Why do traders lose while trading forex? When losing one or several repetitive trades, this question may come to your mind. More than 90% of traders repeatedly lose when trading forex, as the sum of their winning and losing trades is negative, meaning they do not make profits. Have you asked yourself why there are more losers than winners? Could you be in the category that consistently wins (10%)? And what are the ways that lead to constant profit?
Reasons why traders lose when trading forex
1 – Risk management
Risk management
Often, this title you may have heard about or applied in some way because this is the main reason for you to take the first step toward your success in forex trading, which is to eliminate greed and the desire for great wealth in a short time. Also, it is the most crucial factor that helps you maintain your capital from Loss and remain in the market for the most extended possible period to take advantage of the opportunities you see as quickly and wisely, of course.
Briefly, risk management allows you to win a small percentage compared to your capital in a trade or per month, for example, 1% to 5%, which requires strict risk management. Today, we will not discuss a specific strategy. All strategies are profitable; some people work with different strategies and profit from them. However, managing your account is essential for forex trading and the most important thing you should learn.
An example of risk management for a single trade: – Some follow risk management based on every Trade they enter. Let’s say that the trader’s capital is $1000, for example. He follows the risk management of a 5% risk capital on each Trade, meaning that the stop loss is only $50 and not More than this limit, and the take profit is twice the stop loss, meaning that the risk-to-reward ratio is 1:2 and it maybe 1:3 or 1:4 (depending on the strategy you are working on).
Risk management is not limited to one Trade, day, or month. You can follow utterly different risk management methods than any other. Still, if specific criteria do not apply to it, then you are going the wrong way and must pay attention.
Standards to be met in Risk management
Risk Percentage
Do not risk more than 1% to 10% of the account to remain in the market for the longest possible period to trade on the following days. The market is full of opportunities, but if you are outside the market, you will not be able to take advantage of the opportunity that you have wished for a long time; that will be the end of the game, and you won’t that to happen, right?
Take profit 2x or more.
Take profit is more than the stop loss. Either it is doubled or more because, in the case of losing two consecutive trades, one winning trade can compensate you for this Loss (the take profit may be equal to the stop loss, but that also depends on your strategy)
Commitment
It would be best if you were committed to Risk management you set for yourself, whatever the circumstances. If you cannot do so, there is something wrong with your capital management or how you implement capital management.
Strategy
Is the strategy you are working appropriately with the capital management that you set for yourself? The management of capital must be in line with your plan, and it is desirable to determine the strategy in which you work first and then manage the capital because the strategy comes first according to selecting the appropriate work time for you.
Why is risk management so important, and why do traders lose out by avoiding it?
It is always advised to risk a small percentage of capital because whatever strategy you work with is successful and achieves fictional profits, the risk is incoming, and it is possible for a loss, even if twice every 10 trades, If you do not follow risk management, you are inevitably out of the market and will waste your money, and your psychological state will not be well. Risk management preserves your money and health, which is much more critical.
The lower the percentage you risk, the better, as a bit of profit is better than a significant loss. By practicing risk management for one or two years, you will become proficient and experienced in managing capital at that time. If you want, you can increase the risk, so do not rush to Big profits. And be patient; you are in an investment market.
Trading addiction: why do traders lose if they trade a lot?
Trading addiction
Are you an addict in trading forex? You will discover the answer to this question on your journey to the world of forex trading. If you do not follow the steps and instructions you set for yourself, you will be addicted to trading forex. This is not a defect, but you must discover the answer to this question and try to fix it as soon as possible so you do not fall into more losses.
For example, if you lose 5% to 10% of your account in one day, move away from the platform entirely because the psychological factor is significant. Try not to worry about trading forex, and go to any place you would like to get out of this situation so you can continue trading forex again.
