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Foreign Currency Exchange Trading tips: Why Do 90% of All Currency Traders Lose Money?

Foreign Currency Exchange Trading can be one of the most money-making investments any individual can make. There are various significant benefits of trading Forex… it is a 24/7 market, most of the trading is programmed, you can use a big amount of leverage to raise your potential revenue, and much more.

All the same, there are common errors that seem to be made by each and every newbie fx trader and sometimes even the pros.

You might ask yourself, how can I evade these mistakes and how do I identify them? Well, I am trying to do something different with this article, I am going to explain to you one mistake and then a solution, then another mistake and another solution and so on.

Over Trading:

I ‘m sure the majority of us have been told about this one, but if you haven’t please allow me to illustrate. Over trading happens whenever a foreign currency trader is looking for trading opportunities that aren’t really there. I have heard it all, “But if I trade more I will make more easily”, “If this trading strategy works it will make money even if I trade it on 15 pairs”, “trading a number of pairs doesn’t alter money management”... I could keep going for hours.

The reality: over-trading is the primary reason why nearly all traders lose money. Trading the forex market can be challenging and it is easy to get confused by the tremendous amount of information that is available on the web (the problem is that most of this information is incorrect!).

The solution: The best way to become a wealthy foreign currency exchange trader and not over-trade is to have a trading plan; every successful trader I have met has one. Having a trading plan can help you become a far more disciplined trader and of course a more lucrative one. This takes me to the next common mistake.

Not having a trading plan: I have been trading and developing currency exchange strategies with some of the wisest and most prosperous Forex traders in the USA and all over the world, and I have NEVER met any effective trader without a trading plan or that just trades what looks good.

As an example, when a particular person wants to get a loan from a bank to initiate a business one of the most essential documents that the bank will ask for is a business plan. Why? They don’t want to lend money to anybody who doesn’t have a clear idea of what to do with it. The same happens in foreign currency exchange.

You can be a highly talented trader and have the best tools and resources but if you don’t have a trading plan you won’t be able to put it all together. Get it?

Picking tops and buttons:

 Many new traders try to pinpoint and define where a currency pair will turn around and go the opposite direction, this is a big mistake. Picking tops and buttons is a very complicated task and even when it is done correctly you might still get an generic result.

The best technique to not commit this mistake is to stick to your trading plan and trading strategy. Hot tip: if your trading strategy is based upon on reversals (tops and buttons) make sure that you demo trade for at least 2-3 months before you send your hard earned cash to your broker.

Making decisions based on emotions:

Emotions control, or at least manipulate everything we do and think, but unfortunately being emotional in Forex can very expensive.

Forex is a really challenging arena and when you trade the currency market you are trading against some of the wisest minds on the planet, this is why you need to stay focused and not let your emotions control your trading decisions. Hot Tip: use automated software to help you to identify your entry and exit points and to take the trades for you, this will assist you to keep emotions out of the picture.

Not using money management: money management plays a quite significant role in Forex currency trading. Not using any money management in your trading is like going to war without any weapons. The easiest way to incorporate MM (money management) in your Forex is to create a set of rules that you are going to follow when you trade.

As an illustration, you can make a choice to not trade more than 2% in any given trade or to not trade more than 5% of your total capital a day.

Foreign Exchange Trading can become a extremely gratifying activity ( and that is bringing outstanding monetary rewards) or it might even become your Full time job. You are the only one that can take action, get prepared, and start to trade Forex the right way.

I hope I was able to provide you with useful information that you can apply to your foreign currency exchange trading  today. Stick around for more.

To your trading success,
Jay Molina
Advanced FX trader & coach

Jay Molina is an advanced Forex trader that helps other investors around the world to learn about the Forex market and its rewards and risks.
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