- September 2014
- Posted By Ninoslav
- 0 Comments
The world of forex trading offers traders many opportunities to take advantage of the market’s ever changing conditions. At the same time, many forex traders experience the worst of what the forex market may have to offer them.
Success, when it comes to the forex market, is the direct result of making good decisions at the right time, particularly when the market’s conditions are, in fact, favorable. Though, knowing how that works is a matter of knowing how the forex market works itself. While some forex traders are already skilled in knowing those particular aspects, others aren’t.
Sometimes, forex traders even doubt themselves about their performance. Due to such a phenomenon, there are many reasons why a forex trader might stop themselves from achieving success. In this short article, we’re going to look at some reasons why that might happen.
What stops a forex trader from achieving success?
Mismanaging trades by not setting up stop loss orders.
The stop loss is more than just a safety net. Stop loss orders ensure that forex traders won’t lose most of the money they’ve committed to a trade upon its expiry date. When traders enter a new position, it’s pretty much required for them to get a stop loss order, as it will prevent their accounts from taking too many losses from unexpected movements in the market.
Having a lack of funds or capital on hand.
To trade in the forex market, you need some type of capital, the funds that you’re willing to put at risk. As trading in the forex market involves taking losses more often than making profits, you will have to maintain some type of capital to offset any losses you might accumulate.
You can’t just rely on leverage, either, since higher leverage ratio thresholds actually pose more of a threat in ‘handing over losses’ than they do with profits. In other words, a single trade on a high leverage ratio can potentially wipe out your entire risk capital.
Having unrealistic or unattainable goals.
One thing that forex traders don’t understand is the fact that they can’t harbor unrealistic goals. It’s incredibly easy to harbor those thoughts, but they’re dangerous thoughts to have. People that do end up harboring those goals eventually end up taking on bigger risks than they need to take on.
That often results in them making faulty trades—and eventually expending their entire capital. Even making too many trades runs the risk of expending your capital, as forex trading is more about building a sustainable trading foundation, rather than building up short term trades.