Why 99% of traders lose money

Exactly, too many reasons. If this was simple everbody could be rich while they are sit in front of the computer for 4 hours per day.

FWIW I've started to compile a list of links to some of my favorite posts (some written by me, some by other FF members) in the 'Strategy tips, ideas and caveats' section here.

You need to remember, every broker were business man..they are there to take your money..in their system its scripted to take all your money using the possible compute power available in the market..,its difficult path to win...but there 5% - 10% out there..who keeps winning...these people were discipline, well trained..and really keep reading...and listening to advice..and above has well planned of winning

Thank you abundantly David.
God bless you.

Thank you very much Hanover! I see, it’s an excellent thread (that you shared); so it’s time to spend more time here and update my trading skill! Thanks again.

The reason #1 (imho) is: NO edge.

If your predictive power is 0, you are just trying your luck. An R-Squared of at least 0.02 can get you anywhere.

The reason #2 is: Don't letting winners run and/or let losers run.

99% people would rather lose their whole accounts on martingale-grid-add-to-losing schemes than taking their losers.

The reason #3: Don't care (or aren't conscious) of the risks of their trading plan (drawdowns, position sizing, trading costs).

Real traders make money 100% on average on the long term.
The other ones are just amateurs, wannabes, although some have sometimes excellent trading knowledge, who pretend to be traders.
So actually the name of the thread I guess should be: "Why the amateurs that fool around with trading, lose money 100% of the time?".

I don’t think so. Because, there is nothing 100% in Forex trading, so I don’t know how real traders can make money 100% on average. Of course long term traders able to earn maximal profit from here but not with certainly at all times.

Well, most people enter trading because of the dream making money fast without the hard work. They would not enter trading if they would not expect it. Newcomers expect to get much more faster and bigger income that they can commonly genereate by other activities. Trading is a cruel game for people with this dreamer approach.

actually 100% of traders lose money, it's called a stop loss, defining the time range is kind of important

Newcomers always try to make huge money from here without learning. As a result they become loser due to lack of exact trading knowledge and experience. Newbie’s should keep a cooling mind when trading practically and have to ensure how to control emotions by proper trading discipline.

First reason most traders lose money is – they come to forex with unrealistic expectation. Like with 300$, I would earn 100$ per day. As a result they become reckless to make profit. They ignore that forex trading requires specific knowledge and skills. And for that knowledge and skills you need time. They treat it just like gambling.

It's common knowledge retail traders try to pick tops and bottoms.
This is potentially a highly successful strategy as it offers more or less, the best Risk/reward.

But,
1) You need to be very diligent with your analysis (fundamental and/or technical)
2) Trade small so you do not panic because a trade goes 30 pips against you.
3) KNOW you exit point where the trade is no longer valid and GET OUT!! (again, fundy and/or tech wise).
4) Appreciate that trading, if you want to do it long term, is an ENDURANCE test, not a race. Take the losses when they come, minimise risk, and move on.

A trader PM'd me the other day saying he was short GU from 1.33 and wanted some help.
At the time, GU was trading around 1.41 I think.
That's 800 pips, and the 3657 high had been taken out.
Why hold?

I think at times, when a trade is moving against us, it's natural that our mind can play tricks without us realising it.
We can begin to place more emphasis on fundy and/or tech aspects that are perhaps not so important, and place less emphasis on more important aspects, in order to justify our view to OURSELVES, that the trade will come back in our favour.

One of the best threads to learn and appreciate the above.
https://www.forexfactory.com/showthr...8#post10737458

Losing is part of the game..The only thing is the acceptance of that truth and making plans to control them not running away from them

Traders lose money as a rule because of a lack of experience, here it's crucial to understand that most of them leave after the first deposit drain and that's sad.

IMO - Everyone has made very good and valid points.

 

1. Inexperience (which covers a lot).
2. No trading system.
3. No hedging.
4. Emotions

While I agree that an EA would help someone to follow their trading system or rules, not everyone knows how to make one. I for one don't or else I would probably make a lot more money - because hindsight shows that if I had entered and left things according to my rules I'd have made more.

