Why the majority of the retail trader struggles
- by Vicky Lean
- 20 days ago
Everyone knows trading is one of the best profession in the world. Due to easy access to the online trading industry, the number of active traders in the Forex market is rising at an exponential rate. Many new traders in Australia often think this is the only way to lead their dream life. But they are wrong. Unless you develop a perfect trading system, you will not be able to execute high-quality trades in the Forex market.
In this article, we are going to highlight some of the key reasons for which the retail traders are losing money. Let’s explore the key reason for which we struggle in this profession.
Lack of knowledge
Knowledge is power when it comes to the investment business. Without having proper knowledge of this market, it’s really hard to make a profit from this market. Being a novice trader, you are most likely to execute random trades. Unlike the rookie traders, the professional traders always look for high-quality trading signals. They never execute any trade without having a valid logic. And to find such trades, you must develop a proper trading strategy. Some of the novice traders often buy an expensive trading system from the pro traders. But the trading system needs to be developed based on the personality of the retail traders. So, educate yourself and trade the market with proper discipline so that you can make a consistent profit.
Taking too much risk
Taking too much risk in Forex market is very common. The new traders always try to make millions of dollar without working hard. They don’t realize the fact, trading is more like a business. If you intend to make a profit, you must follow the proper strategy. During the development stage, make sure your trading strategy is taking care of the risk management policy. Never take too much risk in each trade since it will cost you money. No one can assure you, a certain trade will hit the take profit level. So, try to trade this market by following the 2% rule of money management. Stop taking the unnecessary risk since it is one of the major cause to lose money.
Overtrading the market
Overtrading is a very big problem for novice traders. The new traders think this is the only way to make more money. But have a look at the professional traders at Saxo. They never overtrade the market. You need to find the best possible trade setups in the higher time frame to reduce the associated risk in trading. Things might seem extremely challenging at the initial stage but once you learn to trade the market with proper logic, you will understand why overtrading cost the retail traders.
Ignoring the high impact news
The new traders always follow a trend trading system. But by following a trend trading technique, you can’t make a profit in the Forex market. You need to analyze the fundamental news to find the best possible trade setups. Things might seem a little bit complex at the initial stage but once you learn to trade the market with proper discipline, you will understand the importance of major news. For instance, high impact news like interest rate change can even change the long term trend in the EURUSD or GBPUSD pair.
Some of you might think learning to analyze the fundamental variables is a very complex process. But if you dig deep, it will take less than a month to understand how the high impact market data impacts the price movement of a certain asset. Take your time and try to learn the details of fundamental analysis. If required, go for paid education to get a clear overview of this market. But never ignore fundamental news or else you will always lose money in the Forex market.