What does it mean to lose money?
If your initial Forex deposit gets down for more than 90%, it means that you lost it.
The web is full with trading systems and assistants promising that you would gain huge profit within the shortest time. Can you trust such promises?
First of all, we would like to ask why someone offers you to earn on Forex and why so many people lose their deposits?
How does a broker earn?
To answer the above questions, you need to understand what makes a broker’s earning. In this light, it will be easier for you to get the point of promises in the web.
An honest broker earns on spread (the difference between bid and ask). In other words, it is broker’s commission for your transaction in trading terminal. Normally, the more and longer you trade, the better earning of a broker is. But it is related only to honest brokers.
Here we are coming to the:
First rule: choose a fair Forex broker
How shall I trade Forex in this case, you would ask. Is it really impossible to earn on the Forex market? You can make money, though probability of your success is not as high as promised by all kinds of commercials . But an unfair broker will heavily limit you. In such companies human failures are smartly turned into profit.
Thus, making a deposit without making a thorough research about your broker is risky. The conclusion is obvious: choose your broker carefully! Check its regulation, find reviews of other clients on all relevant websites. Regular reports about disputes between a broker and its clients should be a warning note for you.
Second rule: control your greed
Cope with your greed. A miser pays twice and this proverb is absolutely true for currency market.
Let’s imagine the situation: you’ve put 100$ to your account and intend to make 1000$ for as soon as two hours. You are lucky if you manage to earn so, but it is only fortune. Your second trade will hardly bring the same result.
Third rule: be active
Get over your laziness. Education can’t take a couple of days (as wrongly represented by many companies). To become more or less competent in the Forex trading, you need at least 2-3 months. Besides, such training can in no way be free of charge.
Fourth rule: each trading system has its limits
Fourth rule is when you perform your trading without any system. As a rule, traders surf the web to find trading system and start to employ it without taking a demo trial or figuring out. But each person is individual and shall adjust trading system to their personal style. Set parameters the way you like: time of trading, terms and watch first results. But remember that earlier or later its potential will be exhausted and you will need to switch to a new system.
Reasons why you lose money
- Wrong calculation of volumes in relation to the amount of capital
- A big amount of trades opened in one direction, which cannot be closed on time under a quick market.
- Lose of control over opened positions due to a technical failure (PC goes down, no connection etc)
- Not submitting Stop Loss order for the time when you are not able to control the situation.
- A wrong expectation that price will move in the opposite direction is one of the main reasons of loss of all funds.
Conclusion
What do we have as a result? Loss of deposit on the Forex is, first of all, your error and unfair Forex brokers just take advantage of it. To prevent your damage, follow the above recommendations. Good luck!
Alexander Goryachev is a Forex analyst with 7 years of trading experience, who advises beginners in the Forex market how to trade effectively. He works for FreshForex
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