Why people blow out their account after a good start?
If you are not new in Forex, you will have seen that most of the people have a bad start in this industry. They also accept this beginning because they know they need to work on their strategy and plans. Some people are lucky and they have a good start. Some people work hard, they maintain their daily routine, they check the conditions of the trend and volatility before placing trades and they get their desired success. If you think it is just their hard work, you are wrong. It is also their determination and their practice that gives them the profit. Though these people have a flying start, not many can hold on to it in the end. They eventually start losing money. This article will try to explore the reasons why people lose money after having a good start. There are thousands of reasons and we will only focus on the main reasons. If you are making money consistently in Forex, you also need to read this article to avoid the disaster in the future.
Overconfidence and trading
Overconfidence is another key reason for blowing up the accounts. The professional UK traders suggest the rookie traders trade with a stable mindset. Winning a few traders doesn’t mean you have discovered the holy grail. Always remember, every system has some drawdowns. No matter how skilled you are at trading, you will always have to lose trades. So never become an overconfident trader as it will ruin your career.
People become overconfident when they make money. They have seen how traders have been struggling to make a small profit and when this reward comes to them, they do not know what to do. They become happy, they feel proud and they become cocky. They begin to take trades which involves high risks, volatile trends and also against the market. It may seem impractical in common sense but they have lost their sense of judgment. They think they rule the currency world and this is how the industry takes back the reward that was awarded to them.
Use of leverage
When you deal with the most traded currency pairs, it’s very natural to use high leverage account. But you need to be extremely careful about your risk management policy. If you risk more than 2% in any single trade, there is a good chance you will blow your account within a short period of time. So stop taking unnecessary risks, even if you happen to have the perfect trade setup. The outcome of each trade is completely random and no one can tell you with 100% certainty that you have a winning strategy or trade. So always be prepared for the worst case scenario, as it will save your investment in the long run.
They try to stand out from the crowd
As we know that the groups cannot make money because they take the most common decisions, overconfident traders try to stand out from the crowd and place trades. It is no surprise that they lost money and they have to close the trades. Many try to go against the market and they paid the price.
Forget the reality and set unrealistic goals
The goal that you set in front of you should be realistic and it should match with your level of knowledge and skill. If you are working on a boat but you are given the task of working in a submarine, it will only bring catastrophe to the Mariners. A good start makes people forget the reality and they set impractical goals. As they have come this far, they can also achieve more if they try harder, this became their belief and they ignore all the analyzes and trends. Think very carefully and take your steps with proper caution. Never think your luck will help you to become a successful trader. You have to a very disciplined trader to save your investment and make a consistent profit.