Top 10 reasons you’re failing as a Forex trader
Trading is not all about analysis.
You know the stats: 90% of retail Forex traders lose money. If you’re a beginner (and even if you’re not), chances are you’re one of them.
Why?
When you first start out with trading, it feels incredible. Like you’ve finally found that holy grail that will allow you to become rich and quit your job.
After a few months of losing or lack of consistency, the illusion usually bursts. You feel angry, frustrated and disappointed.
This is the point when most people give up. Things become too difficult and the results they expected are not quick enough. It’s just easier calling it a day and going back to your old life.
Don’t do that.
Trading is like everything else: in the beginning, the obstacles seem insurmountable. But they’re not.
You will learn the theoretical stuff: the fundamental and technical analysis, the indicators, the price action and so on.
But that’s not enough.
What trading really requires of you is to get to know yourself and ask yourself the right questions.
The next 10 reasons you’re likely failing as a trader will help set you on the right track.
#1 You don’t take responsibility for your actions
In my experience, this is the number one reason traders fail.
Don’t waste your time and energy blaming somebody else or external circumstances for your trading mistakes.
The market is not out to get you.
Your decisions are your own and you should owe them.
Don’t get attached to your trades. Leaving emotions out of trading is one of the keys to succeeding in this business.
The best thing you can do is to cut your losses quickly and move on.
#2 You don’t have a winning mindset
If you grew up hearing stuff like ‘Money is the source of all evil’ or ‘All rich people are corrupt’ or ‘You should find a steady job’, you could struggle to earn money as a trader.
Your conscious brain might be burning with desire to become financially independent and get out of the rat race, but deeply rooted subconscious beliefs say otherwise.
Our negative beliefs are mostly created during our childhood, and it doesn’t take much. A few words from a parent or a teacher is enough to cause lifetime damage.
This creates a situation that scientists call cognitive dissonance — the psychological stress of holding contradictory beliefs.
You consciously want to earn money trading, but deep down you feel you don’t deserve it. Or you’re scared of being rejected by your friends and family.
If your fear of rejection is greater than your desire to succeed, you will sabotage your success without realizing it.
You need to get your priorities straight. There are techniques you can use to dial down the demons in your head. We’ll go over some of them in a future article.
#3 You have poor risk management
You might be a daredevil and you’re opening positions too big for the size of your account. Or you’re a scared mouse and you don’t dare take any risks.
Either way, if you set fixed limits for yourself — like risking 1–2% of your capital on each trade — your trading will become much less stressful.
Let’s say you have $1000 in your trading account. Decide to risk between $10 and $20 on each trade.
Put your stop loss above the latest high or below the latest low and adapt your lot size accordingly.
And remember: leverage is your friend, but only if you use it wisely.
#4 You don’t have a trading strategy
If you trade on a whim or because your gut tells you so or because you’re bored or because somebody says so on a forum, you’re not going to get far.
You need a solid strategy and you need to stick to it.
A trading strategy is a technique that tells you when to buy and when to sell a particular pair. It isn’t only about when to get into a position. It’s also about when to get out.
A trade can go 100 pips in your direction, but if you don’t close it at the right time, you will be giving profits back to the market.
Don’t forget: you make money when you exit a trade, not when you open one.
A reliable trading strategy might seem boring, but it’s the only way to consistency.
#5 You don’t have a trading plan
A trading plan is not the same as a trading strategy. A strategy consists of buying and selling signals based on analysis — of knowing when to get in and when to get out.
This is not enough.
A trading plan is much more personal. It’s your Forex to-do list. It includes your trading strategy, but also many other things.
For example your trading goal, the analysis you use, your trading capital, your risk management, the risk to reward ratio, what timeframes you trade, the indicators you use, etc.
But it should also include some more subtle aspects, like: What will I do if the trade doesn’t go as planned? How will I react if this or this happens?
Deciding in advance what you will do in a stressful situation will make it much more likely for you to go through with it.
