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Top Reasons Forex Traders Fail
Last Updated: June 30, By Rayner Teo. I was fascinated by how a man could be so wealthy by simply picking the right stocks to hold for the long run. Reasons why most forex traders failed read books on value investing and fundamental analysis. After a while, I notice the authors kept repeating these 3 elements…, reasons why most forex traders failed. My first stock I bought was Sembcorp Marine in because it had solid fundamentals, and the markets were recovering.
Then I did a short reflection and concluded that it was my emotions that trigger this action of mine. Not giving up just yet and with the markets making a bull run, I knew I had to get back into the game. Being naive and ambitious I did more fundamental research and bought more companies, with margin. But me being a fundamentalist, trying to reasons why most forex traders failed Warren Buffet to hold these stocks for the next 30 years, I held on. At this point, I was feeling like a champion, reasons why most forex traders failed, with a knack for picking stocks.
Even my broker was commenting that everything I touched turn to gold, reasons why most forex traders failed. The Euro Debt crisis had hit the markets. One moment I was feeling like Rock Balboa, the next I was Luke Skywalker when he realized Darth Vadar was his father.
Eventually, I bailed out of all my positions when the price went further against me. A few months later after recovering from this mental trauma, I started reflecting once more.
What did I do wrong? After much brainstorming, I realized I had no plan for exits. So this led me to further research on stop loss, entries, and exits. I was immediately drawn to the fanciful charts and colorful indicators that beautify my screens.
This beats crunching numbers and financial statements. In the matter of days, I find myself drawn to trading more and more, reasons why most forex traders failed. It became my passion whereby I was spending more than 10 hours a day in front of the screen. Easy money is ahead of me, all I need to do is click my mouse. Or so I thought…. It was on Babypips where I was first exposed to a trading strategy. I was looking for anything interesting and chance upon a thread teaching new traders like me how to trade.
My first trading strategy was using Bollinger bands to buy low and sell high, and take profit at the opposite end of the bands. I thought this was the Holy Grail! I traded this for 6 months and lost money.
Sounds familiar? In fact, if you Google price action trading you will see many websites regurgitating similar content. Reason being there are so many trading gurus out there teaching this method and they all have a huge following. I was an ambitious naive trader who wanted to make millions of dollars.
The Harmonic Trading Strategy took me 6 months to figure out. I thought to myself that the more complex a strategy is, the more powerful it will be.
How silly I was. In essence, harmonic patterns are drawn by using the confluence of Fibonacci ratios and extensions. They have a few variations of harmonic patterns, like Gartley, Bat, Crab etc. Personally, I find harmonic patterns to be the most beautiful thing on my charts, reasons why most forex traders failed. But I was in this business to make money and not draw beautiful patterns. Example of a bat pattern…. And the reality was that I was a losing trader despite learning so many trading strategies.
From indicators to raw price action to harmonic patterns. Just name it, I probably would have tried it. At this point, most traders would have thrown in the towel. I mean, who would continue trading after spending thousands of hours at it only to lose more money than he started. I graduated with first-class honors but failed at trading.
So it is true that even if you have a degree, you may not be a profitable trader. When I graduated from university I knew there was only one career path for me, proprietary trading.
That was a wake-up call for me. I knew I had to let it go. Shortly after I was accepted into their proprietary trading firm, my journey to professional trading began. I first started out scalping the futures market and doing arbitrage across inter-related markets. I had to do something about it before the fire in reasons why most forex traders failed dies out….
Despite trying out so many trading strategies and none seems to work, there were important lessons behind it that would make me the trader I am. And that I would like to share with you. This is solely my opinion and I could very well be wrong. Most indicators lag the market so it is difficult to enter at a good price. By the time the indicator has confirmed you would probably miss a chunk of the move.
Furthermore, confirmation from an indicator does not necessarily increase your win rate, thus, I stopped using indicators for trade confirmation. This has to be the most popular trading approach among retail traders due to its fantastic internet marketing. Because of its popularity and the reasons why most forex traders failed mentality, it was very hard for me to let this strategy go.
I kept telling myself this has to be the way to trade and the only way to make money. I was always waiting for the price to come to my level, and then form a reversal pattern before initiating a trade.
You can look at the volatility of the markets, the size of candles and much more to give you a feel into the strength and weakness of a market. What can I say? However, one of the problems I encountered was the subjectivity of drawing these patterns which constantly makes me doubt myself.
Nonetheless, the biggest takeaway I had was identifying good risk to reward ratio which allows me to be wrong more than half the time and still makes money. There is one quote that kept propelling me forward and to be open to constant learning. At the same time, I learned more about myself as a trader and started having an idea what kind of trading strategy would suit my personality.
It is not long later that I met my wife, trend following. Initially, my first impression of Trend Following was simply trading with the trend. But as I read more books and studied research papersI realized it is much more than that. After being a losing trader for 4 years, it took me 6 months to make back everything and more.
It felt darn good when I saw my account back into the green and growing after what seems like forever. Yes, the journey is tough, the obstacles are huge and the heat is on. But you are not powerless. You have a mighty weapon called discipline and a protective shield called perseverance which will see you through the fire and the storm. More than 30 times I thought I will hit a home run only to be stopped out. And that is why I succeed. Thanks Rayner. Hello, reasons why most forex traders failed, im just new to trading but I need to ask this question.
If a profitable trader is earning money to trading, why does he need to sell his books and strategies? Cant he just trade and earn money? Is it like the gold rush saying that youll get more rich selling the shovels than mining gold yourself? I just want to ask this cause Im not sure if someone really earns consistently in trading. Cause if you consistently earn, why sell books? upon checking that link, I now have better understanding why you still have to sell books apart from being youtuber.
If it was you, will u give out ur hard earned work for free??? Nice quote by the way! Do i hear that Michael Jordan quote within your lines as well?! Well played Sir! Three years now and am still making losses. However, learnt soo much. Am soo much better emotionally, some discipline coming in, and more and more patient as I put to test my professional strategy. I just finished my associate degree with higher honors and still a failing trader!
Waoh, I am still in the game. Thank you for sharing your trading experience.
4 Reasons why Most New Forex Traders Fail ��
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The 10 Essentials of Forex Trading blogger.com 09/08/ · And for both of you, most probably my perspective is definitely wrong! This trading world is so vast, no need to waste good energy working on contradicting each other. Gazillions ways to 23/08/ · Forex traders and other market participants should brace for the expectation of hints coming out of Jackson Hole regarding a decoupling of tapering and rate hike timing. Connected to that, we should also be prepared for tapering to begin sooner rather than later and thirdly for interest rates to perhaps start rising by the back end of
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