Why Most Newbie Traders Fail? - Forex Forum

It is said statistically that 90% of the people who enter the Forex market end up failing and thus losing all the money they used to trade. But why are all these people ending up failing with so many strategies out there and such a big chance of building up a fortune?

The simple answer is: They don't treat their trading accounts as their businesses. Yes! Forex trading is a business. If you reject this idea you have failed or will probably fail as part of that 90%.

When you deposit your first $100, $500, $1,000 or whatever... you are making an investment to start your own business. That money needs to be carefully managed on each trade because if you don't, your business will collapse. Everyone knows a business needs to be run with patience, responsibility and most of all discipline.

Newbie traders are in for the big bucks, and that is not bad at all. I am in for the big bucks as well and I actually have a big amount on my trading account. However, newbies want to make the big bucks overnight and that is the BIG mistake. We all know that trillions of dollars are flowing every day through the forex market but that doesn't mean we get to have a big cut of the cake right on day 2.

Trading is a skill you need to learn based on discipline and self-control. Humans are greedy by nature and that has to be ripped off from us when trading. We cannot expect to have 100 pip gains on our first day (unless you have been practicing with a demo account that won't happen).

Forex can really change your life as it has for many of us. The key to build a successful forex business is to go for small but consistent earnings at first. Then as you grow your trading account and you are confident with your skills, you will be able to trade bigger amounts of money and get growing at a faster rate. I dare to bet that most of the successful traders that have made forex their living, started this way. It is recommended that when starting you only trade 2% of your trading account on each trade. As you get confident with the market and your skills get it up to 3-5%.

You can't just enter the market and get rich tomorrow. Unfortunately that won't happen. But if you are disciplined and get to know the principles you will become successful and believe me you will make a fortune if you do it right.

Good luck with your trading and don't be greedy!

Yokiro.

I think discipline it is a primary factor.
Many young traders have no trading plan. To do trading operations not having the plan very risky.
Fear. This feeling the bad adviser.

I liked your text. I did a translation of it and publish it in my blog in french to make it accessible to french-only traders. My blog address is erbe.over-blog.net

Luck is based on competency in forex. You have it. May it lead you to a happy successful career.

erbe

i think another big reason a lot of new traders fail is:

1. they are new.... so they suck at it. when people are new at things, they typically suck at it!

2. since they sucked at it, they give up!

giving up is really the reason they fail.

do you give up on a video game first time? do you only try throwing a basketball at a hoop once?

why give up so quick when money is involved? it is only money after all.....

it feels very bad to lose money and those bad feelings make new traders go away forever, and go back to whatever they were doing before, because that feels more comfortable -- it's easier.

i invested a small amount for my first account and lost it.... very quickly. i almost gave up right there because it made me feel bad. i felt stupid. what a scam forex is, i thought. i felt like i could never understand the market, and i felt like forex ripped me off.


luckily, at one point i thought long and hard about that first loss. i realized that the only thing that would make it a definite real loss is giving up and going away -- thinking oh well forex sucks, i'll never do that again.


so i carefully went over what went wrong there. i learned from that mistake and moved on, which is something i think few people do. my initial mistakes taught me what to avoid. after that, i learned to break even. then i learned to profit a little. now i have found a very profitable way to trade. this is beginning to change my lifestyle and i want to keep moving on up. so now i am only working on lowering my risk, to make sure i am trading very safely long term -- because it is a business, just as the first post here says.

This post has been edited by kingwade: Oct 6 2008, 20:07

this was an intelligent post. i am a newbie and am just starting to research forex. thanks for your input.

I agree with lineprofit! Newbies have no plan to trade, most of them (include me) started with no big idea what Forex´s market was. They need more information about so they get it from the real market and get experience there. The only plan is trade and learns at the same time. That´s way they fail, but that´s way experienced people advice that is better start with a demo

Here are some key issues why novices fail

What set aside the pro to a novice , to be honest i think it is just applying the right attuide and following a strict set of rules , most know why novices fail but still they seem to keep doing the same mistakes, i know i still make mistakes and anyone who tells you different is a fibber.

