Can You Lose Money on Forex?
Can you lose money on forex?
Is forex trading a scam?
How can you trade forex profitably?
These three questions might have crossed your mind…
If so, read on…
Can you lose money on forex? Most new traders lose money on forex
Most new traders lose money trading forex.
That’s a fact.
In fact, 90% of all forex traders lose all their capital before quitting or reassessing their approach.
While that number sounds grim, forex traders keep coming back for more…
There must be something more here…
So why do forex traders lose money in the first place? We need to answer that question first. Secondly, what are the most common causes of blown accounts?
Common reasons forex traders lose money
The number one reason forex traders lose money is they don’t know what they’re doing.
You probably know that anyway.
If you don’t, accepting that you don’t know much is the first step to trading forex profitably.
It’s okay not knowing much…
You’re only human, after all.
Most forex traders go into this game with a huge ego. They know someone who has made a lot of money and think they can do the same thing.
But do you know what happens?
They lose money…
Let go of that ego.
A common cause of failure is small accounts.
If you follow our site, you might know that we recommend trading a small account at the start. That said, trading with a small account has its risks as well…
If you are trading with a few pennies at a time, you won’t care if you lose your money.
This carefree attitude is risky…
Take your forex trading account seriously.
Whether you’re trading $100 or $1,000, treat it the same.
Keep in mind that small accounts are okay at the start. But if you want to get better, you need to fund your account with a meaningful sum of money. If you lose your capital trading a larger account, it will be enough to sting you.
Determining an amount that’s enough to sting you – but not destroy you – is the sweet spot. You will take your trading more seriously if the loss is enough to sting you.
Refusing to accept that you are wrong
You know now that you can lose money on forex.
That said, it’s tough to stomach that you’re wrong.
That goes for both life and forex trading.
But if you’re going to be a successful forex trader, you need to be comfortable losing.
Knowing and accepting that you’re going to lose money is part of the game.
If you refuse to lose, you have an ego problem and will lose money.
Indeed, the question you should be asking is: How can I minimise my losses? Not: Can you lose money on forex?
Lack of discipline and greed
If you want to become a profitable forex trader, you need to be disciplined.
A disciplined forex trader is often a profitable trader.
Here are a few tips to help you become a disciplined forex trader:
- Remember that holding on to losing trades for too long is going to make you broke.
- Try to hold on to your winners and cut your losers quickly.
- Don’t ignore your trading rules.
If you ignore these three rules, you’ll never be a consistently profitable forex trader.
You might be lucky and hit a few trades out of the park.
But your greed will eventually catch up with you and wipe you out.
Not having a trading strategy
Is it enough to just be a disciplined trader?
The answer is no.
You need to have a trading strategy as well…
Most new traders don’t have any strategy when they’re trading forex.
We like to call it shooting in the dark…
But most people call this gambling.
If you don’t have a forex trading strategy, you’re gambling with your money.
In fact, a trading strategy isn’t enough…
You must have a trading plan as well. For example, you should know when to enter and exit a trade…and how to manage your risk while you’re in a trade.
These are basic things that you need to master.
But if you want to gamble your money away, just ignore everything we said above…
Can you lose money on forex? Learn how to trade forex the right way
Now, there’s no magic strategy to trading forex.
But if you’re committed to learning the right way to trade forex, you’ll increase your odds of success.
Forget about the Ferraris at the start…
If you want to be a consistently profitable forex trader, you need to put in the work.
It’s all in the mind
The first step to profitable forex trading is to get your mindset right.
Mindset is 90% of the battle.
The other 10% is trading…
Manage your expectations when entering this world.
Once you have the right frame of mind, you need to put in the work.
Rome wasn’t built in a day, after all.
Learn to trade properly
Think about it: Doctors and nurses go to medical school to learn their craft.
Lawyers go to law school.
There are classes for cooking, parenting, even public speaking.
So what makes you think you can start forex trading because you saw a 12-minute video on YouTube?
How ridiculous does that even sound?
Take the course, learn the ropes, and you’re off to a cracking start.
That’s another reason why most traders fail as well…
Protect your capital
But the number one job of a pro forex trader isn’t to make money in the market.
Well, it is…
But pro forex traders aren’t concerned with making money.
They’re concerned with managing risk.
You can’t make the markets move up or down, or even sideways.
Your job is to trade when you see a suitable set-up…and get out if you’re wrong.
Sounds simple, doesn’t it?
Forex trading should be mechanical, without doubt, fear or hesitation.
You need to manage risk when trading forex.
There’s no negotiation here.
There are lots of ways you can do this.
One way is proper position sizing, but there are others…
Your ‘Start With Forex’ Takeaway: Can you lose money on forex?
Let’s review today’s question: Can you lose money on forex?
You already know the answer.
It’s inevitable to lose money trading forex.
But how much?
That’s the question…
Most forex traders fail because they have no idea what they’re doing…
Most people don’t know where to start…
Your ‘Start With Forex’ Takeaway: If you want to become a consistently profitable forex trader, you need to get your mindset right. Trading is mostly mental. When you’re in a losing trade, down hundreds or thousands of dollars, it’s easy for logic to go out the window. That’s why it’s so important to have the right trading mindset from the start. Once you have the right mindset, then it’s time to learn how to trade.
If you want to learn how to trade forex like a professional, start by reading our FREE forex course. Remember, there’s a million ways to make a million bucks in the forex markets. So if you want a head start in forex trading, alongside our free course, check out our approved products page for forex trading signals and systems to help kick start your trading.
To your trading success,
Start With Forex
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