Why 95% Of All Traders Fail
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Thread: Why 95% Of All Traders Fail

  1. #1
    After spending nearly 2 decades of trading and losing nearly $2000.00 I've learned the reason why 95 percent of all traders fail. It's exactly the identical reason for virtually any company, why a few of these fail. Well here is what I learned.

    1. Traders allow their feelings, greed, hope and assumption to consider over their trading. This is probably the toughest thing for a trader to do is to eliminate those items while in the Forex business. Did I state firm? Oh it is a company.

    2. Lack of Eduion. Most traders (myself included) are extremely arrogant when they first begin trading. After a couple transactions they figure they understand all of it, but they've not gone through any course or school like http://www.babypips.com/school/. They have not gotten the proper eduion in any way. Well allow me to remind you, always get your eduion first, and eduion never ceases.

    3. Undercapitalization. Most traders believe all they need is $100 or $200 dollars to begin the company but they're sadly mistaken. If you would like to start a company with Forex, I strongly advise that you begin with a MINIMUM of $2000.00. Oh, if you would like to use $100 or $200 to begin, then just use that as demo money. Consider it gone. But most brokers will allow you to begin with $5000.00 virtual currency (play money) to exchange with.

    4. No egy. I know that some traders believe that they can begin a company with no egy in mind. I did that. That is one of the reasons I lost money. I had no plan, no goal. What the trader needs is a egy about how best to trade, when to trade, what time frames to use, etc. etc.. Without a egy there is nowhere that you go.

    5. No rules. This is very important. Perhaps equally as significant as all the others, but the trader also has to earn a set of principles and then write them down. Without a set of principles you will most likely be making blind transactions and hitting stop-losses or margin call.

    6. No discipline, no consistency. This was a big problem for me. At first it was difficult to follow all the rules since I had been so excited to earn money and that I was rushing to it all. The trader needs consistency and discipline to generate money in forex. Also, the trader needs patience. Do not worry, the money will come.

    7. No money management and overleveraged. This can't be stressed enough. As it has been said many many many times, manage your risk while trading. I know I risk a bit more while trading, but my system tells me if a good trend has started. As long as that rule is followed by me about my trading money management principles are followed. But that doesn't mean that you can risk that percent too. A trader MUST risk hardly any when starting, perhaps 1 to 2% only. Once you get decent expertise in trading then and ONLY THEN you may increase your risk SLIGHTLY.

    If anybody else has some suggestions or reasons why 95 percent of traders fail, please respond to this thread. Thanks.

    Pierre (RedRobin)

  2. #2
    I think it can be summed up as others have said earlier in the thread. Trading is a business. Many traders fail because of the exact same reason that many start up companies fail. The barriers to entry are only pretty low in trading so folks think it's simple and don't approach it with the exact same discipline. They soon find that it is not and most blow off their accounts quit and out.

  3. #3
    Quote Originally Posted by ;
    After spending almost two years of trading and shedding almost $2000.00 I have discovered the reason why 95 percent of traders fail. It's exactly the identical reason for virtually any company, why a few of these fail. Well here is what I learned.

    1. Traders let their feelings, greed, hope and assumption to consider over their trading. This is the toughest thing for a trader to perform is to eliminate those things while at the Forex business. Can I say firm? Oh yes it's a company.

    2. Lack of Instruction. Most traders (myself included) are very arrogant when they first begin trading. After a couple transactions they figure they understand all of it, but they have not gone through any course or college such as http://www.babypips.com/school/. They haven't gotten the appropriate eduion at all. Well let me remind you get your eduion first, and eduion never ceases.

    3. Undercapitalization. Most traders believe they all need is $100 or $200 dollars to begin the company but they are sadly mistaken. If you want to start a company with Forex, I strongly recommend you begin with a MINIMUM of $2000.00. Oh yes, if you want to use $100 or $200 to begin, then just use that as demo cash. Consider it gone. However, most brokers will allow you to begin using $5000.00 virtual money (play money) to exchange with.

    4. No plan. I am aware that some traders believe they can begin a company with no plan in mind. I did this. That's one of the reasons I lost cash. I had no plan. What the trader wants is a plan on the best way best to trade, when to trade, what time frames to use, etc. etc.. Without a plan there is nowhere for you to go.

    5. No rules. This is very important. Maybe just as significant as all the others, but the trader also needs to earn a set of rules and write them down. Without a set of rules you will most likely be making blind transactions and hitting stop-losses or margin call.

    6. No discipline, no consistency. This was a big problem for me. At first it was hard to follow all the rules because I had been so excited to earn money and that I was rushing into it all. The trader needs consistency and discipline to generate money in forex. Also, the trader wants patience. Don't worry, the cash will come.

    7. No cash management and overleveraged. This can't be stressed enough. As it's been mentioned many many many times, manage your risk while trading. I know I risk a little more while trading, but my approach tells me if a good trend has begun. So long as I follow that principle regarding my trading, then cash management rules are also followed. But that doesn't mean you can risk that percent too. A trader MUST risk hardly any when starting, maybe 1 to 2% only. As soon as you get good experience in trading then and ONLY THEN you may increase your risk SLIGHTLY.

    If anybody else has any suggestions or reasons why 95 percent of traders fail, please respond to this thread. Thanks.

    Pierre (RedRobin)
    I dont know who said 95 percent all traders fail ?
    Fail at exactly what ? Losing money ? Well 100% traders lose money.
    There are no set rules in FX.
    Each men makeup differs.
    Some are scalpers others are position takers.
    Some rely on technicals,some on fundamentals and others fly by the seat of the pants.
    No system is fool proof.
    Markets change from range jumped to volatile very quickly.
    Understanding what market conditions you're in and equipped to correct is they key to success.
    This is the reason why I stress to individuals that are new to stick with a single currency and exchange it.
    Its simpler to exchange the community currency as you've got a better sense for economic terms and its impact.
    The tools you'll need are; Descent news service,Broker that provides great liquidity at good and bad times,a few contacts at the professional market that are seeing the huge flows and a quality charting agency (if specialized trading floats your boat).
    Last but not least a little luck.

