes of this massive failure is important as it will help you adjust your trading plan. This article explains—in detail—three psychological factors that lead many Forex traders to lose money. And suggests ways to avoid such failure.
You don’t have a minute to lose.
Search for “How to successfully deposit money by PayPal and start Forex trading online” or “Forex trading tips,” and Google spits out a dozen articles for you.
Read through the articles, and these common themes emerge:
- Choose a reputable broker.
- Deposit money by PayPal
- Make a plan.
- Forecast the condition of the market.
While it’s important to deposit money by PayPal and start Forex trading online as well as to choose a reputable Forex brokers, those suggestions are not the main reason why many Forex traders fail. Often, traders fail because of greed. Our intrinsic emotions—the love for wealth or fear of failure—drive us in ways we can never imagine.
As the saying goes, “Bulls and bears make money; hogs get slaughtered.” Driven by greed, emotionally-charged traders often “act irrationally,” BabyPips’s Dr. Pipslow says. “This usually comes in the form of overleveraging, overtrading, chasing the markets, or holding on to trades you know you should’ve exited long ago.”
The solution is to have maximum control over your emotions. Before you chase that market, ask yourself:
Is this trade in line with my strategy? Is it in line with my overall goal?
It’s okay to feel afraid as a trader, especially if it’s temporal—a brief pause to make a rational calculation. What is not okay is to imprison yourself in a permanent condition of fear at all the time.
Let’s talk more about that.
Entrepreneurs aren’t risk-takers. Entrepreneurs are calculated risk-takers.
But, as a Forex trader, being a calculated risk-taker doesn’t give you permission to hold trades forever. It doesn’t give you permission to keep waiting. That’s fear, and it (fear) is the main reason behind many Forex trading online failure.
Fear paralyzes amateur traders and stops them from trading. To succeed in starting Forex trading online, you’ve got to beat your fear. Professional traders know that taking a risk is crucial…
It’s not okay to just keep your capital under lock and key, and not trade. You have to deposit money into your PayPal account and start Forex trading online. Sure, you will fail along the way. But “you have to know that taking a loss is part of the game and you need to embrace it,” Joel Kruger, the renowned Forex trading expert says. “If you can’t take a loss and accept you were wrong, you will never be a successful trader.”
As a rule, clear up your mind before you embark on any trade. And remember to focus on price and stay small. Don’t let your overconfidence pushes you in the wrong direction.
Talking about overconfidence…
If fear prevents you from trading and greed pushes you to act in ways you shouldn’t, then overconfidence should help you win big when you decide to deposit money by PayPal and start Forex trading online, right?
Wrong. You’ll certainly lose money—a lot of it—if you act with overconfidence. The reason why? Overconfidence supports your ego, validates your beliefs, and leads you to go astray, psychologists say.
For example, overconfident traders who win big yesterday might not hesitate to try the same strategy today, even when the circumstances are not the same. This “confidence bias” is dangerous. You need to be cautious of your trading euphoria.
Always ensure to analyze your trading sessions and look at your wins and losses in detail so that you won’t engage in an unwise trading decision. Or use “expert advisors” (robots), which 90 percent of successful Forex traders use to help them make money, according to a study by MahiFX.
The bottom line
The Forex market is big… In fact, it’s 2.5X bigger than the global GDP.
Yet, many traders are failing to profit from this bigger lucrative market. Emotions are preventing them from succeeding when they start Forex trading online:
- Greed pushes them to take a wrong move.
- Fear holds them to stay idle.
- Overconfidence knocks their trade on the brick of bankruptcy.
It’s time for traders to start looking inward, not outward. Don’t let your emotions control you. Be the controller of your emotions. Stay small and focused and believe in your strategy.