According to research, the consensus in the forex market is that around 70% to 80% of all beginner forex traders lose money, get disappointed, and quit. Generally, 80% of all-day traders tend to quit within the first two years.
While one may argue that the failure rate in the forex industry is very high, with many new traders dropping out within their first few years of trading, this doesn’t mean that you should not start trading.
Trading is surrounded by many misconceptions and myths, and many traders tend to start trading for the wrong reasons. Basically, getting into trading to become rich quickly is one of the main mistakes and one of the key reasons that traders become frustrated and quit trading. Having the wrong expectations and starting forex trading for the wrong reasons will lead any trader to quit. But trading is not like a hobby and takes patience, love, passion, and dedication. Again, lacking the perseverance and passion for the game will also lead many traders to quit.
Mistakes that lead many forex traders to quit
But let’s see in more detail some of the most common reasons or mistakes that lead many traders to quit. What’s interesting to note is that the majority of these mistakes can be easily avoided.
What does the market tell you?
One of the most common mistakes made by forex traders who quit is that they ignore the market and don’t listen to what it says. While it may be easy to develop and enhance your trading skills, traders also need to have the intuition and sensitivity to adapt their knowledge to the real conditions of the market. In other words, put their knowledge into practice. Many traders, when they first start, seem to be unable to apply their knowledge in the proper context, ignoring the market and what the market is showing or telling them.
For example, if you are buying a forex pair with the expectation that its price will increase, but you see that there are various fundamental factors and too many buyers pushing its price lower, maybe you need to assess the situation and take a step back. The market is dynamic, and while you may follow a plan, sometimes the market will tell you to take some time, reassess the situation, and make a decision to respond to the new market conditions. Remain alert and always monitor the markets to stay ahead of unexpected market moves.
Avoid stubbornness and persistence, and don’t increase your position based on emotion. Instead, take your time, research, and analyze any new information that may influence price action.
Very often, you will hear experienced traders emphasizing the power of the market and saying that the market has rules, and if you disobey them, it will take what belongs to it. Well, the market is unpredictable and can take your funds just like that, so learning to listen to the market, being open to new information, and being adaptable to new situations will help you remain flexible and grasp opportunities when they arise.
Are you stubborn?
Connected to the above, but a big issue altogether is the insistence on being right all the time. Many forex traders hate to be wrong and end up making huge mistakes. In forex trading, sometimes traders focus on a specific currency instead of looking for opportunities in other currency pairs. So whatever they do, they remain focused on trading that currency the way they always do, and when the trades don’t go as planned, they don’t change but stick to them, refusing to exit their losing positions.
While commitment is important in many things in life, when you trade, you should always keep an open mind and avoid being too invested in one single trade. Great traders know when to exit a losing position and they do so quickly.
To be consistently profitable, you should accept the fact that you cannot be in control all the time have great results, and look to make good trades despite the outcome. Learning from previous failures and avoiding falling into the same old habits will keep you flexible and ready to adjust and make corrections.
The difference between having or not having a passion for trading
Every trader out there has made mistakes. But sometimes, the ones who stay in the game are the ones who remain faithful to trading out of their love for it and dedication. If you enjoy trading and have a genuine desire to learn and improve your skills, you may be one of those traders who won’t quit and won’t give up that easily. While quitting may be an emotional decision, very often those who quit may not have a passion for trading and lack the desire to persist.
Deciding to continue despite the difficulties and to give it another try is a decision driven by will and determination. Without the will, enjoyment, and strong interest to learn and do better, it is hard to continue when trading becomes harder or you get disappointed. You need this unending flame and motivation to pursue trading, enjoy practicing, and develop your skills.
When traders lack any love for the game, conducting the necessary market analysis, and putting in the extra hours, trading will end up being like a boring task, something they have to perform and which they do not enjoy.
Forex traders do not have the right expectations.
Not everyone is a profitable trader from the start, and it usually takes time and a lot of mistakes and disappointments until you get it right, and even then, there are no guarantees.
Egos may get crushed, trades may exit in disappointment, and money may be lost. But you get up and do it again, not only because you love it but also because you know the risks and understand that gains are not guaranteed. Young and inexperienced traders make the mistake of thinking that they should never incur any losses.
They add more pressure on themselves and take it very hard when they fail. Accepting that there may be losses and that you will experience good and bad trades, losing and winning streaks, undergo drawdowns, and feel bad, and that all these are part of the game, will keep you focused.
Being kind to yourself and having realistic expectations is paramount. It’s okay to be wrong and mistakes do happen. Even the best forex traders experience these things. Being patient and respecting the process, with all that it involves will make you stronger and wiser.
Not everyone will make it big. But you have every right to give it your best and try to become the best trader you can be. No one can take that away from you. And this is why some traders quit and others don’t.
Become an IronFX forex trader
When it comes to trading, choosing the best CFD broker will help you reach your goals and remain focused. IronFX is a broker who will be by your side no matter what and will provide the necessary support to get you to the next level. Work hard, dream big, and the rest will follow. With a great broker who has all the right tools and amazing trading conditions, you will get access to trading tips and insights and develop your skills so you can take on the markets with determination.
Disclaimer:
This information is not considered investment advice or an investment recommendation, but instead a marketing communication. IronFX is not responsible for any data or information provided by third parties referenced or hyperlinked in this communication.
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