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Reasons why you’re not making money with your Forex trades

The good news is that we can easily diagnose what you’re doing wrong if you’re not making money trading yet. There are fairly predictable and common reasons why traders don’t make money. Once you have figured out why you are not making money on the market, then you can move on to the all-important task of correcting what you are doing wrong, so that you can hopefully begin to profit.

Don’t get discouraged right now if you’re in a bad place in your trade. Despite how others might portray trading on the internet, no one gets rich quickly as a trader. In order to make money trading, it takes time , effort and an ability to make errors, correct them and move on. Hopefully, you will get better and better at trading as you improve and move on, and eventually begin to profit consistently.

Over trading from being overly confident

Novice traders tend to be over-traded. What does that imply? This simply implies that they buy and sell currency too often. You don’t even realise you’re over-trading, which is why it is harder to diagnose this issue. Just so you know, the world’s best traders have a great deal of patience, in the sense that in a short period of time, they don’t place too many trades. When the opportunity arises, they don’t jump into the trade.

 You are not managing risk properly

This one is pretty obvious, but because so many traders do not properly manage risk, it is important to discuss it. Not managing risk is a sure-fire way to lose money on the market on every trade you take.

If you need more ‘evidence’ other than my views on this matter, check out a recent article I wrote called 28 motivational trading quotes, in which article you will find many quotes on the importance of risk management in trading from other professional traders.

To put it simply, you are never going to make money if you don’t know your personal risk tolerance per trade, which is the amount you are personally OK with potentially losing per trade. In addition, even if you DO know that amount, but you don’t stick to it on EVERY trade you take, you’re not going to trade cash either.

Inadequate capitalization

Money is needed to make money. This translates into the fact that in order to become wealthy, you have to invest a significant sum of money. Right now, what you need is trading capital. With a limited amount of starting capital, you can achieve a substantial profit by speculating on the price of financial assets. However, with a leverage of 1:1000 or higher, you can trade in the foreign exchange market. The FX market is already highly leveraged, so the problem could be caused by insufficient capitalization.

Not adapting to market conditions

Getting started in foreign currency exchange is not as complicated as staying profitable. All you have to do is open a trading account and place your first order with one of the many brokerage companies. It is necessary to adjust to the ever-changing market conditions to attain consistent profits. Basically, you have to adjust your trading strategy to the different conditions of the market. If you don’t do that, you’re going to under-perform. In terms of profitability, think. During the summer months, when volatility is higher, the foreign exchange market tends to vary.

Being motivated by greed

It is difficult for Forex traders to take the emotion out of trading. They let greed get the best of them sometimes. It is not a good idea to give in to greed. So, don’t try to squeeze out a move on every pip. With every purchase or sale order you place, if you try to get rich, you will most certainly end up blowing up your trading account. It’s better to slowly take things in. Aiming for a fair profit. Currencies continue to change, which means there’s no need to get that last pip. When the market moves against the traders, things may easily get out of hand.