Why are new traders losing money?

 Why are new traders losing money?

It is well known that the practical majority of newcomers lose their deposit, and as a result they conclude that it is unrealistic to make money on Forex and this is just a divorce. There are several reasons for this. You can compare it with any other sphere: there are only a few in business, while others lose everything and go bankrupt.


Forex deposit drain has slightly different aspects. At Forex, you need to understand that everyone is losing money, this can not be avoided. Drawdowns are even among professionals, it is an integral part of trading, as well as profit. At the same time, they pursue the trader constantly. It is impossible to work without drawdowns, but you can control them, this way you will earn.


The most common reasons for a deposit to drain


  • Ignorance of the basics. Most novice traders are sure that they know everything about Forex and can immediately earn a lot of money. Without the necessary knowledge and skills, they begin to work. This is a very serious mistake, since Forex is not a game, it requires knowledge, the ability to analyze. You must be able to read the chart, which displays many factors that affect the price. Therefore, before you start trading, you need to learn how to conduct technical and fundamental analysis, develop your strategy.


  • Ineffective trading system. Since beginners have no experience, they will not be able to develop a profitable trading system. In this regard, quite often they use ready-made solutions that can be found on the Internet. However, most free trading systems are not only ineffective, but also written specifically with errors. Therefore, in order to find a profitable trading system, you should contact the experts who work with your broker and for a fee pay them a profitable TS.


  • Psychology. Probably the most important reason for newcomers to drain the deposit and not only is the psychological aspect. Trading is a psychologically stressful job that requires endurance, discipline and the ability to control emotions. Unfortunately, many after the first unsuccessful transaction cease to control themselves, in the pursuit of profit they make one mistake after another, as a result of which they lose even more until the deposit is completely drained. In order to be able to cope with their emotions will take time. It is advisable immediately after an unsuccessful transaction to close the terminal, calm down, then analyze the situation, identify errors and only then return to trading.


  • Lack of analytical skills. Trading is built on analytics. Various factors influence the exchange rate: political, macroeconomic, technical. It is necessary to understand and understand these areas. There are two types of analysis on Forex: fundamental and technical.


Fundamental analysis is the study of events and the ability to analyze how an event will affect the price. Technical analysis will require more skills. It is necessary to study technical tools, using which you can understand where the price will go in a given period.


What should a beginner do in order to have a positive experience on Forex?


First you need to tune in to avoid losses. No need to immediately begin real trading. You should be trained, for this it is advisable to use several resources at once, and also use a demo account to hone your skills. There is a list of books that every trader must read. The most important thing is to work out your psychotype. It is psychology that distinguishes a beginner from a professional.

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