Rules that were taught to me when i first started but took me a while to completely understand them, but are very straight forward

1) Identify highest probability, ignore the others.
2)Never ever rush into or chase a trade,Loss of opportunity is preferable to loss of capital.
3) Always look for most obvious charts patterns, same as the big boys will be looking at.
4) Dont Overtrade , its the same as gambling.
5) Have a plan - Set targets
6)Study Trader Pschology
7)Treat it as a business , start small ,use the method of compounding ,

As i use a method that has set indicators and methods you might know follow everything but most of it applies

Fear and greed , Market is ruled by these emotions. You need to learn to understand this and control it, i feel this is the most important part to be a professional.

Every course or program that is on offer mentions that you will make ???+ pips a day, maybe they do but what they dont tell you is that you have to have the psch?makeup to use the systems, 99% of people dont. Personailty is everything what might work for me might not work for you, but learning the right attitude and using a strict set of rules and using money management you will find the edge.

Professional edge

They go that extra mile
Diet, exercise, sleep, relaxation, visualisation, reading, studing, self improvement.

4 emotions

Fear- to control this you need to feel good about your trades , know that if it goes bad you have done your homework etc . You have done a correct trade it has just gone against you this time.

Greed - People want to make money fast, now etc , they overtrade , this is how fear kicks in because you are gambling, it is all relative.

Anger/revenge- just getting stopped out or you just missed a trade and jump in, it reverses , you trade again ,so on and so on. JUST DONT DO IT. BE A PROFESSIONAL.

Arrogance- Dont get cocky , keep yourself to yourself about how successful you are, help others be respectful and humble.

Well i hope this helps , i will be glad to answer any questions and problems you may have.

For now

Hi,
Nice thread, I think the reason behind newbies traders fail is the insufficient experience and understanding to go with the market. Before having into the real trading one should acclimatize oneself to the current market position and gather as much as experience and knowledge because trading is something which can be learn only through experience and proper practical knowledge.

This post has been edited by hadencole: Dec 5 2008, 11:38

Another thing most newbies don't get is they need to be patient. There is a new system I downloaded like a month ago from http://www.pipsonfire.com that has caused a lot of noise because its effectiveness. Yet, some newbies fail to follow it because they get impatient to hold their breath and let the market make their move. They need the discipline and patience; maybe it's a matter of having the right mindset.

This post has been edited by Frankietp: Nov 11 2008, 21:58

It really depends on your market. There's at least one major forex broker which has no minimum trade size (no fixed lots) which means doing a 2% risk - or whatever level you like - is no problem at all, no matter the timeframe.

In my opinion the answer is in the question. "why do most newbie traders fail"

its because they are new right?

you can't just walk into the forex and say you are a professional, a professional anything takes time and effort and sacrifice (Time, Money etc)

Also it needs to be considered that not everyone CAN be a trader. It takes a distinct personality type to be a successful trader. In the same way a professional trader may not be able to be a professional basketballer!

Marketers and advertising have a lot to answer for also. I know traders who have and will consistently lose money in the markets for years because of the way the forex is portrayed by so called pro systems and signal marketers.

So my point is not to discourage new people from trading, only to evaluate your personality type, ignore marketing (not everyone can be a trader, contrary to what the people who want your money will tell you)

Look at yourself honestly and treat your hard earned money with respect.

also if I had to pin the biggest mistake of the starter trader to one thing it would be under capitalization. you cannot build something from nothing or trade your proper position sizes with a small account.

Thanks for listening

My opinion most newbie fail because they can't control their emotion. I can be a good (bad) example. Once i tripled my account in a few hours then blew everything in 1 hour (during news). Lesson learned.

