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The forex market is the largest financial market and can be accessed around the world, but even though there are many forex investors, only a few are really successful. Many traders fail for the same reason the failure in other asset classes. In addition, extreme leverage - the use of borrowed capital (collateral) to increase the potential return on investment - that is provided by the market, and a number of relatively small margin to trade currencies, denying traders the opportunity to make a lot of mistakes at low risk. Factors specific to currency trading can lead to some traders expect a return on investment greater than the market can offer, or to take more risks.
Certain errors may keep traders on their investment objectives. The following are some of the common pitfalls that can interfere with the forex trader:
1. Not Maintaining Discipline in conducting trade.
The biggest mistake that can be made by any trader is to let emotions control trading decisions. Being a successful forex trader means achieving a major victory after a while suffering from a lot of small losses. Experiencing many consecutive losses emotionally disturbing, and can test the patience and confidence of…
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Forexahollic avatar

Thank you, Anna :)

Likerty avatar
Likerty 25 Mar.

Man, you forgot to place some pictures..:) Thats a no-go in this contest...

Forexahollic avatar

Rather difficult to apply in the form of images. but thanks for the suggestion. :)

Airmike avatar
Airmike 25 Mar.

nice article

Forexahollic avatar

Thank you, Airmike :)

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30/65
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Why many people trading forex has a very high percentage to fail?And why even a successful businessman or someone who has succeed to acquire a million / billion of money or never fail to earn a good life still experiencing a losing trading in forex?If you know that the risk of losing money is very high, why people are so keen to open a live account with the forex broker?Don't you people regret and hate forex trading because you can only see your account balance depleting very fast (A day, a week, for sure less than a month)? Regardless your starting capital is <$100 or $500 or $1,000 or $10,000 or even much more bigger than $100,000.So, now tell me; Why can this happen?Many factors can affect forex trading but I will just give a brief example to this issue.In stock trading, you can make a big profit when prices are rising (Almost guarantee) as long as you have chosen the right shares to have. But the game is different with forex trading because when you make money somebody else out there are losing their money and vice versa.So only less than 10% of forex traders are making their fortune at a cost of the other losing traders.How about reading a forex books that authored by a legendary successful forex traders, will this help you to survive? The answer is YES and NO.NO because by reading those books does not guarantee you can copy their success. Just like reading a Warren Buffet's story does not mean you can become rich as he is.YES only in terms of knowledge and personal experiences to motivate you and giving you some basic pictures of what forex trading is.To finish this introduction, my advice do not easily trapped by a broker's advertisement which often says: "We will show you how to make money in forex easy without stress" OR "Do you have 5 minutes to 1 hour free time each day? Earn a living from forex"Are the above sounds familiar to you? I can be sure that you will shout YES, YES, YES I have seen those kind of advertising in facebook, google, etc.However, making money for a living or even just for an additional second income in forex trading is not an easy job at all.Now I will show you 4 simple mistakes that most people made during their trading time:Mistake #1: No Trading plan.If you are going to have a franchise business or opening a shop, will you just put the money for deposit, rent a place, pay for all warehousing, staffing, etc and start selling? Of course not; Why? Because you have to make sure that everything is going your way and not opposite. This is why trading plan is important.It is not a big surprise that people are not making their fortune in forex trading. Simple yet powerful. In many cases, a vast number of traders execute their trades without a proper plan for entering the market, exiting the market, SL and TP, what if the trade is not going the right way (Emergency plan? Cutting losses?)Many new comers want to make money straight away and as fast as possible to fill their rainbow jug and start their dream come true life NOW. But remember, even a successful traders still making their mistakes from time to time but they learn fast and adapt because they can look back to their trading plan and tuning it to a better one.There is an old saying for forex trader like "Plan your trade and trade your plan". Have you?Mistake #2: Lacks of understanding of Leverage.Leverage is like a double edge sword which can make you rich faster or opposite. Just for your reference that many successful traders are actually trading using 1:1 or 1:30. Yes I know, you might said that you need a very large capital for that but remember if you know how to use the leverage than I suggest stick to 1:100 maximum.Avoid high leverage brokers and do your homework (Research and learn).Mistake #3: Risk Management.If you are going for a skydiving, I am sure you will double check your parachute, belt, goggle, suit, etc before you actually jumping from the plane. Right? Why? I