Reason #1 <ul><li>Not understanding what the Forex market is about </li></ul>Many retail traders make the mistake of treating the currency markets the same way they treat other financial markets. For example, even though the trading charts used in the stock and currency markets are similar (or even identical), the underlying natures of both markets are vastly different. To be able to trade profitably in the Forex market, you’ll have to first understand its characteristics and nature – don’t think that Forex trading is the same as other forms of trading!
Reason #2 <ul><li>Not understanding your position in the market </li></ul>There are many players in the Forex market, and each type of trader has different strengths and weaknesses. Many losing traders don’t realize that the trading strategies of one type of trader won’t work for the other types. For example, the trading strategies used by institutional traders will fail miserably for retail traders. This is because the strategies used by institutional traders are based on their strengths and weaknesses, which are very different from that of retail traders.
Reason #3 <ul><li>Not understanding the effects of </li></ul><ul><li>greed, fear, impatience and pride </li></ul>This is quite self-explanatory. Instead of using this knowledge as a tool to trade against other ignorant traders, losing traders often fall into the habit of suffering from these emotional effects themselves.
Reason #4 <ul><li>Listening to bad trading advice </li></ul>It’s easy to find Forex trading information and advice on the internet today. Unfortunately, most of this advice is provided by people who aren’t profitable traders themselves. While their advice is generally well-intentioned, the fact is that much of it is pure hogwash and cannot be practically implemented into any sustainable trading strategy. Be careful about where you learn about Forex trading from.
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