How do online Forex traders lose?

[StockyGuy]

Hi Folks,

This may seem like a strange question, but I'm interested in how online retail (like you and maybe me if I can pluck up the courage) FOREX traders lose their capital. What are the pitfalls, common and uncommon?

On this subforum, others forums, and OF COURSE on the actual FOREX vendor websites, a rosy picture of easy gains seem to be painted. Seems like just following simple patterns in volatile pairs at appropriate times (opening times, major events / news stories etc etc). Do commission and taxes mean that only the exceptionally skilled or lucky earn much consistent clear profit?

IN SUM, how would I LOSE my money trading FOREX if i so desired?:

 

[Kauri]

Hi Folks,

This may seem like a strange question, but I'm interested in how online retail (like you and maybe me if I can pluck up the courage) FOREX traders lose their capital. What are the pitfalls, common and uncommon?

On this subforum, others forums, and OF COURSE on the actual FOREX vendor websites, a rosy picture of easy gains seem to be painted. Seems like just following simple patterns in volatile pairs at appropriate times (opening times, major events / news stories etc etc). Do commission and taxes mean that only the exceptionally skilled or lucky earn much consistent clear profit?

IN SUM, how would I LOSE my money trading FOREX if i so desired?:

same way as any instrument, don't have a workable plan/market edge and don't use risk management.
Cheers
.........Kauri

 

[>Apocalypto<]

I tend to think you lose it faster then trading 10-4, as the monster run 24/7 5.2 days a week, many more opportuities to blow it during the day!

What u think Kauri??? :

 

[Stormin_Norman]

I tend to think you lose it faster then trading 10-4, as the monster run 24/7 5.2 days a week, many more opportuities to blow it during the day!

What u think Kauri??? :

dont chase the market & stick to your plan. for everyone.

personally i prefer like apocalypto to hold my trades for longer-term. but im a fundamental trader. i find holding my trades sees me gain more in the longer term. riding dips is easier when the trade is already in profit.

 

[disarray]

25 Rules

it's a good read

 

[ithatheekret]

never let winners become losers .

never hang onto losers

don't lose money whenever possible

hope is in a box , it will always stay there if your serious .

get in sync and stay there .

 

[Timmy]

On this subforum, ..., a rosy picture of easy gains seem to be painted.

I don't think that is correct.

Have you read through this thread?

 

[StockyGuy]

Some very nice points there, guys. Cheers!

@ Timmy: Yeah, you're right. People are quite down to earth here. But I guess it's a bit like survivor bias: the most vocal people on FOREX matters tend to be those doing okay or those just learning / starting out. The disasters don't stick around to discuss, I think.

 

[Timmy]

bit like survivor bias: the most vocal people on FOREX matters tend to be those doing okay or those just learning / starting out. The disasters don't stick around to discuss, I think.

Good point SG.

I think your OP asked a very good question. In that thread I referred you to there are issues raised which show that even traders doing everything right wrt to a trading plan and discipline etc. can still lose money in FX ... have to understand the structure of that market, how brokers/mms behave and the differences between them, etc.

 

[BentRod]

Stocky,
Best thing to do is open a demo account and find out for yourself.

The demo accounts have real time data and are a great way to learn.

The best platform I've found so far is Metatrader.

Plenty of websites that offer demo accounts...eg:

http://www.alpari-idc.com/en/metatrader4/open-demo-account.html

As far as a rosy picture being painted for Forex, I think it's just that it is marketed more. The fundamentals of trading are the same as stocks,futures etc.

 

[nizar]

The same reasons why stock traders lose.

*Holding your losers for too long
*Selling your winners to early
*No money management
*Don't use stops

Couple that with 24hour trading and the use of high leverage, and

 

[Stormin_Norman]

The fundamentals of trading are the same as stocks,futures etc.

i disagree. the technical trading may be similar, but fundamentally stocks are different to FX. FX are relative prices, stocks are absolutes, and because of this its relative economic differences between countries not performance in isolation by companies which dictates price movements.

 

[BentRod]

Gday Norm.

I probably used the wrong word there.

When I said "The fundamentals of trading" I meant the fundamentals of technical trading IE. position sizing, money management, profit factor, etc etc.

I wasn't referring to the fundamentals of a Currency/Country.

 

[Kauri]

i disagree. the technical trading may be similar, but fundamentally stocks are different to FX. FX are relative prices, stocks are absolutes, and because of this its relative economic differences between countries not performance in isolation by companies which dictates price movements.

Trading technically I quite often don't know what I have placed a trade on... if the pattern I am looking for is there I am on.. (obviously doesn't apply to when I am looking at rumours or for those who trade purely fundementally..)..
Pyschology is the biggest and for mine the most important aspect to any form of trading.. and also the biggest downfall... i.e

a rosy picture of easy gains seem to be painted

I know it wasn't meant in the vein I am using it, but that is the sort of psychology that almost always guarantees the decoupling of a punter and his money...

Cheers
..........Kauri

 

[julius]

thought I might add that it's incredibly easy to wipe weeks of profit away in a single trade

managing volatilty is hugely important

 

[tayser]

thought I might add that it's incredibly easy to wipe weeks of profit away in a single trade

managing volatilty is hugely important

oh yes.

 

[Boggo]

Hi Folks,

This may seem like a strange question, but I'm interested in how online retail (like you and maybe me if I can pluck up the courage) FOREX traders lose their capital. What are the pitfalls, common and uncommon?

On this subforum, others forums, and OF COURSE on the actual FOREX vendor websites, a rosy picture of easy gains seem to be painted. Seems like just following simple patterns in volatile pairs at appropriate times (opening times, major events / news stories etc etc). Do commission and taxes mean that only the exceptionally skilled or lucky earn much consistent clear profit?

IN SUM, how would I LOSE my money trading FOREX if i so desired?:

StockGuy, scroll down to the third post (I think) on this thread, worth a read.
http://www.mtptrader.com/showthread.php?t=1363

Mike

 

[Kauri]

a real easy way... take a trade on this swap... use the min stop of 10 pips ... and get get stopped out by the 10 pip spread..
Cheers
...........Kauri

 

[StockyGuy]

StockGuy, scroll down to the third post (I think) on this thread, worth a read.
http://www.mtptrader.com/showthread.php?t=1363

Mike

Great link, Boggo. Very interesting. It says don't do intraday FOREX trading -- never sell in under 60 minutes of buying. Damn LOL: scalping was what I was most interested in!

 

[BentRod]

I reckon Tayser and a few other guys on the LT forum think otherwise.

Don't count it out yet.