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Three Reasons why so many people fail with Forex trading

Updated on April 8, 2011

Three Reasons why so many people fail with Forex trading

Everyone that considers starting trading Forex will need to some research and often finds pages which give great instructions on how to earn some pips. (PIP – is the smallest change in value a currency can make, usually 1/100 of a percent; therefore if you buy EUR/USD at the price of 1.35 and sell at 1.36 you made 100 pips.) Somehow a lot of people fail even if they get the best of signals (Signal – an indication when to buy or sell, can be automatic when well programmed software produces them, or manual when an analyst actually sits in front of the screen analyzing charts). Here are three major factors why so many individuals do not actually make an income with Forex.

1.The Simple lack of discipline

It seems that people always want to be better than others even though they don't have enough experience. Then comes in the greed which somehow causes the switch to go off and all strategies are forgotten. Simple rules are being ignored and objective observation of the market is lost.

2.Lack of knowledge

You will be surprised how many people start spending real money after a week "training" with practice accounts. There is not enough experience regarding market changes and money can be lost just as fast as you gained it. Would you play Poker with a friend on a 500$ buy-in just a week after you first heard of it? There is tons of material that first needs to be studied – only to understand technical and fundamental analysis. No knowledge of money management, no documentation, no clue about trading software.

3.High Leverage

Don't forget – you can lose just as fast as you gain. Even though this goes to point 1.) again, it needs to mentioned. Risk Level rises strikingly with the Leverage(Little instruction on Leverage – search for disadvantages yourself using your favorite search engine) Seems so obvious, but I ask myself why people don't seem to know this?

Purpose of this article is simply to draw some attention and not to criticize, I was simply amazed by all the news about complete loss of savings.


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    • chukseasy profile image

      chukseasy 6 years ago

      thanks great hubber that was thaughtful of you