Have you ever wondered why most people fail in trading? If you have, then this article was written just for you.
As a Forex trader with many years of experience, most times I come across young and upcoming traders with great potentials but within a few week, they are out of the market. I have mentored more than 200 successful traders, and I have manage funds worth thousands of dollars for people/business. These three things which I will share with you shortly is the main reasons why most people fail in trading and are unprofitable.
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3 Main reasons why most people fail in trading and are unprofitable
Lack of Trading Knowledge
Most struggling and upcoming traders are mostly interested in making quick money not in getting the trading knowledge. As a mentor, my advice to traders is “get the knowledge first, then the profit will come”. If you invest your time in getting the knowledge, you will enjoy the profit.
Trading is a skill, let every other skills, it need to be develop, you can develop your trading skill by having a trading mentor, studying and understanding the charts, candle sticks and market structure , enrolling in a trading academy, etc.
Greed.
I defined greed as the absence of risk management or violation of trading plans by neglecting trading target. Even after getting the trading knowledge, you can still fail in the market if you allow greed to control your decision. Have a daily target and stick to it.
Target based trading is one of the secret why most trader succeed in the market. Even if your target is $5 daily, It’s a good start, depending on your trading capital and as you advance, your capital is growing and your target is equally growing.
If you want to get rich overnight, forget it trading is not for you
3. Impatience
Impatience works hand in hand with fear. Sometimes, you have analyze the market and all your mark-up shows that the market will go in your direction based on your analysis, but because of a two minutes delay in the momentum of the market, you hurriedly close your trades in red, only to realize few minutes later that your analysis was right.
Most traders fall into this trap every day.
To be a successful trader, you need to get the knowledge first, learn and practice risk management, flee from greed and work on your trading psychology. Most time, trades will go against you, it’s normal, know when to close when there is a violation of a market structure, or when to hold when the market is just about to take out Market liquidity.
The only way to overcome the liquidity trap, is to trade only high probability trade, this can only be achieve if you:
- Understand the concept of Supply and Demand
- Have a fair knowledge of Market structure
- Understand the three stages in the forex market (Consolidation, trend and breakout) and how to trade them.
- Learn to be patience with your trades and yourself