5 Reasons Why You're Not Making Profits in Forex Trading

Posted on 21st February 2018
5 Reasons Why You're Not Making Profits in Forex Trading

Acquiring mastery over forex trading is a difficult task. There are many things that you may not get right or you might lack the adequate skills and knowledge. As a FX investor the main challenge is to survive to trade another day. So should you panic if you are on a losing streak? Losses are an inevitable part of trading as winning. However continuous lack of profits could mean that your trading techniques need working around. Let's analyse few reasons why you are not making profits in forex trading:

  1. Overtrading: You tend to overtrade by not being aware of what your trading edge or strategy is, not being disciplined or being over-confident. If you don't know what exactly you are looking for in the market you will essentially be gambling with no real edge. Thus, while trading without a plan you will overtrade as you are likely to misinterpret trading signals. Again, if you aren’t disciplined enough to follow your strategy and fail to strictly adhere to it you will end up overtrading. Also, you may overtrade by becoming complacent and being desensitised to the underlying market risks following a series of winning trades.

  2. Poor risk management: Not managing your risks for every trade that you execute will most certainly make you lose money in the market. If you don’t know your personal risk appetite per trade, what is the amount you can afford to lose per trade, you are never going to make money. Furthermore, if you don't stick to a suitable risk to reward ratio you aren’t going to make money trading.

  3. You don’t know what you’re doing: If you want to be profitable in the market you must be aware of your trading goals. You should be confident of your trading approach and its effectiveness. In other words you should know your intent and purpose of being in the market.

  4. You aren’t preserving trading capital for good setups: As a trader if you are trading back to back, you will not be in the right trading mindset to capitalise on favourable setups when they form nor will you have sufficient trading capital to reap big dividends from them. If you aren’t preserving your trading capital, you aren’t going to make money as a trader.

  5. Being fickle with strategies: Investors apply the same strategies but end up with different results. Though charts are the same, our interpretation of those vary. Always see whether a particular strategy is suitable to a specific time-frame. Practice and understand its feasibility, nuances & whether it will be profitable through a demo account. Do not switch strategies more than once every six months on an average while you're researching. A profitable forex trader is one who is constantly learning.

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