Remember, the important thing is to stay in the market as long as possible
The capital is insufficient
Many traders think that Forex trading is a treasure and full of money, and they must exploit it as soon as possible and harvest what can be harvested from the money, so they deposit $20 or $50, etc.….
you can start trading forex with this capital, but your psychology will not Be stable, and you will not be able to do strict risk management for such an amount of the account knowing that it is possible to double this small amount, but in the end, you will lose your account because you did not follow the Risk management, so what is essential in the trading forex is to remain as long as possible in the market, and your capital is increasing at a reasonable rate
The right amount to start trading forex
Firstly, if you are a novice in forex trading, you must work on a demo account before you deposit in a real account in order not to waste your money and keep it as much as possible, and if you can manage the strategy and manage the capital that you work on, the least suitable amount you can start trading forex is $1000, and it is preferable to have the demo account at $1000 as well (meaning that the amount that you will practice with is the same as the amount in the real account)
Leverage (Choose the proper leverage for your account)
Many traders (especially beginners) increase the leverage to a maximum that may reach 1: 2000, and the account size is very small and does not bear this high leverage, as leverage is an integral part of Risk management, so you protect your account from a high or undesired risk. Of course, profit and Loss will decrease by reducing the lot
How to obtain capital?
Money
There are 6 ways to obtain capital to start trading Forex; choose what suits you
1 – Obtain capital by Saving
The first method, common among people, is saving, but saving loses its value over time due to inflation, which is considered the number one enemy of any government in the world. Therefore, if you are thinking of saving, I do not advise that. Letting the money work for you is much better than putting it next to you.
2 – How to Obtain capital by copy trading or investments
To obtain capital through copying or investing in one of the investment portfolios, you must first have some money to deposit and start investing. Over time, this investment will grow little by little. Still, the problem here is that this method carries with it several risks.
The first is that you are likely to lose the entire amount of money you have deposited, and it is also possible that the company or investor you want to invest with will defraud you. Therefore, if you have money that you want to invest in, first choose a good and reliable company, and second, be assured that you may lose this money at any time. Because the person who trades with it may make a mistake at any moment, you cannot blame him.
3 – Forums Bonus
This method is excellent if you do not have money to start trading Forex and have good knowledge of Forex trading. Many companies have forums and websites where traders can share helpful information. In return, you will get money for participating in these forums. Of course, each company has its own rules and policy for the bonus system it gives you in return for your participation, so please read the terms and conditions carefully before joining any Forums.
4 – Welcome bonus Or No deposit bonus
bonus
This method cannot be relied upon as a primary source of capital for trading Forex because the bonus that the companies give you is a one-time bonus, and you will not be able to use it again. Also, the amount is very low for you to start making money in this field. The purpose of this bonus is that the companies give it to novice traders to attract more Traders and obtain a more extensive customer database, but it’s also not wrong to get a Free bonus, and after you get some profits, you can withdraw them; Free is always good, right?
Please note to read the Bouns Terms carefully before applying
5 – Expert Adviser (EA)
This method is similar to investing, as you must have money to start Forex trading. However, in this case, you will not give your money to someone to trade with but rather to the automated trader / Expert Adviser, who will trade with it based on a trading strategy designed for it. This method also carries risks because you may lose all your money. If expert advisors are good, why don’t all traders use them? However, the strategy used determines whether or not the EA will be profitable.
6 – Prop firm
In my opinion, this is the best way for get money to trading Forex. It is funding from companies for traders with experience in the field of Forex trading. You will get funded after you pass a challenge to prove your worth as an experienced trader. I do not recommend starting with financing companies if you do not have sufficient experience in trading forex, and of course, this Funded account is not for free. Still, you pay a small Fee to start the challenge, and if you pass the challenge, you will get the funded account.
Pass Prop Firm challenge with HFT EA 2025
7 – Forex Trading competitions (Demo)
This is also an excellent way to earn capital. Many Forex companies hold weekly and monthly competitions, and the winners receive cash prizes or a bonus to trade with. This is an excellent opportunity to test your Forex trading skills and earn money. Also, do not forget to read the Terms and conditions for each Demo contest you participate in because every company has its own rules.
2 – The psychological factor
all about feelings
The second reason will undoubtedly be your psychological state while trading forex, so the following steps are unimportant if your psychological state is not good.
Example: John finished his work time in a Contracting company after he achieved the highest percentage of sales that month. He was on his way to the elevator going home when his manager met him, and he was pale-faced because of papers he had not completed. There was also an argument between John and the manager. The manager Deducted 3 days from John’s Salary, and when he went home, he threw his belongings on the ground, was miserable and angry, and poured his anger on his wife and son (knowing that he usually treats them kindly)
Do you think John’s psychological condition was good?
