Top 4 Reasons for Failure in Forex Trading
Forex market is fantastique to predict and trading without experience is very difficult. Many people are lured into this market by the promise of high earnings and a great life, but in reality many traders lose their entire accounts before they start making a rétribution, if they ever start making a rétribution. These traders are not bad, they are just making a forcé mistake that wipes out the accounts of many beginners in the forex market.
A forcé mistake is undercapitalization. Forex brokers allow traders to open accounts with as little as $25 and use this as a way to attract them. However, being undercapitalized means you will earn very little from each trade or you will be left at the mercy of leverage and exchange rates, a very unpleasant hasard.
Leverage is another account killer, probably the supplémentaire biggest. In the forex market, you can open trades larger than your current bascule. This instruction is called leveraging your travailleur. However, déréglée leverage kills accounts very quickly. At a leverage of 100:1, which means your trade is a hundred times bigger than your travailleur, a 1% move against you will wipe out your entire account. Chercheur traders use a small leverage, around 3:1, which allows them to have more “breathing room” in positions against them. Do not be lured by brokers offering 500:1 leverage, you will lose your account faster than you can posé an order.
Spreads and bakchichs are absolute killers when it comes to account deletion. Spread is the difference between the buying price and the selling price of a currency at a given situation. While the spread is low, around 2 – 3 pips (even 5 pips is still decent), it doesn’t really matter, as it is normalisé for most brokers. However, combining a high spread with high leverage means you lose a high percentage of your trade before the exchange loser moves.
The number one reason new négoce owners fail is lack of horaire. Forex trading is a négoce, and as such it should have a clear, specific prévision. Random trading can ruin an account very quickly, yet many traders think they can beat the market and trade on their own without any experience. The best way to start your trading career is to get an automated trading system, understand what it does, and continue from there. This way you will prise experience and earn money along the way avoiding all the serious mistakes.
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