No matter what new business you are engaged in, you should assess your strength and chances for success. Trading currencies also falls under this rule. As a result, those interested in trading at such an exchange often ask the same question.
Is t hard to trade at Forex?
The first important difference between trading on the stock exchange and usual office work is the lack of an action plan. Nobody will give you a manual, all decisions you make independently. You also have to choose your strategies and approach to trading. Forex is more like a business where the main qualities are stress tolerance and ingenuity.
Ruthless statistics show that 95% of beginners in the currency market lose their deposits and fail to achieve lucrative, stable trading within the first year. Only the most capable, ambitious, and steady players hold their ground as successful traders and show more or less acceptable results.
But why does this happen? After all, even by tossing up a coin, there is a 50% chance. But on Indian Forex platforms, besides luck and fortune, additional factors are standing on the trader’s side. In trading, you are guided by experience, logic, acquired knowledge, and technical and fundamental analysis. That’s why the probability of getting the profit increases in proportion to how effectively you use your assistants.
Reasons for losing a deposit
It is worth noting that in the foreign exchange market traders constantly make mistakes and errors, which in the total lead to the loss of money from the balance. To be able to classify them and deal with them successfully, there are basic groups:
- Greed. Beginners always want to make as big a score as possible, so they take huge risks and end up losing their deposit. This strategy is doomed to failure from the outset, since the chances of making a lot of money in a short time frame are minimal, and one should not even count on them.
- Emotional trading. If you abandon logic and use big leverage in trading, you will not see a stable profit. Emotions are a trader’s worst enemy because they prevent him from adequately assessing risks and preserving earned money.
- Wrong strategy. Often inexperienced traders use the Martingale system, but it does not show the expected results. This mathematical algorithm is based only on the probability theory, while there are many other factors affecting the market behavior.
- The desire to win back. This point is interrelated with the previous one, as the trader begins to increase the bet to get back what he lost, but in the end, it will only incur more losses.
- Fatigue. If you feel morally or physically tired, it is necessary to refrain from transactions, to postpone work for a certain period. For in this case you no longer have the previous reaction, and you will not be able to earn with the former efficiency.
- Bad Internet connection. Technical problems also act as one of the reasons why we lose money from the deposit.
- Disregard money management rules. A well-thought-out money management plan in the forex market contributes to the preservation and multiplication of funds in any situation on the market. You should immediately determine the amount of the transaction and leave it unchanged until it reaches a predetermined level.
- Neglecting stop-loss orders. Stop-losses allow you to fix losses, and even professionals recommend using this tool.
- Trading on the news. Even if you use a proven and effective trading strategy, you should enter the market only if you have the appropriate signals.
- Force majeure situations. Circumstances do occasionally happen on the market when a deposit is lost due to circumstances beyond the trader’s control. Server outages, crises, broker bankruptcy, etc. can be referred to in such situations.
Yes, forex trading is not as simple as it might seem at first glance. But with the right attitude, motivation, and a cool head, anyone can master it.