If You see the statistics of retail traders’ activity in the Forex market you would know that more than 80% of retail traders make a loss in the first market. Moreover, isn’t the first stage of successful traders losing money here due to the easy software for retail traders to incur losses in the Forex market?
If you want to join the forex market to trade here for a while you don’t want to make a loss in the Forex market again. As we know the Forex market is the world’s largest financial market and it is run by the big institutes only.
Therefore, as a retail trader, it is quite impossible to determine what the price of a particular currency pair would go.
For retail traders, the only way to sustain here is to follow what the big players are doing in the market. Do you know what the big players are?
Who Moves the Forex Market?
The main market movers in the Forex market are Central Banks. When a central bank changes its monetary policy decision it will affect the economy of that particular country. Therefore, it will have a massive impact on that country’s currency.
We know the foreign currency pair consists of two different currencies of two different countries. Therefore, any change in one currency will affect the price of another currency.
For example, if you see the EURUSD move up due to a monetary policy decision by European Central Bank, it will affect the US dollar price as well as the Euro price.
So the main market participants here are the central bank. However, a lot of business happens between countries.
Therefore, any economic calendar of one country will affect another country. In this way, big financial institutes, multinational companies, and other economic factors influence the Forex market.
If you want to get yourself involved in the Forex market you would know this concept very well.
If you don’t know what the central banks are doing and what the global economy is heading it will be impossible for you to make a sustained growth of your equity.
Why Traders Lose Money in the Forex Market?
The forex market is a way to earn money or to be a way to become a financially free person. But why are there not a lot of people who are financially free by being a Forex trader? Why do people lose money in the forex market? let’s unlock the answer!
#1 Not Having a Trading Strategy
This is the biggest reason for traders to lose money in the forex market.
There are many traders who think a forex market is a place for gambling. You are investing money here not mean you are staking a bed.
The movement in the forex price is logical. There is no luck or chance of winning. Therefore, you need to understand the core concept of the forex market and you need to know how to implement it on your Forex card.
Without having a trading strategy you will roam here and there and you will not find any result. As a result, you will win the game by being a loser.
#2 Not Following Rules
Let’s say you have read the above section and you got a Forex trading strategy.
Still, you might struggle to follow the trading rules strictly. It is very hard for traders to wait and see the market moving and not participate in it. If you see the market is moving and it is likely that we will lose profitable trades.
Therefore, most of the retail traders entering the position early are left. Therefore, most traders follow their trading rules at the wrong time.
As a support and resistance trader, you probably sell the currency pair when it is on tr resistance and you will buy the currency pair when it is on support.
However, in the forex market, there is a possibility that the price will spike up and spike down and hit your stop loss before moving toward your direction.
You need to know when to take your trade and when to wait and see. Most of the forex traders struggle in this step and therefore they lost money in the forex market.
#3 Ignore the Market Context
Market context is a crucial part of the market structure of a currency pair.
It will let you know in which phase you are in and you need to react according to the Price Action of that stage. For example, if you are within a long-term bullish trend where the price is moving upside with an impulsive bullish pressure.
Therefore any setup in a short time frame will have a higher possibility to move up. On the other hand, if you take any sell setup in a long-term strength it will hit your stop loss.
So you need to understand the market context to determine at which stage you are.
Therefore, you can evaluate your trading strategy according to the market structure.
#4 Strong Trading Psychology
Trading psychology is the hardest part that is needed to become a pro trader.
If you are in the forex market you probably have known the world’s fear and greed.
When you make a good amount of profit you will become a reality and then you will test bigger trades to earn more. On the other hand, when you make some laws you will become fearful and then you will start to ignore good trades.
It is very difficult to remain white and come while trading. However, you have to achieve this quality to become a pro trader. To achieve this quality the only thing you need to have is practice. The more you practice, the more you will learn.
Moreover, you need to perform meditations and you can have knowledge about human psychology. You know how you can improve your trading psychology.
Conclusion – What a Trader Should Do?
To get yourself out of the loser you need to follow your trading rules strongly.
If you are a swing either you need to identify the swing low and swing high and you should take your trades only when the price reaches the top and bottom of the swing.
For intraday traders, you need to make sure that you are trading in the bigger traders’ direction. Moreover, the key element to be successful in the forex trading industry is to have strong money management.
We trade forex with only probabilities and there is no 100% guarantee that the price will move in your direction.
Therefore, minimizing risks will allow you to save your capital and you will find time to take entry when the suitable price condition comes.
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