From the statistics of trading, it is clear only a few traders can work properly in the Forex market to make money. Almost 70% of the new traders fail to make any profit during their first year of investing. And it is also observed that 96% of them lose money in Forex and leave the market, there are many reasons why they fail in trading. Mostly new traders don’t focus on their work in the greed of making more money and today in this article we will show you some of the important reasons why they fail.
Commissions of the brokerage
In the retail trading ecosystem, brokers are like the main gatekeepers. Brokers play a crucial role in Forex, they provide the traders to get entry to a platform that will allow them to buy or sell foreign currencies and for this service, they take some charges which are referred to as a commission. The brokers give very substantial leverage to the clients for trading, primarily the brokers make money on the bid-ask spread.
But in choosing a broker you have to be sure that he is not a fraud. You should test the broker first to make sure he isn’t a fraud. For new traders, it is important to choose a genuine broker who are well regulated.
Lack of knowledge
You must have extensive skills in the CFD trading business. Without having the skills you can’t expect to become a professional trader. The retail Aussie traders are losing money since they trade with hope, emotions and gut feelings. These are the things that contribute to making big mistakes at trading. You should think like the elite traders at Saxo. They never rely on super complicated things. Just by using the three major forms of market analysis, they execute quality trades and manage to secure profit.
Advantage of retail brokerage
Traders can borrow money from the retail brokers which are often known as leverage. And it might allow them to trade with a big lot. Another advantage of retail Forex is that it is an easy setup to work with. Traders are forced to pay retail prices by which brokerages trade. Retail trading is an easy way to make profits. A trader should always focus on how a retail broker sets the trading range.
Retail brokers can also join in the direction of majority trading clients, not every broker will work as per your aspects. They follow their term of trading principal. Before you fund your real account, chose a well-reputed Forex brokerage firm so that you don’t have to trade in the low-class trading environment. Follow the conservative approach and trade with the best broker.
Currency trading is done by using computers. Computers are used especially to execute the trades that have a particular set of criteria. Some of the traders often try to automate the trading process by using bots and EAs. But the bots and EAs can’t find good trade setups since it won't have the ability to analyze the market sentiment.
Beginner traders should not use the evolution of algorithmic trading as from this they won’t be able to learn anything. There are few defects in this process, it a process where the program works on its own and can’t analyze the market sentiment properly. So, in the long run, algorithmic trading is not suitable for beginners.
New traders should always focus on learning and practicing the processes of Forex trading. The successful trading process is quite similar to the phrase – slow but steady wins the race. If you trade in a rush then you won’t be able to do the correct process of trading. Trading is a long term process; it takes years and years of hard work to know the strategies of trading. But if you stick to the process of learning you will surely make money in Forex trading.