9 Reasons Why Traders Fail

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Why traders fail

EEvery year, thousands of traders get to grips with trading in the hope of making a million bucks. What most don’t realise is that when you look at the stats, there’s only a tiny percentage of traders who succeed. According to some research, 90% of traders lose money. There are numerous reasons for this; in this article, our forex brokers are going to focus on nine reasons why traders fail.

1. Unrealistic expectations

It’s important to have realistic expectations. Trading is not a get-rich-quick scheme. While it’s possible to make money quickly, it’s much harder than most people think.

It will take time for your account to grow to any significant size. Even then, you’ll need to be consistent with your trading and continually make profits to grow your account more. To achieve consistent profits in the stock market, you require knowledge, experience, and capital. Yes, some degree of luck never hurts either! This is an important reason why traders fail. Fix it and you’ll be successful.

2. No Trading Plan

Trading is a business, and you should treat it as such. Trading is not gambling; it takes a lot of time, study, and effort to become good at trading. Traders who do not have a written and specific trading plan are doomed to fail before starting trading.

A trading plan provides the structure for your trading business. It lays out the rules for your business to make sound decisions in both good times and bad times in the market. Without this structure, your emotions will rule your trading decisions and lead to failure 80% of the time.

3. Poor Risk Management

Risk capital is money you can afford to lose without it having a significant impact on your financial situation. If you are going to trade, you need to set aside a certain amount that you can use for trading.

Risk management is one of the most important aspects of trading and one that many people tend to overlook or underestimate. This applies regardless of whether you are trading cryptocurrency, forex, stocks, or other commodities. If you manage your risk poorly, you’ll fail as a trader in no time!

4. No Clear Trading Strategy

A huge part of having a good trading plan is having a good strategy and knowing exactly when to apply it. If you fail to do this, there is no way to succeed as a trader. You’ll be jumping in and out of trades with no clear direction.

You need a trading strategy that has built-in rules for risk management, entry, and exits. If you don’t stick to these rules, then you won’t be able to trade consistently or profitably over the long run. Also, if you transact without a clear strategy and just go with your gut feeling, fear and greed will likely control all your trading decisions. This will lead you to lose money over time.

5. Risking Too Much

The stock market is a very volatile place, and the price of the securities you are trading can go up or down in seconds.

The key to overcoming this problem is to risk no more than 2% of your account balance on any single trade. This is important because it allows you to stay in the game even when your dealings don’t work out as planned.

Always use stop-loss orders to limit your losses if something goes wrong. You can also use trailing stops to automatically adjust your stop-loss order as the price moves in favour of your position (this helps protect profits). 

For risk-free trading practise, try a demo forex trading account from IMGFX.

Why traders fail

6. Trading Addiction

When people think of addiction, they typically think of drugs or alcohol, but the term addiction can apply to other things too.

So what makes trading so addictive? The adrenaline rush you get from taking a trade. There are few things more exciting than watching your trade move in your direction.

You must control your trading addiction. Addicted traders often blow up their accounts by over-trading or trying to recover losses by increasing their trading risk.

It’s important to know when to stop trading. The market is always there, and another trading opportunity will always arise in the future.

Why traders fail

7. Not Learning from Mistakes

Every investor will make mistakes in trading. Those who learn from these errors and adjust their approach subsequently are the ones who have a higher chance of success. If you keep repeating the same mistakes, don’t expect to get a different result.

Mistakes are inevitable but can be avoided once you stop making them and learn from them. Learning from mistakes is one of the habits of successful traders. The best thing is that there is so much information to help you sharpen your skills, build your knowledge and improve your chances of success.

8. Poor Trade Management

Having a valuable and well-tested trading system is only part of the equation in becoming a successful trader. The other part is proper trade management. This is one of the most important but often ignored aspects of a trading system.

Experienced traders know that even the best systems can have losing trades, but a proper money management technique will ensure that you are still profitable, even if more than half your trades are losers.

Poor trade management can quickly turn a winning trading system into a losing one and vice versa.

9. Over analyzing the market

If there were indeed a pattern in everything happening in the markets, then everyone would be able to make money trading, which isn’t true!

Over-analyzing the market is one of the biggest problems with newer traders. They tend to overanalyze the market or specific trades, and this can lead to paralysis by analysis. One clear step you can do some research about and start implementing ASAP is finding support and resistance levels.

If you spend more time researching than trading, you may be overanalyzing your trades. You can quickly lose several thousand dollars from overanalyzing your dealings and not being able to pull the trigger when you’re supposed to.

Why traders fail


Whether you’re a brand new trader or a more experienced one, you have to consider these points. Before you start trading, consider your goals, the risks involved, and be honest about whether or not your objectives are achievable. Not doing so is part of the reasons why traders fail.

You can do it! Set up a live foreign exchange trading account with IMGFX now!

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