Why Most Retail Traders Fail To Make Money in Trading – Forex Margin
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January 18, 2017 at 1:07 pm #4822
Forex trading is such a lucrative business that every single day the number of retail traders is increasing exponentially. Previously trading the financial instrument was not so popular among the ordinary people rather it was limited to the large bank and institution. But due to technological advancement in the recent times, there are many online brokers who are offering retail trading accounts to the traders with an extreme level of leverage. With the help of the provided leverage, you can easily trade a large amount of money in the forex market without investing too much. But sadly most of the retails traders fails to make money in online trading since they focus too much on their potential profit in the market. But if you truly want to be a successful trader then you need to concentrate on high-quality trade execution in the market. Forex is just like any other business. In order to make a consistent profit out of trading, you must have a valid trading strategy and clear understanding about the forex industry. All the retail traders consider forex as a get rich quick scheme and ultimately to fail to become profitable traders. In this article, we will discuss some of the key points of the failure of the traders.
Not having the proper knowledge: This is the most common problem in most of the retail traders. They jump into the online trading world without having a proper knowledge about the financial industry and thus incur a heavy loss. In order to trade the market with the great level of precision, you must have a strong foundation in the basics of the market. Every single trade should be taken based on the major three types of analysis in the market. And when you take a trade make sure that you know your forex margin level and set you to lot size accordingly. Most of the novice traders take too much risk in a single trade and ultimately their account reach the margin call level within a short period of time. It’s true that understanding the dynamics of the market will be a little bit difficult at the beginning but if you are truly committed to learning the art of trading then you will see that all the stuff are very clear and easy to implement. Develop a reading habit and go through many different articles and books to enrich your trading knowledge in the market.
Overtrading: Overtrading is phenomena when the traders trade the market too frequently. Most of the novice traders think that the more they will trade the more money they will make. But when it comes to real life trading overtrading just jeopardize the traders’ career. In order to remain consistent in the market, you must focus on high-quality trade execution. In the eyes of trained professional, a single quality trade is thousand times better than the high-frequency poor trade in the market. If you trade the market with rational logic and quality setup then you will never have to worry about your forex margin since you know the assigned margin call level for your traded instrument. Even there are some retail traders who trade the financial instrument in the market without knowing their custom margin levels in the market. Since you are taking forex trading as your full-time profession be absolutely sure that you know every single term of this industry very precisely. All the professional traders focus on high-quality trade execution in the market. They rarely take more than one single trade in a day. There are some traders who often spend more than a month for a quality setup in the market. So by now it’s must be pretty clear to you that quality comes first in the market.
Emotional decision: Trading the financial market requires an extreme level of skills and hard trading discipline. Most of the novice traders fail to control their emotions in the market after few consecutive loss. Their mind insists them to take high lot trade in the market to recover their losses instantly. It’s true that sometimes their guts will reward them but when we consider the long-term scenario this is not the perfect solution to become a profitable forex trader in the market. Those who are trading the market for a long period of time knows how to control their emotions in the market. As a professional forex trader, you must know that forex margin system is there to cut down you high leverage open trade in the market so if you take a trade based on your emotions chances are very high that your trade will be closed with the margin call. Always try to embrace the losses in the market and never execute any order without following proper risk management factors. It’s true that controlling the emotions can be extremely difficult at times but since trading will be a full time professional you need to learn how to control your emotions otherwise you will never a successful trader.
In Summary, The number of retail traders in today’s world is increasing day by day. Most of the traders start their trading career in order to get rich quick and secure their financial stability. But in order to make a consistent profit by trading the financial instrument, you must know how to take quality trades in the market. You should always focus on high-quality trade execution rather than quantity. And never trade the market with your emotions since it will slowly kill your trading career. Always take your trading decision based on the rational logic in the market and make sure that you follow proper risk management factors in every single trade.
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