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)