am sure you know the answer for that. The main key is never jump from a plane without a parachute. You will hit the ground and die instantly.But why in forex trading, new comer traders often break the rules of risk management. Remember that only suicidal and hopeless traders are going for a live trading without a practice and sufficient knowledge of the market.There is no easy money here as it was described in the advertising. Keep watching and guarding yourself so that the market cannot reach you and knock you out in the bear and bull market. Always calculate how much risk you can handle, what your maximum drawdown will be, etc.Mistake #4: No Discipline.Now let's say that you have done your homework for calculating the risk, applying an entry and an exit strategy, putting your SL and TP. And you say this is really a very high probability trade; I should trade it now (With a big hope...) then you put yout first trade and your first one is a losing trade. But you might say it is not a big deal at all as it is part of trading and everybody experience a losing one.Ok now you make a second trade and you are still losing it. And you might say maybe I was doing something wrong and missed some checklist. Let me double check again.Then comes to the third trade and you are be more careful now before putting the trade and execute it. The result is another losing trade.... Hate, anger, impatient, hot and fury are filling you at that moment.You keep thinking and have no clue at all for why your system fail. So you plan to skip the next signal and a few hours later the market is breakout to the same signal that was generated. You might think to jump in the late train but could be too late and you decide to jump the next one and relax for now. Increasing in confident and feel like in control so you wait and wait and wait for the next coming signal but the price is keep steady into the same direction and no sign of reversal.Well, good system but I missed plus increase confident and seems in control; you virtually start counting the profit that you should have made in your trade. In addition to that you whispering to yourself "Man, I should taken this trade earlier and I will earning $x,xxx or $xx,xxx extra money by now."From now I am going to follow all the signal and join the big ride but everyday you see your account balance start to sink like a submarine. The period of losing trade is start again and even worse. You finally decide to quit the forex trading and never ever want to touch or hear or read anything about forex forever. As a result, you become a self appointed hero that sharing your story about forex and your experience but I will tell you guys to not trading forex bla bla bla...Emotional problem is the issue here and many traders focus primarily only to money, profit and make a revenge to losing trades without utilising a trading plan. This is part of lack of discipline.Discipline is the one which separate the one who making money and the one who always losing money in the game or you can call it a battle.Lack of discipline is always a mistake and never be a reason for success.Things to avoid is never increase the lot size (Risk), doubling the losing trades, and the famous one are FEAR - GREED - EMOTION.Discipline for example involving you to make a decision either holding a losing trade or cut loss and accept the losses. Please make your mind and take an action immediately.In closing, just do not focus on how to enter and exit the trade. Follow those 4 tips above and set your TP and SL which you can safely leave your computer and doing other things outside for work live balance. Just do not spend and stick to your computer for trading the whole day. Good luck.
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ikhall avatar
ikhall 26 Nov.

Nice article, would you mind reading mine an letting me know what you think? http://www.dukascopy.com/fxcomm/fx-article-contest/?action=read&article=Retail-Positioning-The-Scary-Uncle&id=365

AdrianWS avatar
AdrianWS 29 Nov.

Hey, while I agree with some of the faults with traders, its a common misconception that 95% fail http://forexmagnates.com/us-forex-brokers-profitability-report-for-q2-2011/

It is however still a very high number all well over 50%, nice article anyway :)

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47/94
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The American dollar shows the mixed results within a week of decision-making under rates The US dollar (USD) showed early in the morning a moderate bearish tendency since investors have returned to the auctions after a holiday on Monday. The sudden wave ориентированности on risk, apparently, обвалила dollar after the decision of the Swiss national bank (SNB) to fix a franc course to an euro exchange rate at level 1,20. The raised stability has led to dollar exchange rate falling since traders have preferred to pass in more profitable currencies. Yesterday's data on the American industrial sector also has specified in growth in manufacture in comparison with the last month. Nevertheless, news haven't affected almost the market forex though they could shake slightly long-term analyses on the American markets of the capital. Under forecasts industrial production should be reduced slowly in the third quarter since the majority of indicators specify in the decreased demand. Today we wait for several economic reports from the USA, and all attention is turned on Bank of Canada (BOC) and its inevitable decision under interest rates. Liquidity, possibly, will be above, than it was expected …
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Livornese avatar
Livornese 11 Sep.

