Trading Failure Why 90% Of Traders Fail

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Why Over 90 Percent of Forex Traders Fail

Why do most Forex traders fail? I believe that there are only two reasons. Learn what they are in this video.

By: Hugh Kimura | Updated: February 21, 2020

The exact stats on how many Forex traders fail will vary by who you talk to. But the fact is that the vast majority of retail traders will blow out their account.

If you are wondering why this happens, there are basically only two reasons. In this video, I’ll go over the reasons, so you know exactly what to focus on.

I hope that you use this information to avoid losing your entire account, like most retail traders do.

Hey there, there’s a common question that I get on my blog and that is:

Why do 95% of Forex traders lose money?

There are different opinions on this and obviously, there are a lot of small things that contribute to why traders lose money.

But I just want to address the two things that I feel are most important, when it comes to losing money in Forex trading.

Reason #1: Not Matching Your Trading System to Your Personality

The first thing to look at is your personality.

You need to match your trading system to your personality. The biggest mistake that a lot of people make is that they try to go out and find a trading course or system that makes a ton of money.

…and that’s great.

The system needs to be proven and whoever trades it needs to be making money. However, if it doesn’t match your personality first, then there’s a very, very low probability that you are going to make money trading that system.

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This results in the trading silodrome. A silodrome is a circus act where people ride a motorcycle or a car around the inside of a silo.

They stick to the walls because they are going so fast, and that is how I kind of see the trading experience, sometimes.

You hop from system to system, on the same cycle, until you lose all of your money, or you give up out of frustration.

…and that’s not fun.

So the trading method you use needs to be proven, but it doesn’t need to be the most profitable system in the world. In fact, you might actually do better if you trade a system that is not as profitable, just because of your personality.

There has to be a good match. It’s like your relationship with your husband or wife. It has to be a good fit, or it won’t work.

That’s the first reason people lose money.

Reason #2: Mindset

The second primary reason people lose money trading is because of mindset. What do I mean by that?

Your mindset is the result of everything you have been taught in the past. All of your traumatic experiences and all of your positive experiences contribute to your mindset.

This ties into your personality, but mindset goes beyond that. For example:

  • How do you feel about money?
  • How do you feel about rich people?
  • How do you feel about success?
  • Are you afraid of success?
  • Do you think success will bring bad things to you?
  • Do you think that it will be too much work to be successful?

These things are not necessarily conscious. They are usually in the back of your mind and you have to dig into your subconscious to figure out what you are really thinking.

There are some exercises for this and they is not the point of this video. But if you want some exercises on how to figure this out, read through the blog and there are a lot of posts on mindset.

But it’s enough to say that the major reason that people lose money is because of mindset and the way that they think about money, the way they think about wealth and the way that they think about success.


So those are the two reasons why most traders lose money. I know that this was a very broad overview, but I think it will help you really think about the smaller things under those two categories, that are tripping you up.

I hope that you realize that these smaller issues “roll up” to these two primary things. Once you can learn to get these two big things under control, learning to trade should become much smoother.

It’s obviously not easy and everyone knows that. But it is a skill and just like any other skill…it can be learned.

Why 90% of Traders Fail or Lose Money

Hey! Its Sasha Evdakov founder of Rise2Learn and in this video episode I want to talk to you about the famous phrase of Why 90 Percent of Stock Traders Lose Money.

There are a few different reasons why this statement came about. One of the reasons is that people think very directional or they focus very much on what they think and they stick to it they won’t change their mind, they won’t go up out of their comfort zone.

For example if you’re a trader who only thing directional buying low and selling high or on the short side selling high and buy things back lower then that’s the way you’re going to try to trade, you’re going to trade that directionally and you have really 50-50 chance at getting it right or maybe a 33.3 chance if the stock standstill.

Basically can go up, it can go down or you can stay where it is but really you have a 50-50 chance at getting it right. Now the problem here is people get impatient. So even if you do get things right you might be impatient and you might get out way too soon or the stock may have some confluence behind it, dips a little lower and then you get out and then stock continues higher.

Again you’re getting out too early and you don’t have the patience.