Inexperience is something that hits most (if not all) traders at the beginning. What determines how your do thereafter is what you do with the experience you gain.

A trading system is VITAL to any trader. I have a very simple system (in comparison to more experienced traders) that uses BB, SMA, MACD, RSI and AO. I know a whole lot less than most pro traders but from what I've seen, my technical analysis is usually right. Not always, but usually. My fundamental analysis skills need a LOT of work, but with this system I have in place I just avoid news. I don't do breakouts. Just guessing the direction based on what looks like a trend isn't the best way to go. The next thing to the trading system would be the risk management. I've talked to persons less experienced than me that wanted to buy 1.0 lots with a $100 account. I told them it's not impossible, but it's dumb IMO as the account could be blown in seconds.

Hedging is something that can save you depending on your system and available equity. Part of my rule (which I don't follow all the time.....) is to divide the available funds by 10,000 to get the maximum lot size. So let's say $5,000 / 10,000 = 0.5 - but I don't open a single trade with that. This means that the maximum positions I have open should not exceed 0.5 lots. This way I can open smaller trades and if things go south I have enough room to hedge without putting my funds at a massive risk. Pending orders help with this a lot.

Emotions get in the way a lot. Many times I close a trade in profit because it's pulling back before continuing the trend and end up with much smaller profits. I recall sitting and watching a trade make $5 and was ready to close it - then my wife comes up and says I should wait. It went into the negative and then kept going. After about an hour or two of waiting I closed the same position with $40+ instead of $5. Patience isn't a strong point when you see money that you can take. Emotions also work against you when you're at a loss. I had a small account that got wiped out because of repeated issues. Trump fired his chief of staff, disbanded the business council, took on Korea and then Korea launched missiles over Japan. All in under two months. The USD just kept going down. If I had the equity things would have bounced back (events were from July 28 to August 29 and USD bounced back in October) and I'd have recovered, but the account was small and I couldn't manage it. But seeing my stuff go in the red by 30% then 50% then 70% - if I had stopped it at 30% I'd have still had 70% left. But emotions - I didn't want to lose that much and ended up losing it all. Knowing when to stop (and when to hedge) is crucial.

My 2 cents.

I agree with all of your points without hedging! Because, it’s not a general trading style as like scalping and swing trading!

99% ? Where did you get that figure from amando? Who and where did such a research? According to the Pareto principle it can't be more than 80%, +/-2% as a statistical error.
Answering your question FX is a non-zero sum game; between each seller and buyer we have a service provider, very expensive one. Each transaction is taxable, indiferent the result. And brokers charge us up front. The more positions we open the more taxes we pay. That's why it's so difficult to find the right edge. It's like playing poker; you win or not, must pay the blinds.
In order to run their business smoothly, brokers encourage us to use low time frames and to put very tight stops. They care about their business, not ours. We, as retail traders, are a drop of water in the ocean full of sharks. We are not even liquidity providers: 80 % of us, for hundreds of different reasons, are lambs going silently to slaughter.
Most unskilled traders are loosers 'cause they believe in magic indicators, averages, convergences, supports, resistences and so on. Insted of using the space between their ears, they are dreaming about everlasting wealth, bilions made within days, weeks or at most months. Instead of applying common sense they are jumping from one system to another, selling in demand area and buying in distribution zone (in most cases after a huge marabuzu candles, the last one in the current trend). Some got chopped out by banksters in strong support and resistence areas, seeing their stops triggered on both sides of that lines.
Traders with some experience lose because of God's syndrome. After several months of relatively good results of smoothly working system, they got hit by Swiss tsunami, Brexit, 7/11 and so on.
The remaining twenty percent never stop learning modesty regarding their abilities, getting what the Market gives them. Obviously on high time frames.

The 99% is probably an exaggeration, but it is a high number even if it's 80% give or take 2%.

https://www.theforexguy.com/forex-traders-lose-money/
http://www.crbtrader.com/trader/v09n01/v09n01a01.asp
https://www.investopedia.com/article...ay-traders.asp
https://www.thebalance.com/why-do-fo...-money-1344936