Why do Most of The Traders Fail?
If you’re using proper money management and keen on the leverage, then even 10 bad trades on a row will not get you a Margin Call. Else, it’s definitely gonna burn out your whole capital. If you really want to make a decent profit in the Forex Market and trade more safely, you first need to understand the importance of money management. It plays an essential role in Forex trading. In fact, poor money management is the reason why more than 95% of traders lose money in Forex trading.
Lot Sizing: Why does it matter?
We get to communicate with a lot of our users every day on our live chat support and some of them come to us saying “I lost about $200 in trading, all because of your signals”. But we also know for a fact that most of our well informed traders consistently make a decent profit. To find out what went wrong, we first ask them about their capital and the lot sizing they choose. The answers they give us show a very obvious mistake that they make. Poor money management!
For example, last week one of our users said that his capital was $1000 USD and his lot sizing was usually 0.5 or more. (1 pip of EUR/USD with a lot sizing of 0.5 is around $5 USD). Choosing such a high lot sizing for such a small amount of capital is a huge mistake and it will swallow up your capital quickly during the bad days.Using high leverage actually means that you’re gonna lose money fast. You need to always keep this in mind..
The Importance of Money Management
Money Management is the most important thing in trading. If you are not really able to understand about the seriousness of it, over a longterm you cannot win. When you are damn confident about making money in the Forex market with any tool or signals, then you can increase the capital and the volume of your lot sizing which will eventually allow you to make more money.
The Need for Patience & Discipline in Trading
Earning in Forex always needs a lot of patience. You need to understand some of the very basic things which are absolutely necessary for the trading process. A loss is just a part of the trading process and it is not something that you can avoid. You may face 10 consecutive losses in a row, but that cannot prevent you from making money. It will keep happening to any expert or so called fund managers, even those who are in the WALL STREET.