Forex Why do most retail traders lose money?

[FXOchartist]

Maybe we often hear that 90% of retailers lose money in the forex market, although this statistic is still questionable, some brokers such as FXOpen UK on their official site are transparently informed that 60% of investors who use their services lose money. This means that most retail traders lose money.

But why do most retail traders lose money?

Quoting from the opinion of Ryan Pannell, CEO and Chair, at Kaiju Worldwide via Forbes, this is because most retail traders don't have a trading plan.

Retail traders focus more on dreams that may be too good to be true, not having a proper trading plan. According to him, the first important rule is "Plan your trade and trade your plan"

Besides that, most retail traders' mistakes do not stick with stop loss. Sometimes we often make mistakes because we change the stop loss value thinking the price will match what we think. The market moves dynamically, risk mitigation is very important in forex trading.

Some of the differences between retail traders and institutional traders are the capital they have, retail traders cannot influence the market, while institutional traders can influence the market with their rich capital.

Further details on the differences between institutional and retail traders can be found on the FXOpen blog.

 

[btaliat]

Just like you said. Most traders do not plan their trade. For a trader to be successful in forex trading, it is necessary for them to be planning their trade. They need to go extra mile trying to get some information about the market and the currency that they want to trade in.

And as well, there should be some money set aside to make some trades. This will prevent the market from crumbling. If all these measured are put in place, it may be very difficult for the traders to make some losses.

 

[FXOchartist]

A mature trading plan helps us gain profits in forex trading which must be done with high discipline, even though starting with large capital, trading without a plan is like wasting a bullet without knowing what the target is. Forex trading is not just about buying when you see prices rising and selling when prices fall, but more than that, traders need to take into account the possibility of prices starting to reverse and so on.

 

[moonchild]

Most retail traders lose money because they don't know what they're doing, they got into trading to get rich quick like most of us, but when the going gets tough they back out and chicken out and most of them actually quit or they refuse to find a mentor and keep on losing their money.

I think trading is simple but it's not easy, it sound like a paradox but that's what it, it looks incredibly rational to not do somethings but due to our human nature we always break our rules and lose in trades.

Retail traders also are mostly trading with shitty brokers that hit their stop losses for fun.

 

[King bell]

In their ignorance of trading principles, market dynamics, technical analysis, risk management and trading strategies, several retail traders incur losses. They also rely on emotions such as anxiety, avarice and restlessness when they ought to be using logic. Poor risk management that includes lack of stop-loss orders or wrong position sizing makes them vulnerable to huge losses. Consequently, some even overtrade and fail to have self-control hence causing their financial downfall in the market.

 

[FXOchartist]

Psychological factors are indeed the problem most traders face, this is like driving a car, you must have adequate equipment to drive long distances, and a skilled driver knows when to step on the gas pedal and when to step on the brake pedal. The forex market is very dynamic, therefore we cannot trade haphazardly without a clear goal.

 

[FinTrader]

I think most traders are driven by greed, excitement and haste. They come to Forex to earn a lot of money in a short time, just like in a casino, without learning anything. And without long preparation and without gaining experience and knowledge, such an approach will always bring only losses and losses.

 

[Ivo Zetticci]

Most retail traders lose money in forex due to lack of education, poor risk management, emotional trading, and unrealistic expectations. They often fall victim to over-leveraging, chasing losses, and neglecting proper analysis, leading to consistent losses in the volatile forex market.