 Why Does The Average Forex Trading Strategy Lose Money? |
 Jan 22 2009, 9:20
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An interesting article, written by David Rodriguez from DailyFX, attempts to explain one of the simplest reasons for which many traders have lost money in forex markets.
QUOTE (David Rodriguez) Why does the Average Forex Trading Strategy Lose Money? Both anecdotally and empirically, we have seen that many new forex traders are unable to profit due to poor money management techniques. Many speculators come from other traded markets, and their technical and fundamental analysis skills are quite good. Yet the most common reason for failure comes down to one simple point: poor money management. The most successful traders do not necessarily have an analytical edge. Many unprofitable traders have excellent analytic and forecasting skills, but going from analysis to live trades is often a limiting factor. What is good money management? Letting your profits run and cutting your losses short. A countless number of trading books advise traders to do exactly this. In theory, this is a simple exercise: make profit targets larger than maximum loss thresholds. In practice, however, we see clear evidence that most traders do a poor job of putting these strategies in to action.
Read the full article on DailyFx |
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