When a trade fails it’s usually due to an abundance of reasons, but it’s mainly pertaining to the fact that the same investors have a tough time with other assets as well. Leverage is a key component to this as well, which is when the investor makes use of borrowed capital to maximize their potential ROI’s (return of investments). Not only that, but the margin that’s in place when you’re trading currencies sort of puts traders in the position where nothing is low-risk.
The traits of trading currencies can lull some investors into a false sense of security, and in most cases will have them expecting a greater return on their investment than they’re scheduled to receive (or just simply take a lot more risks than they should usually be taking).
The Risks of Trading Forex (The Biggest and Most Common Mistakes)
There are a list of certain things you can do that will more than likely put you in the negative when it comes to your investments, so look at your trading regime and fix it accordingly. Nobody likes taking a loss on the market, so prepare yourself and do your best to avoid it.Trading Discipline
The worst possible thing that any trader could do is to lose their discipline when it comes to trading, you should never let your emotions control you and your money when it comes to the market. If you really want to be a successful forex trader you need to think like one, and you also need to make an immense amount of winning investments (while still maintaining a small number of losses, if any at all!). When you experience a bunch of losses back to back on the market you might lose your confidence, but it’s important to trade with a smart edge (as opposed to letting your emotions control your decisions). Fear and greed are things you don’t want to deal with, so keep your eyes on the prize and practice discipline when it comes to trading.Not Having a Trading Plan
No successful forex trader is going to tell you that they didn’t create a trading plan, the key to success is to follow through on an initial plan that you’ve already put together. When you don’t plan you’ve already lost a head start when it comes to the forex market, and head starts are exactly what you need. Make sure you’re looking at your risk management processes, as well as expected ROI’s (return on investment). Being a planner before a trader can be amazing in most case, so try it out for yourself and see how it works. No trading plan means you don’t know what you’re going to do with your investments, which is a foolproof way to end up on the wrong side of the profit margin.Not Being Able To Adapt
The market is ever changing, and there’s no way to stop it. It’s just how the financial market grows, and as a result plenty of traders are being “left in the dust” (so to speak). Look at the different scenarios you might find yourself in before you’re even trading on the market, because preparation is ideal for anybody who wants to be successful. Being able to adapt to the many changes the market will bring to the table is critical in order to be a great trader, so planning for events that might not even occur will prepare you in ways you would have never thought possible. There are an abundance of different risks to take into account when you’re looking at forex trading, but preparing yourself is one of the key components necessary when you want to be successful.Source: http://investazor.com/2014/07/26/why-do-forex-traders-fail