Finally the third thing is that people are hoping and praying. If the stock actually tanks a little bit lower and then it goes down even further you know you’re stops you know where you’re comfortable with you’re having trouble sleeping at night then all of a sudden people start hoping and pray and in this business hope and prayer does not work well that works great for a lot of other things and other industries and other areas of life however in the stock market you need to eliminate hope and prayer and you need to stick to a proven strategy.

You need to stick to the numbers you need to stick to your risk and reward, your plan and your stock trading system that works a lot better. Now if you’re trading options and you don’t understand time decay then you’re probably losing money every single day and you definitely want to stop trading options immediately until you understand the time decay behind option premium.

If you’re buying something like a long put or a long call after the stock either going up or down then you’re probably losing money every single day behind options. Again it’s something that’s just losing money and decaying overtime and this is what a dumb money does not the smart money, the dumb money does.

Don’t just buy a long put or a long call just in hopes that the stock move in on one direction or another this is not with the institutional doing this is not what’s the professional investors do. They trade options spreads they trade things like butterflies, they trade things like calendar spreads maybe iron condors, all kinds of different things but they put the time value in their favor not against them.

Now you guess of course there are certain instances to trade long puts and calls but in general if you don’t understand time decay and you’re trading options don’t trade options because that’s what the dumb money does.

In addition why over ninety percent of stock traders lose money is because they’re looking for the Holy Grail indicator. They’re looking for the Holy Grail stock chart or even the newsletter that’ll make them a fortune, they’re looking for somebody to send them are alerts on what to trade or they’re looking for this magic indicator and they have their whole chart system set up like a circus.

It’s so busy out there they have maybe 20 indicators on there, they might have the parabolic sword, they might have the Bollinger Bands, the stochastic, the Mac. All those things and they don’t know what to trade off of them.

I mean what you look at when you have a circus for a chart you really don’t know so that’s what you got to remember is that keep things clean and simple. The only true indicator behind trading stocks is the one that you create, the system that you create for yourself and the methodology behind the way you trade.

The only way you’ll be consistent is when you find something that works for you and then create and develop a system around that based on your risk and reward strategy. All these reasons add up to why ninety percent of the stock traders lose money and eventually it bankrupts them because they over leverage on their account they try and get their money back and maybe they start feeling confident and they don’t understand the principles behind the money management and then again their account becomes toast and eventually things lack and they’re gone trading.

For you to be able to trade for a lifetime or make investment or grow money from your money, you want to make sure you have a good proven risk and reward strategy. You can be a horrible trader but if you have a good risk and money management strategy you will survive for another day, another week, another month and another year.

Stick to your rules stick to your system and that way you can continue moving forward now of the 10 percent that do survive in trading they make a fortune because of the ninety percent of the other traders that lose their fortunes so all the money that the ninety percent of the trader lose, all that 10 percent that’s remaining of that profitable traders gets that ninety percent of the money or the wealth.

This is what’s very attractive for a lot of people in the stock market, it’s because they’re reaping the financial rewards or the leverage power behind the stock market but really this is where it’s coming from, it’s from the ninety percent of traders that lose money.

Don’t get sucked in and become one of those ninety percent. In either case I hope this video was helpful to you.

Thanks for watching!

Remember to do what you love, contribute to others, and most importantly live life abundantly.

Forex Trading Failure – Why Most Traders Fail

Most aspiring Forex traders unfortunately do not ever achieve the success they desire when starting out. There are a number of psychological errors at work here that contribute to failure in the forex market. This article will focus on one of the primary psychological errors that hold traders back from achieving their desired results; over-complicating their forex analysis and strategy. It is extremely easy for forex traders to fall into the trap of thinking that their method needs to be technically difficult to understand or that they need to do extensive analysis in order to consistently profit. On the contrary, in reality the emphasis placed on trading methods and trading systems is way out of proportion to the relevance of the topic towards long term trading success. A simple forex trading strategy designed around a clean price chart is all you need, technically speaking, to build a trading method that allows you to profit consistently.

Do your charts look like abstract modern art?

