The world economy is so vast that a single head cannot understand its functionalities and mechanisms. To implement the fundaments in trading place, it’s not possible for you and me. Besides individuals like me, has a little investment compared to the big guys, we must choose a sustainable trading system which will give us a good return (return of investment) as well as minimizes the probability of loss.
Technically forex is a 50%-50% trading place. If you are into a trade, there are fifty percent chances to win or to lose money. The major traders (dummies) think that forex is a gambling market place. We invest a little money and dream to be a milliner. Honestly this is just a dream and we all know dream never comes true. During my three years of trading life I figured out few points why we lose money in forex!
- Little investment: In spot market trading most of the trader start with a little money. For example, $50, $100, $200, $500, $1000 and so on. Yes, you can say this amount as your investment, but is it enough for trading to make a smart amount of money at the end of the year? Definitely no, the minimum investment for spot trading should be $5000. You can handle your trade using this amount if your broker provides low unit trading.
- Choosing a broker: for dummies this is the hardest job to find out the perfect broker. If you google for the best broker, definitely you will find out the top and best broker list. But the fact is, which broker is perfect for your investment. Most of the time we see the online advertisement and open account to them. We don’t think about the broker flexibilities. My suggestion for the dummies is to choose a unit trading broker. You can easily maintain your money management there.
- Greed/quick gain: 90% of trader cannot control their greed during trading time. When I started trading I thought of gaining 100% of my investment per month (laughing out loud). That time I used to use 1:40 leverage to fulfill my monthly target. The consequence is getting a margin call for a sharp market move.
- Over trading: Over trading is a bad habit. Most of us try to catch the every move a pair makes which give us mental pressure and results in a wrong decision in trade.
So before come into spot currency trading place I recommend everyone to check these four points. Wish your happy trading life. Thank you.