  4. #4
    Fantastic penetration - so what happens today? Can you throw in the towel?


    I would add that another reason for failure is that almost all retail traders are self explanatory. Years ago when I had my series I operate in a group. We were accountable to one another and into the bull supervisor. I hated having to constantly do things based on corporate, but ultimately that was their prescription for success.

    When a new trader sees the potential in Forex sitting in front of him leaves his imagination run wild. Accountability to someone whether a boss or a staff is critical for any type of self-directed activity. Well known trader Rob Booker hired a man to keep him in check. Even though Rob has been very successful he is not too proud to acknowledge he needs accountability.

    A self-directed action without outside human checks and balances is a receipe for disaster. I recall to mind many mountain climbers although very competent got stranded on the mountain because they went alone or did not tell anybody they were going.

    Even a solo pilot understands to file a flight plan.

  5. #5
    Due people, these are the answers I was looking for. Yes you are right there's no perfect system, there's no Holy Grail. None exists. Yes there are lots of traders and they have their own trading style. Whether there are some responses to this question I'd greatly appreciate it because it might help me become a better trader. Answers, individuals, please!

  6. #6
    P.S. - I feel another reason traders fail is because after a big loss, perhaps resulting from a margin call and accepting all their money, leaving the trader not sufficient to trade, get very sad and quit.

  7. #7
    It is verytrue what's stated

    I'll take my Illuion of yesterday for the currency pair 02/09/08

    GBP/US$

    Contract no 1 Profitable
    Contract no 2 profitable
    Deal no 3 Profitable


    Contract no 4 Profitable


    Contract no 5 Lost all the money made from contract 1 to 4

    All happened during te period to 3 hours

    The lesson to Find dont be greedy
    use your principle
    dont overtrade

  8. #8
    Thanks so much, very good reply harigp. The reason I began this thread is due to that big percentage of traders that fail. It had been asked, Fail in what? Well, fail in trading, and it's about losing money. I lost nearly $2000.00 in my 2 decades of trading, so me also, I did, but I am still here, still striving. But KudzuFX, a few traders do toss in the towel. No, there are no set of rules in FX, so that's the reason why you as a trader MUST place your own.
    There aren't any set rules in FX.
    Each persons makeup differs.
    Some are scalpers others are position takers.
    Nobody is fool proof.
    Markets change from range jumped to volatile very quickly.

    None of this has anything to do with failing and losing money. It's all about emotions, no eduion, no plan, no purpose, no subject, no rules and no MM. Other items discussed about such as emphasizing automated systems as opposed to doing the trades yourself also must do with it. However, what you said is right in its context.

  9. #9
    Forexlion, Thanks also for your input, all is accurate. I didn't actually consider that, so thanks. You and I are on the same page regarding doing your own trades and quit relying on automated systems. I use a system that is totally manual, no Take Profit, no Expert Advisors or Limit Orders.

  10. #10
    Quote Originally Posted by ;
    the Primary reason why Nearly 95% Neglects is because: Nobody wants to work hard to create his own trading procedure. Everyone depends on dumb rsi, stochs and ma crosses, when it is well known that all of these are unworthy. Nobody tries to function on the fundamental concept of trend evaluation and trend strength. Getting on the trend when it is almost completing and not when it is starting, since rsi, stochs are lagging indiors. Its really large time for men to wake up and stop after the so called specialists blindly and try to develop your own trading egies.

    So long as you follow the so called specialists forget the notion of making money consistently.

    The fundamentals is WORK HARD, DESIGN YOUR OWN STRATEGY

    Just forget anything and what about trading on less than daily chart tendencies,l YOU ARE WASTING YOUR TIME CATCHING SMALL FISH.

    The so called specialists counsel 5 or 15 minute charts since they need a fan following behind these to look for guie everytime something goes wrong in a chart decision.

    I say this today it is nearly impossible to loose money in Currency Market. After 3 years in fx I could say this, however initially during training period I did loose quite lot, but recovered increasingly much more in course of time.

    Bottom line is:

    MAKE YOUR OWN TRADING SYSTEM.

    ALL TRADING SYSTEMS TODAY ARE DERIVED FROM BASICS, EVEN THE FAMOUS VEGAS SYSTEM IS DERIVED FROM FIBONACCI SERIES. THERE IS NOTHING NEW
    Very well said ,
    People just forget fundamental concept, and run behind dumb indiores.
    When I was new in fx ....and knowing nothing about indiores..even not knowing MT4...I earn very great amount by just considering price and price behaviour..then on NFP day. . I got large bang. . .and come to know what's NFP with large cost.
    Then I started studying forexforum.co.za forums and other forums . . .and believing ....these folks knows a lot of indior and system..and I do not know anything . . .and reading all article....understanding many indior and system . This wasted my enormous time,.... Numerous system..so many indior..so many thread..and total lost ....then after total fruion I understand something...I make my own setup where I could visulize price actions and price dynamics . And then saw how market functions.

    Now I read article of good experiance traders. And pray for people who are new and going through initail learning stage hoping they will find right way to understand FX.

    Here is Example of how foolish is RSI.
    Place RSI 14.
    Then place smooth moving average 14 on chart. And watch.
    When price fall below smooth moving average 14 ....RSI fall below 50.
    And RSI 30 or 80 has no real significance. . I saw RSI stay abve 70 or 80 and price continue more 300pip move. So RSI realy do not help.

    Refer connected picture

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