Like the fundamentals!!

LinnuxFX avatar
LinnuxFX 13 Sep.

Well done, but need some improvements...

doctortyby avatar
doctortyby 25 Sep.

the us dollar seems to have taken off...to the north... I wonder where it will stop 80...81 or more... good analysis +1... keep writing

ritesh avatar
ritesh 27 Sep.

Nice article buddy +1

mag avatar
mag 16 July

Swiss exports (e.g. pharmaceutical industry) need a change to the euro and dollar more cheaply, so put it in range to 1.20 is appropriate.

Good fundamental analysis! Thank you.omment...

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7/94
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      FOREIGN EXCHANGE and the other FINANCIAL MARKETS (precious metals, commodities, bonds, stocks, options) may be the ONLY WAY to get FINNANCIAL INDEPENDENCE and FREEDOM in today's ECONOMY... (Financial Freedom means to be able to sustain your living and comfort financial and survival needs, for you and your family - from your current savings, for the rest of your life even if you don't obtain other income from that time on. Ex: if you have 500.000$ in your savings, and your monthly needs expenses are 1000$ , you have insured 500 months, or about 41 years an a half for your current living, if your savings gain at least the yearly inflation to protect them, even if you don't obtain any other income for the rest of your life)      Next to Real Estate Market (which has a long time to even start recovering) and Businesses (which are harder and harder to manage because of the law environement and the lack of support from governements for small and medium companies), the FINANCIAL DERRIVATIVES are the best way to keep track with the growing inflation of the world currencies...      However I strongly believe there is no such thing as FREE MARKETS (With the PRICE formed freely from the…
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Eclipse avatar
Eclipse 20 Sep.

Nice article +1

hedgefund101 avatar

Some good pointers here. +1

doctortyby avatar
doctortyby 27 Sep.

Guys, once you realise You sell your TIME for Money, you will know that you are not free... Preapare yourself for the type of Trading that gives You freedom, not for that Time consuming Trading that Consumes all your TIME (Full Time Trading)

SpacyTrader avatar

Good insights, but if you're not able to place your order at market when you want to that means your broker is crap not that its a general problem :)

Sharpshooter avatar

Согласен)

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25/73
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                                              My Girlfriend's Birthday I'm a trader. This is what I do to pay my bills. And I love every second of time I spend on doing this. Like you all know, trading is a serious stuff and nothing compares with a rolling coaster then trading the forex markets. I want to tell you a story I'll never forget. This year in May I signed up for a contest with one broker that offers Metatrader platform. The only thing I didn't signed up for was the wild ride I was about to jump in. Having different platforms opened on my screens is easy to see market moving. However, Metatrader looks the same even if offered by different brokers. Being a contest, like any runner-up I traded the whole amount for each trade. On one of my real accounts I had an amount similar with the one in the contest's account. And I guess you know what happened. I remember it like it was yesterday. Here I was, my girlfriend just opened a bottle of champagne to celebrate, and I was in a hurry to BUY aud\usd on the contest account. So I went upstairs (where I have the computers), bought the whole account with aud/usd (10 full lots and one more because I had some available margin le…
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DaddyPapi avatar
DaddyPapi 15 Aug.

Yeah, thats why I am no longer in the competition. I remember putting on a trade on the demo thinking it was the real..all gains went to the demo and none to the real..you have to focus when trading live. Good luck in both though

Dieselfx avatar
Dieselfx 17 Aug.

how about: well i closed the phone on Soros after an argue with him and when i looked at the charts it dropped instantly ...if u dont use SL it means u had a good week or month and u starting to be cocky and then ..u know

ritesh avatar
ritesh 28 Aug.

Your girl is lucky for you. God bless +1 ;D)))

adask avatar
adask 29 Aug.

Trading competitions is a stupid thing, that's for sure. But I think that if you open position in a wrong direction you should always close it ASAP you notice. I had it several times too and best you can do - just close it.

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