Foreign Currency Exchange Trading tips: Why Do 90% of All foreign exchange Traders Lose Money?

Foreign Currency Exchange Trading can be one of the most lucrative investments any individual can make. There are numerous advantages of trading Forex… it is a 24/7 market, most of the trading is computerized, you can use a significant amount of leverage to boost your potential revenue, and more.

Conversely, there are common errors that seem to be made by every single newbie foreign currency trader and sometimes even the pros.

You might ask yourself, how can I evade these errors and how do I identify them? Well, I am trying to do something different with this article, I am going to explain to you one mistake and then a option, then another mistake and another solution and so on.


Over Trading:

I ‘m sure most of us have heard about this one, but if you haven’t please allow me to illustrate. Over trading happens whenever a foreign currency trader is looking for trading ideas that aren’t really there. I have heard it all, “But if I trade more I will make more quicker”, “If this trading strategy works it will make money even if I trade it on 15 pairs”, “trading a number of pairs doesn’t affect money management”... I could keep going for hours.

The truth: over-trading is the principal reason why a lot of traders lose money. Trading the foreign exchange can be tough and it is easy to get confused by the massive amount of information that is available on the net (the problem is that most of this information is completely wrong!).

The Fix: The best way to become a profitable currency trader and not over-trade is to have a trading plan; every single profitable trader I have met has one. Having a trading plan can enable you become a much more disciplined trader and of course a a lot more lucrative one. This takes me to the next common mistake.


Not having a trading plan: I have been trading and generating foreign currency exchange strategies with some of the best and most successful Forex traders in the USA and around the globe, and I have NEVER met any highly successful trader without a trading plan or that just trades what looks good.

For instance, when a person wants to get a loan from a bank to set up a business one of the most valuable documents that the bank will ask for is a business plan. Why? They don’t want to lend money to an individual who doesn’t have a clear idea of what to do with it. The same happens in Forex.

You can be a pretty talented trader and have the best tools and resources but if you don’t have a trading plan you won’t be able to put it all together. Get it?


Picking tops and buttons:

 Most new traders try to pinpoint and determine where a currency pair will turn around and go the opposite way, this is a massive mistake. Picking tops and buttons is a very tricky task and even when it is done the right way you might still get an abstract result.

The best technique to not make this mistake is to stick to your trading plan and trading strategy. Hot tip: if your trading strategy is primarily based on reversals (tops and buttons) make sure that you demo trade for at least 2 months before you send your money to your broker.


Making decisions based on emotions:

Emotions control, or at least affect everything we do and think, but unfortunately being emotional in Forex can very expensive.

Forex is a very challenging arena and when you trade the forex market you are trading against some of the smartest minds on the planet, this is why you need to stay focused and not let your emotions control your trading decisions. Hot Tip: use automated software to help you to find your entry and exit points and to take the trades for you, this will assist you to keep emotions out of the picture.

Not using money management: money management plays a very important role in Forex currency trading. Not using any money management in your trading is like going to war without any weapons. The best way to incorporate MM (money management) in your Forex trading is to create a set of rules that you are going to stick to when you trade.

As an instance, you can consider to not trade more than 2% in any given trade or to not trade more than 5% of your total capital each day.

Fx trading can become a very gratifying activity ( and that is bringing outstanding monetary rewards) or it might even become your Full time job. You are the only one that can take action, get schooled, and start to trade Forex the right way.

I hope I was able to provide you with useful information that you can apply to your foreign currency exchange trading  today. Stick around for more.

Sincerely yours,
Jay Molina
Professional Foreign exchange trader & educator

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About the author

Jay Molina is an advanced Forex trader that helps other investors around the world to learn about the Forex market and its rewards and risks. To understand more about foreign curency exchange trading, visit the link: http://www.myfxventure.com

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