It is not uncommon for aspiring Forex traders to start out with a simple trading method but over time add indicators and other analysis tools to it, before long it becomes a mess of confusion that when applied to your trading screen can literally take on the appearance of a piece of abstract modern art. It is crucial that any aspiring Forex trader understand the psychological origins and implications of using overly complicated trading techniques. The natural tendency of people who do not make very much money to assume that people who do make a lot of money are employing some super complicated technical secret that leads to riches is at work here. It is human nature in our modern day capitalistic society to assume that making a lot of money from relatively little work is simply not possible, which is generally true out side of the world of financial speculation. Therefore, when applied to the world of Forex trading, this tendency drives traders to read every economic release and try to analyze its market implications, as well as place numerous lagging indicators on their price acton charts. As those of us who have traded for any period of time will attest to, more is not often better in the trading world.

Over-complicating your forex analysis and strategy is one of the first psychologically induced problems that traders will encounter. Unfortunately in the world of trading one psychological mess up usually leads to another and once the ball gets rolling it is only after losing more money than you care to remember that you actually realize you are doing something wrong. So the remedy to this problem is to just accept the fact that it is almost always better to employ a simple forex trading method that makes use out of a clean price action chart than to spend hours combining different indicators and trying to understand their mathematical foundations or trying to program expert advisors and the like. The cold hard truth about forex trading is that there is no magical system or formula that will allow you to make insane profits from a tiny amount of money; it is just an inherently flawed concept to believe that. There are however simple forex trading strategies that can reduce the emotional implications of trading and allow you to steadily make consistent profits over time.

Why trade with price action?

The most straight forward and simple yet effective way to trade Forex is by using price action analysis. Forex trading with price action analysis is the best way to get started out on the right foot; so that you do not jump start an avalanche of emotional miscues. Take a price chart and remove everything on it; indicators, volume, everything but the price bars, candlesticks are fine. Now you have a clean price action chart in front of you, price action is the core data of any market; it is all that should and does matter to a Forex trader. When aspiring Forex traders apply lagging price indicators to their charts they really are just clouding over the important information, an indicator that visually represents past price movement is not going to tell you anything that you can’t already see from knowing how to analyze price action. Clean price action charts are the only analytical tool you need to employ in your forex trading plan.

The main reason why we only need a clean price action chart to successfully navigate the forex market is due to the fact that trading success in forex or any market is almost entirely relent upon an individual’s level of discipline and emotional stability. The only thing that complicated indicator based trading strategies end up doing for traders is make it more difficult to stay disciplined and emotionally stable. So, since trading success is mainly dependent on discipline and mind-set this rules out the emphasis on method , it only makes sense to trade forex using a simple trading technique like price action analysis so that we can use our trading method to help maintain discipline and emotional reaction.

Trading requires a different skill set than other professions

When we trade using a simple Forex trading strategy like price action analysis we open ourselves up to the possibility of mental clarity on market movement. When we see price movement clearly and not covered up by colorful lines and indicators we greatly increase the odds of arriving at our desired destination of long-term Forex profitability. One of the biggest obstacles any Forex trader will have to overcome is the obstacle of their own mind. Our minds are naturally wired to work against us when it comes to Forex trading. Most of the traits that lead to success in other professions simply do not apply to the world of Forex trading. Take a doctor for example, a successful practicing doctor my decide to play his or her hand in the Forex market because they’ve heard you can make a lot of money relatively quickly from trading and assume since they made it through medical school they should have no problem learning to trade. The problem with this scenario is that the habits learned from medical school; intense studying, over-analyzing studying material, and the overall more-is-better approach that equals success in school and at most jobs, does not equal success in the Forex market and will generally be detrimental to progress.

Discipline and conscious control over emotional state are the two factors that determine forex winners from losers. Emotions help us in most other professions but when it comes to trading success they are our worst enemy, in other words, we are our own worst enemy while trying to succeed at forex trading. Trading a simple forex method such as price action analysis is the very first step that any aspiring trader should take if they truly want to excel in the utlra-competitive Forex arena. Clean up your price charts and start using price action to trade Forex, it is the most logical first step towards achieving your goals as a trader.

To Learn More about Price Action Strategies , Check out My Forex Training and Coaching Course here

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