At first glance, you will say, of course, no, but His psychological state was perfect. Still, because of a tiny problem, it led to an exaggerated problem that affected his entire day and his family as well.
Can John trade at the end of the day?
If his psychological state is still bad, then it is not recommended to trade at all and stay away from the chart entirely until his mood improves.
What do you benefit from previous events?
- It would help if you separated work from the personal relationships between your friends, colleagues, and family.
- Don’t let little things affect your day or your mood
- Focus on the positive and handle difficult circumstances with kindness and wisdom
Trading forex by Emotions, not by logic
As we mentioned earlier, the trader’s psychological state is critical, so it is essential that the trader first trains on a demo account for at least three months to train psychologically and scientifically and to practice patience as well.
What happens if your emotions control you when trading forex?
You will make random decisions based on your psychological state at the moment of making the decision. If it is good or bad, the decision will not be correct and will not be based on knowledge and thoughtful analysis.
- If your psychological state is terrible, then you will search for the pair that made you lose, and you will want to take revenge in any way.
- You will make overly optimistic decisions based on weak signals if your psychological state is well.
Trading forex with feelings and emotions does not produce a positive result. Decisions are made based on knowledge and a thorough study, as haste is an attribute that is sometimes not good; trading forex needs to study price movement, the psychological state in which you are a significant factor for your decision-making, so be always positive so that you can make positive decisions (based on your analysis and logic).
3 – Choose the right strategy
Trading strategy
trading strategyAs mentioned earlier, all strategies achieve profit, but are you correctly applying the strategy? The strategy is one of the most critical factors that make you lose while trading forex because if you delve into the concept of strategy, you will find that there is someone who tried this strategy on a demo account and learned this strategy and understands all Its aspects, so this strategy became profitable for him. Still, it does not mean that it makes profits for you. When you apply the same strategy, there are conditions You have to stick to, for example:
Is the strategy suitable for your lifestyle?
- For example, an employee who works from 8:00 am to 8:00 pm and wants to work For two hours only and then goes to sleep, will he fit a strategy that needs violent market movement? Of course not, because the violent market movement begins with the interference of the London Stock Exchange and New York from 3:00 pm until 7 pm (GMT+2). He will not be able to make profits at this time. What is appropriate for him is swing trade; in this case, he can trade at any time and do the analysis on a daily time frame. It will be long-term And leave the Trade for a week and maybe months.
Have you tested the strategy?
- Of course, this strategy you use it for the first time in forex trading, but you know some information about it, which may help you in trading forex. But it is essential to preserve your capital and not risk it now; it is highly recommended to test this strategy on a demo account first for 3 months at least so that you know everything About this strategy and know how to avoid losing trades and achieve the maximum profit possible through this strategy. If, over 3 months, there is a profit of 70% or more in total trades, then this strategy is successful (most strategies depend on this percentage)
Trading against the general trend (the trend is your friend)
You will find that most strategies always advise and support trading forex with the general trend of the market and do not trade against the general trend because the market is a mirror that reflects traders’ decisions, such as the trend. For example, it is unreasonable for 80% of traders to buy, and you sell depending on only 20%, hoping that the price will fall for a retracement. If the price drops, the movement will be too slow, and there will not be momentum to push the price down.
Trading on more than one pair
This principle is not wrong, but in the beginning, you need to study the movement of one pair only, be able to do it, work on it for some time, and then move to another pair so that you can make four currency pairs, for example. This number will be perfect, and I do not advise increasing it.
4 – Failure to adapt to market conditions
World events
When trading forex, many economic events affect the market negatively or positively, so the trader, in this case, when natural disasters or economic events occur … etc., has to make a specific decision
1 – Either to move away entirely from the market for not understanding what is happening in the market
2 – Join the risk-takers and enter the market at this time
The choice is not easy. One of the most critical factors that make traders lose is haste and not making a correct decision at the right time. If you want to trade at such times, you must have enough knowledge to realize what is happening in the market in terms of economic events, news … etc
Forex calendar
The economic calendar contains many economic events with specific dates and times before they happen. It also shows the strength of each news impact in previous times and how the Forex market reacted. This will help you identify the news’s impact next time and predict whether it will be positive or negative.
