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Learn more. Who loses money in forex? Ask Question. Asked today. Modified today. Viewed 92 times. Improve this question. Hadman Hadman 33 2 2 bronze badges. In stock market it is not at all necessary for anyone to lose for you to gain.
It is not a zero-sum game, there's always new money flowing into the system. Anyone who buys high and sells low loses money, just like anyone who buys low and sells high makes money. You don't know whether the person you're interacting with is making a profit or loss or neither on the transaction. Between spread, slippage, and swap fees, it looks like it's the brokers winning and the traders losing.
Add a comment. Sorted by: Reset to default. Highest score default Date modified newest first Date created oldest first. If you are buying then someone is selling. If you are selling then someone is buying. Improve this answer. Sign up or log in Sign up using Google. Sign up using Facebook. Having the "beating the market" mindset often causes traders to trade too aggressively or to go against trends, which is a sure recipe for disaster.
Most currency traders start out looking for a way to get out of debt or to make easy money. It is common for forex marketers to encourage you to trade large lot sizes and to use high leverage to generate large returns on a small amount of initial capital. You must have some money to make some money, and it is possible for you to generate outstanding returns on limited capital in the short term. However, with only a small amount of capital and outsized risk because of too-high leverage, you will find yourself being emotional with each swing of the market's ups and downs and jumping in and out and the worst possible times.
You can resolve this issue by never trading with too little capital. This limitation is a difficult problem to get around for someone who wants to start trading on a shoestring. Otherwise, you are just setting yourself up for potential disaster. Risk management is key to survival as a forex trader, as it is in life. You can be a very skilled trader and still be wiped out by poor risk management. Your number-one job is not to make a profit but rather to protect what you have.
As your capital gets depleted, your ability to make a profit is lost. To counteract this threat and implement good risk management, place stop-loss orders, and move them once you have a reasonable profit. Use lot sizes that are reasonable, compared to your account capital. Most of all, if a trade no longer makes sense, get out of it. Some traders feel that they need to squeeze every last pip out of a move in the market. There is money to be made in the forex markets every day.
Trying to grab every last pip before a currency pair turns can cause you to hold positions too long and set you up to lose the profitable trade that you are pursuing. The solution seems obvious: don't be greedy. It's fine to shoot for a reasonable profit, but there are plenty of pips to go around. Currencies continue to move every day, so there is no need to get that last pip; the next opportunity is right around the corner. Sometimes you might find yourself suffering from trading remorse, which happens when a trade that you open isn't immediately profitable, and you start saying to yourself that you picked the wrong direction.
Then you close your trade and reverse it, only to see the market go back in the initial direction that you chose. In that case, you need to pick a direction and stick with it. All of that switching back and forth will just make you continually lose little bits of your account at a time until your investing capital is depleted. Many new traders try to pick turning points in currency pairs. They will place a trade on a pair, and as it keeps going in the wrong direction, they will continue to add to their position, sure that it is about to turn around soon.
If you trade that way, you end up with much more exposure than you planned for, along with a terribly negative trade. It's best to trade with the trend. It's not worth the bragging rights to know that you picked one bottom correctly out of 10 attempts. If you think the trend is going to change, and you want to take a trade in the new possible direction, wait for a confirmation on the trend change.
If you want to pick up a position at the bottom, pick up the bottom in an uptrend, not in a downtrend. If you want to open a position at the top, pick a top when the market is making a corrective move higher, not an uptrend that is part of a larger downtrend.
Some trades just don't work out. It is human nature to want to be right, but sometimes you just aren't. As a trader, you just have to accept that you're wrong sometimes and move on, instead of clinging to the idea of being right and ending up with a zero-balance trading account. It is a difficult thing to do, but sometimes you just have to admit that you made a mistake. Either you entered the trade for the wrong reasons, or it just didn't work out the way you had planned.
Either way, the best thing to do is to admit the mistake, dump the trade, and move on to the next opportunity. There are many so-called forex trading systems for sale on the internet.
10 Ways to Avoid Losing Money in Forex · Do Your Homework · Find a Reputable Broker · Use a Practice Account · Keep Charts Clean · Protect Your Trading Account. One commonly known fact is that a significant amount of forex traders fail. Various websites and blogs even go as far as to say that 70%, 80%, and even more. I am a beginner in Forex trading but already have lost bucks. And I wonder how do people who lose 20k still coninue trading. I would be very upset, really.