I’m still a newbie taking experience in demo. Soon, I’ll get in the real world trading some of my capital. From my experience, several months in demos, I’ve seen at the beginning my under control trading almost all the time even if I was not sure. Then, I tried to change my scalping method going more in long; even if I don’t keep orders more than a day, I’ve improved taking control trading and following some indicators, now I understand them more. Vanes

Most beginners fail because of be beginners I mean they don’t know how much to do or how to do, they just are trying an failing, so this is the only way to learn, no other way, of course, emotions, follow step by step an strategy can help, but have a plan help to don’t fail.

Frankietp, that’s a good post, I know that everybody in the beginning didn’t pay too much attention to the market, so they (me included) can make any move without protection or even without taking care of what they’re doing, so if they fail, it doesn’t matter, no real money, no real pain, it’s just practice. But everybody need that, practice and practice before get in there for real, because if you go in the real market, with any knowledge, for sure, you’re going to lose everything, and nobody will like forex anymore. Dont you think?

Newbies fail, because we all were newbies, that’s it, period.

This is a good thread. in fact, the reason why there are many demo platforms assure this topic and assure most of your opinions. Beginning with a small amount let us know how we can get some profits, at least don’t fail! A newbie has lots of tips to follow. It is true there are many brokers offering free demos, but not every demo gives us the same advantages. I’m trying by now my third and I still found differences. Vanes

About that, traders are doing it first time in a demo, so they can think that´s not a real money, so they can lose when they want, but they get in the market, without knowledge and interesting, so for them are just a try. That´s why the advices for them are “get a demo” because if they do it for real can lose everything and after that nobody want to trade anymore.

I prefer "get a mini account" because your trades won't be the same with real money.
It's really important to learn with real money. With a demo account you often take bigger risk than with a live account.

I totally agree with felipeca said, beginners traders fail because they are beginners, so let them be, in the beginning nobody was by my side telling me advices, I had to looking for them in the forum and in my mind, because if you don’t try, nobody is doing for you.

My 2 cents.

Beginners at first don't fail. There is a fairly known weird advantage all beginners have on expert chartist traders : Beginner luck.

I have followed up numerous retail traders and I have found to my surprise that at first they make a LOT of money, then they start overanalyzing the market by stockpiling hundreds of indictators, and this where comes the big clash.

My humble advice would be:

If you start by winning money, just keep doing it the way you started with, dont bother trying to do better. This means basically that you are able to trade naked charts because you have the feeling of the market, like a pianist or a guitarist can feel a song.

If you start loosing money, give yourself a change on a demo account, try to trade "logically", and if this doesn't work well...start stockpiling massive amounts of indicators hoping you will find the holy grail.

So to answer short, no, beginner make money, intermediate level traders loose money, FX experts have a positive but quite average profit expectancy.

This is based on facts, I am not throwing out a theory here.

Hope that helps.

This post has been edited by Forex_Master: Dec 24 2008, 13:02

Cela ne fait plus aucun doute dans mon esprit, la majorité de ces post "english" sont écrits par le même français, dont les connaissances en anglais sont a peine passables. Par exemple il écrit "loose money" au lieu de "lose money", etc...

Mais pourquoi cela c'est ce que je voudrais bien savoir...

Enfin bon, qu'importe.

Hi Dracula,

I am not French, but I speak 5 languages. How about you "Misteur Dracula"?

Also, what's the point of correcting my english if you don't even write in English in an English forum ?

What's the point of reading an English forum if you are "French" ?

Are you assuming that only people living in New York visit english forums ?

This is my very first thread on this forum, might be my very last If I encounter further brainless traders wanabees like you.

I hope your job is teaching french to young kids, because you won't go far trading forex with such analytical skills.

Please do not answer my posts anymore I have no interest in reading your useless lame comments.

What a madman.....

This post has been edited by Forex_Master: Dec 24 2008, 13:04

Scam, commercial for www.etoro.com

You think some guy from etoro posted that ?