Why Begineers Loss Money In Forex Trading
Many are time, beginners in forex trading loss a lot of money which can be very painful and depressing. Lossing money makes one think of oneself as a failure, believe me.
Fear creeps into your trading, that sometimes we wonder if we are called out for this business. Here is a question for you: those making money in forex are they not human like you or are they all robots. But how do we move from losing to winning trades? We have to unlearn something we been doing wrongly.
Beginners lose money for a lot of reasons.
I will not be able to cover all these in just one article but I will discuss a few of them.
- Little or no knowledge about the dynamics of "LOT SIZE". Lot size is very important in forex trading. As a beginner, any lot size should not exceed 1-3% of your account. A 0.01 lot, for example, means a pip movement will cause you one cent. Let say, for example, you use 0.10 lot size, it means a pip movement will cause you 1dollar. If you are in the wrong direction, this can reduce your account drastically.
Using indicator wrongly.
As of the time of writing this article, I still use Indicators. Mark my words, I said indicators, not just one.
The Relative Strength Index for instance is used wrongly by many trader's. Most textbooks, state buy when it is below 30 and sell when it above 70. But from personal experience, the price can move 3000pips above the price on the chart, when RSI is above70.
Influence of others.
Trading should be personal, expect you guys are a group of like-minded persons. Also if you take signals from your broker, make sure they 60% correct. I have done it before and I lose I huge of money from my account.
Finally, traders lose money because we don't know what we are looking for. This brings me to the issue of backtesting. Before investing your hard-earned money on any strategy or EA you must backtest it to check it's win rate.
I hope you find this article educative. Please upvote if it is worth it.