A trading plan is essential as it reduces stress and makes trading easier. It’s your guide that tells you what to do in every situation you might encounter during your trading.
#6 You can’t accept being wrong
If you’re a know-it-all or a Mr/Mrs Always Right, you’re not going to get far in trading. And you might be one of those without realizing it.
When you trade, you’ll be wrong many times. But you can even be wrong most of the time and still make a profit.
Successful traders don’t take “being wrong” personally. They have a trading plan that they know doesn’t generate a profit on 100% of trades. And that’s ok.
Don’t get upset or angry. Focus on the big picture.
It took me a few years of observation and introspection to admit it to myself how much my ego suffers when I’m wrong.
You can’t fix something unless you recognize that it’s broken. And if you don’t fix it, you’ll be stuck in that vicious circle forever.
#7 You give up too quickly
You know the saying “Practice makes perfect”, right? Well, it’s as true in Forex as it is in anything else.
You need to believe in your strategy. You have to trust the probabilities.
You will lose money, inevitably. But if you throw your strategy out the window every time you make a losing trade, you’ll stagnate.
If you change strategies every 2 weeks, you’re running on a hamster wheel. You’re wasting your time.
Try a strategy for 6 months before deciding if it’s good or not. Yes, that’s a long time, but during it, you will progress and learn.
#8 You overcomplicate
This is a very common mistake with beginners — they feel the need to have 10 indicators telling them what to do.
Every rookie spends months looking for the holy grail indicator that will be right 100% of the time.
Not only does such a thing not exist, but too much information can confuse you and be harmful to your trading.
If you have more than 3 indicators on your charts, you’re not doing it right.
Seasoned traders can get insight from different indicators, but if you’re a struggling beginner, you should learn how to read naked charts.
Remove everything from your charts and learn pure price action.
Knowing how to draw support and resistance, and recognizing basic candlestick patterns is enough to be profitable.
#9 You don’t learn from your mistakes
Mistakes are gold. They mean you acted. You took the bull by the horns and you gave it a shot. But they should also mean that you’ve learned something.
The only way to be good at something is to suck at it first. And when you suck at something, you make tons of mistakes.
Learn from them and use that knowledge to improve. Nothing makes you more prone to success than learning from your mistakes.
#10 You don’t treat trading as a business
Why do you trade? What are you trying to achieve? What is your why? If it’s just to blow off some steam (and dollars), then continue having fun.
But if it’s to make a consistent profit to supplement or replace your income, you need to treat Forex as a business.
Many people think they trade to make steady money, but in reality, they are driven by a whole array of other factors.
They might trade out of boredom. We all know how exciting it is to have a trade open and how dull those days can be when the markets are closed.
Others are addicted to random awards. They are too focused on the here and now. They look for an adrenaline rush and are unwilling to delay gratification to achieve long-term success.
Trading is fun and exciting, but it’s also boring and routine. It’s not gambling.
Being successful in trading means making a consistent profit, not a quick win every now and then.
If you took a loan to open a bakery shop, you wouldn’t walk in every day acting like a hyperactive toddler. You’d take it seriously and do the necessary work to make a profit.
Trading is the same thing. If you’re serious about succeeding, you need to approach it like a business, not like a fun hobby.
Bottom line
Trading is not easy, otherwise, a great majority of traders wouldn’t be losing money. But it’s not as hard as people make it out to be.
What they don’t realize is that analysis and indicators represent a maximum of 20% of success in trading. The rest is the mindset.
As long as you have a half-decent trading strategy, you can be profitable. Most traders have that, but they still lose. Why? Because they’re hostages of their emotions and limiting beliefs.
They react impulsively. They make decisions they regret later.
Get to know yourself better. Observe and analyze your reactions.
You can’t predict the markets. But if you can predict your reactions, you won’t have to.
Thanks for reading my story!
Disclaimer: Trading Forex involves a risk of loss. Please consider carefully if such trading is appropriate for you. Past performance is not indicative of future results. My content on this website is for educative purposes only and does not constitute investment recommendations or advice.