What should you do for strong/medium and low news impact?
To trade with news, you must be well aware of it because news with a high impact on the chart becomes very strong. Medium news may also affect currencies, but weak news will not have a noticeable effect.
Therefore, if you are a beginner trader, it is highly recommended that you avoid trading forex during news events, whether their impact is strong or weak; just watch and learn.
Follow the Calendar events through…
Geopolitical events
Many events may occur in the market without being on the economic calendar, such as political instability, tensions and military conflicts between countries, and terrorist threats.
Natural disasters
Such as volcanoes, hurricanes, earthquakes, and tsunamis.
What should you do if an intense event happens in the market?
Usually, there are safe havens that traders resort to, such as gold, JPY, and sometimes the CHF.
These currencies don’t need to rise in the event of geopolitical events or wars between countries, but it is likely to happen. If you are not sufficiently aware of what is happening in the market or the outside world of wars and conflicts, you should avoid trading forex because your money is at risk if you decide to enter the high-risk market (Forex) without a good study.
5 – Overtrading
Overtrading
Overtrading certainly leads to more losses because deciding to enter a trade comes after studying the market situation and economic events. Let’s assume that after deciding to enter a losing trade, you choose to enter again; ask yourself whether this entry was based on a logical or hasty decision. Did you plan to enter another trade if the first Trade was lost?
If the answer is yes, then there is nothing wrong with entering another trade, but if the answer is no, then you are now trying to fight the market. This method will undoubtedly lead to more losses, and there will be no profit in the long term if you follow this completely ill-considered approach.
Sometimes, the trader thinks that as long as the capital is small, entering into many ill-considered trades is okay. Still, with commitment, capital management, and studying the Trade well before entering into it, you can turn this small account into an extensive investment account.
6 – Fear
Fear of losing and success
Is there fear in the world of forex trading? Actually, yes, there is fear of several things.
Fear of losing
In the world of forex trading, we trade with our money, and we can lose this money at any moment. In the event of a loss, we will be overcome with frustration and extreme sadness, and of course, no one wants to feel such feelings. Therefore, we are cautious about making logical decisions in trading. This extreme caution, as well as monitoring the chart after opening the Trade, makes the trader constantly afraid of losing the money he worked hard to obtain.
Fear of winning & being successful
Is there a fear of success? You may hear this sentence for the first time, but it exists, especially if you are a trader who loses a lot. You may be afraid of being a successful trader, and what prevents you from doing so is change, such as changing your trading style or strategy, etc., because change also brings a psychological shift. People prefer to stick with what they know and do not like change, So try to step out of your comfort zone and try other things you know are in your best interest.
“Fear will control your mind if you are not in control”
7 – Greed
Greed
Simply greed does not make you abide by any of the previous reasons.
- When you try to enter into a trade and you see that it is highly successful, you will risk more than 10% of the account, the percentage may reach 100% of the account without committing to capital management.
- In the case of extreme fanaticism, your psychological factor is not suitable for trading, and you have debts and obligations; you will try to enter a trade even though your situation does not suit trading at this time at all.
- It is hazardous to test the strategy you want to work with for a month or less without taking enough time to understand it and then trade directly for the need for money as soon as possible.
- Depositing $20 at the beginning In the hope you win $1000, and when you lose, you deposit $50, and so on … etc. Ultimately, you will be surprised that you have deposited at least $1000. If you deposit $1000 in one go, you will make good profits and find it hard to lose your capital.
- Trading at a time of severe news in the market to get big profits in violent movements and multiply the account 100 times (delusions), try to ask yourself this question: Why might traders enter a trade they do not know anything about, and more than 90% of them will likely lose at a time?
- Increasing the leverage to open the most significant number of Lots will make the account unable to bear high risk, resulting in the account’s Loss.
8 – Know your Enemies
There are many enemies when trading forex, these enemies want you to lose, and I am not talking about the circumstances you are going through, but real enemies who want you to lose so that they can win, and these enemies are the market makers.
Market makers are the liquidity providers in the market and we can say that they are the ones who control the market because they are the owners of the large positions that in turn move the market. You and I cannot move the market with some of the lots we open weekly. Market makers are large companies, banks, hedge funds, and investment portfolio managers.
