Here are some reasons why traders lose in the currency market: 1.Traders allow their emotions, greed, hope and assumption to take over their trading. This is probably the most difficult thing for a trader to do is to eliminate those things while in the Forex business. 2. Lack of Education. One of the worst things is for a new trader to have some immediate success. this gives them a false since of skill and confidence. After a couple trades they figure they have figured it out and trading the currency market is easy. They have not even taken time to go through any class or school such as Babypips School. They have not gained the proper education and put in the time practicing. Always get your education first, and education never stops. 3. Undercapitalization. Many traders think all they need is $100 or $200 dollars to start there trading career. It is ok to start out with this small amount of money but you must keep in mind that you still need to apply the proper proportions of lot sizes to size of the account. It will take a long time to build up your account to where you could live on the income from trading. If you do not have more money then you should consider getting a part time job to scrape the money together to fund your account. To know how much money you need to start earning a living you will need to figure out how much you need to live on, then track how much you are making in the size of an account you have now. From there you can calculate how much you will need to trade full time. 4. No plan. I know that some traders think they can start a business with no plan in mind. You will need a business or trading plan and a set of goals. In your trading plan you will need to know how to trade, when to trade, what time frames to use, etc. etc. Without a plan and goals there is nowhere for you to go. 5. No rules. Without a set of trading rules you might as well send your money to your favorite charity it will do more good. The rules need to be write down and kept where you can see them for review. Without a set of rules you will most likely be making blind trades, hitting stop-losses or margin call and wonder what is happening to you. 6. No discipline, no consistency. When a trader starts to trade it is hard to follow the rules and wait for the trade to come to him. The new trader is in a hurry to make money and will rush into trades that do not exist. The trader needs discipline and consistency to make money in forex. Also, the trader needs patience, knowledge, and perfect practice. After all this the money will come. 7. No money management and overleveraging your trading account. This cannot be stressed enough. As it has been said many times, by many experienced traders, managing your risks while trading is more important than the entry and the exit points. If you have a trading system that tells you when a good trend has started then you can add onto a trade and manage the outcome. If you follow your trading rules then money management rules are also followed. A trader MUST risk very little when starting, perhaps 1% to 2% only. Once you get good experience in trading then and ONLY THEN should you add to your risk as a trend develops.
