Quitting forex trading? Then you’ve probably fallen for one of these traps! There are plenty of reasons not to trade and many people never will, but that doesn’t mean you have to quit.
Forex trading is a difficult thing to get right, no matter what anyone tells you. In fact, up to 96% of forex traders give up!
But there are ways of mitigating these traps and securing a fortune, you just need to learn how to spot them.
Professional traders are less likely to quit for the reasons we’ve highlighted, they’ve most likely already gone through them and continued on.
Every trader faces these issues at some point and wants to quit, it’s completely normal.
In this article, we’ll look over the top reasons people quit forex trading and how you can prevent them from happening to you.
Top reasons people quit forex trading
There are tonnes of reasons people quit forex trading, but these top three are often prime instigators.
1. They’re losing too much money
Losing too much money tends to be the biggest reason why people quit forex trading and can be a result of the other reasons on this list.
As a beginner, your first goal should be survival. It is very unlikely that you will make much money when you start forex trading. How can you expect to be automatically successful?
You will probably go through a long rough patch at the beginning where you are just emptying your account. As crazy as it sounds, this is pretty normal.
And even when you start making money, you will still make losses. In fact, you will never be 100% profitable.
It’s all about measuring success. For many professional forex traders, a win rate of 50% is successful.
For such traders, to make such a rate work, they aim to make their losses as small as possible and their wins as a big as possible.
This often means getting out of a trade as soon as it starts going bad and staying in a trade when it’s going well.
What you can do
If you’re losing too much money, then you should probably consider trading less and in smaller amounts.
In fact, it is well-known that top forex traders don’t trade that frequently, in reality, the opposite is true - they only trade in specific situations when they know they’re going to make money.
Granted, of course, this takes a long time to recognise such situations!
Further to the above, if you start risking smaller amounts on every trade, your trading account will last a lot longer and you will be able to take advantage of more opportunities.
There is a great rule that many forex traders advise for people with this problem; only ever risk 1% of your trading account on every trade.
You should also put together a good risk management strategy and, obviously, don’t trade money you cannot afford to lose!
People who quit forex trading because they’re losing too much money very likely didn’t set themselves appropriate goals at the begin.
There are also some key things you should avoid doing. One that is often jammed down the throat of many beginners is: Stay away from leverage!
2. They don’t understand what they are doing
This is a huge problem for some beginners. They think when they start trading they’ve found the holy grail. In some senses, it can also be a precursor to the other reasons on this list.
It is highly likely that these individuals have bought into success stories, most of which are likely exaggerated, extremely unique or possibly even fake.
They are simply dazzled by the idea of how much money they can make, ignorant to the fact that forex trading requires a lot of skill.
They are also likely to believe strategies that have been given to them that promise them returns.
Such traders tend to rely on tools to make money instead of their own knowledge. They may strictly follow technical indicators and be completely ignorant of what the market is doing.
They don’t understand the principles behind price action and external factors that affect the market.
Just because you have money to invest in trading doesn’t mean you will make a profit. Money doesn’t always give more money; it can be easily wasted.
Only once you know how the market works, you’ll be able to make your money work for you. Would you invest in the restaurant business without knowing anything about how to run one?
What you can do
You can prevent this from happening to you very easily; teach yourself how to trade and keep learning.
There are a lot of ways you can do this, but first and foremost, you must start dedicating some time to learning.
You cannot expect one video, one article, one online tutorial or one course to readily prepare you for everything you need to know before trading forex.
Quite simply, as we repeat a lot at Trading Education, learning to trade forex is a never-ending process!
The minute you stop learning how to trade forex, you leave yourself open to making mistakes.
You should be careful here not to get bored and quit if you cannot invest the time required to learn to trade.
To get started educating yourself, check out our free forex trading course here.
3. They’re not disciplined enough
It is very possible that you are the exact opposite of the previous point.
You may indeed know how to trade forex and have studied hard to get to where you are today, but if you don’t know how to control your impulses, it can be problematic.
This could just be that you are not seeing results fast enough; you might want to see success now, but unfortunately, for most of us, success a process that happens over time, not immediately.
Forex trading is not a get rich game! To make a profit trading forex requires a lot of skill and experience.
But there are other causes of a lack of discipline.
It might just be that they don’t have the mentality for forex trading. It can be very stressful, especially day trading, which requires a lot of attention.
It might just be the case that you have a great and logical plan, but you just can’t keep to it.
What you can do
You can avoid this by learning to understand yourself better, specifically your trading psychology.
Trading psychology looks to understand what psychological factors affect how we trade. Every trader is different, that’s a given, but that doesn’t mean that some can trade and some can’t.
It is possible that you are trying to work a trading routine that simply doesn’t work for you. Maybe you picked up tips from a successful trader and applied them to your own routine.
While this does sound completely logical, not everyone has the same trading style; what works for someone else will not necessarily work for you.
To get around this, you can keep a trading journal and try different strategies and see what works for you. Find out what parts of strategies are working and what aren’t.
Then, you can take the successful elements and string them together to create a strategy that is unique and optimised for you.
You can also look to lower the stress associated with forex trading by aiming for less. If you really have a tough time dealing with stress, then it’s probably time to scale down and reanalyse the situation.
Though it may sound counterproductive in an industry that’s all about making money, too much stress can actually lead you to make more losses.
This is because the stress leads you to simply react instead of actually analysing the situation and taking the right action.
Another thing you can do is learn to control your impulses. Look out for moments where you’re about to break away from your trading plan and find a way to stop it.
Learn to say enough is enough.
What should you do when you feel like quitting forex trading?
Many forex traders feel like quitting but continue, nevertheless. It is, after all, a tough job, despite what people might think.
But there are things you can do when it all feels like too much.
The best thing you can do is take a break and spend some time away from the charts and find out what it is that makes you feel this way.
Push away all the distractions in your head and isolate what it is that makes you want to stop.
You may find that it comes down to a single issue, a single loss or mistake that happened that day.
Once you’ve found what it is that made you feel like quitting, you have two options; either you go ahead and try to tackle that issue or you simply learn to let go of it and move on.
In the end, many of the reasons traders feel like quitting boil down to one single problem; they don’t really understand forex trading, like in point three above.
eToro – Best Forex Trading Platform For Beginners
67% of retail investor accounts lose money when trading CFDs with this provider.
Key points
If you remember anything from this article, make it these key points.
- Losing money is one of the key reasons people quit forex trading. After all, you’re in it for the money!
- Many quitters don’t know what they are doing. They didn’t have the right knowledge in the first place, which is really risky.
- Lacking discipline can be a killer. If you cannot control your impulses it can be hard to trade, you need to learn to get a grip on them.
- There are several things you can do when you feel like quitting. Don’t just quit because you had a bad day trading, take steps to improve!
If you enjoyed reading this article from Trading Education, please give it a like and share it with anyone else you think it may be of interest too.