Why do the market makers want me to lose?
Let’s say you opened a trade on the EUR/USD pair and this trade won and you closed the deal and then requested to withdraw this money. In your opinion, where will the money you withdraw come from? From the market maker or in other words, the liquidity providers in the market. On the contrary, in the case of a loss, if you lose a trade, the money you lost goes directly to the market maker. This is not a profitable relationship between the two parties. If one wins, the other will lose, and so on.
Knowing the tricks of the market maker is very important to avoid them in your trading. For example, the market maker deceives traders with an imaginary break of support and resistance lines and trend lines so that they enter trades against the movement that will occur, and then the market maker makes them lose.
9 – Being Right vs Making Money
When you analyze the market and you see that, for example, gold will fall and the opposite happened and there were signs that gold will rise more and these signs were very clear to you, what would you do in this case? Would you have defied the market and stuck to your short positions or would you have accepted that you were wrong and the analysis you drew up was not correct enough?
We all have one goal when we join Forex, which is to make profits, right? If a signal appears telling you that you will not be able to make profits if you continue with the positions you have, then the safest option is to close these positions so that you do not lose more and more. If there is a good opportunity to open buying positions, you can take advantage of this rise and buy instead of selling.
There may be factors that prevent you from making this decision. For example, you may be a professional trader with more than 7 years of experience in Forex, but even with this experience, arrogance may control you and you may keep these positions open even if you know that you may lose these trades.
10 – FOMO
Patience in Successful Trading
Have you ever wondered when Trading forex and analyzing for a past period of time why I did not take advantage of all these opportunities? In fact, you cannot take advantage of all the opportunities available in the market because the market has opportunities 24 hours a day and we do not wake up 24 hours a day, so it is natural that you miss some opportunities or even may not pay attention to some opportunities if they are available while you are in front of the chart.
Here comes the fear of missing out (FOMO). This feeling may put you in a state of constant panic in the event that you see an opportunity but this opportunity has not yet formed, but the fear of missing out on this opportunity may make you enter this trade ignoring many factors such as the news and the appropriate lot size for this trade. and you may ignore putting the stop-loss despite the lack of confirmation that this trade is good or not.
FOMO may be a hidden enemy that prevents you from making profits. If you ask yourself whether the market has limited opportunities or not, you will answer, of course, that the market has unlimited opportunities. This is indeed true, but when the opportunity you are waiting for comes, you are overwhelmed by a sense of wealth and the euphoria of quick profit.
We all want to get the maximum possible profit from Forex, but this method is not useful at all because this feeling erases logical thinking and Risk management and you will ignore your trading strategy, so FOMO is not a good thing at all.
11 – Crowd sentiment
There are many traders in the Forex market, each with his way of analysis and lot size, but most of them have some common characteristics, which is that they interact with the market at specific levels For example:
When the price meets the trend line or the support and resistance lines, these areas represent supply and demand areas for traders, and they are interested in opening positions at these levels. In this case, crowd thinking will control you.
Joining the crowd is not a bad thing, but it is not a good thing either. It is a double-edged sword if you do not know how to use it well. You may join the crowd when you see many traders posting their trades on social media to buy a EUR/USD pair, but your analysis of this pair does not support the buying. You now have two choices: join the crowd, which consists of many analyses and ways of thinking, or trust your analysis and enter the trade against the crowd.
Joining the crowd may be good for you as it adds more information to your knowledge and not as a decision to enter a trade or not. The crowd is not always correct, right? If you join the crowd without trusting your analysis method, you will lose this trust over time and if no one helps you in making the decision, you will be completely lost.
Conclusion
Forex trading is a vast field without a treasure or a sea of money. Still, it has excellent profits, and you can get what you want from it, as many traders worldwide do. Still, there are straightforward conditions to profit from this field, and whoever violates these conditions will face a severe storm that will eat His account.
So, always remember that your profits are entirely equal to fatigue, thinking, and your market study. The more you want more profits, the more tired you are, and the more studying and adhering to the standards that make you a permanent winner. Do not give in to greed. Be always a student of knowledge and strive for more. You will receive What you want in the end.
