What causes trading failure?

What causes trading failure?

Again there are as many theories as there are advisers, but there are basically only two reasons for failure that you should concern yourself with when starting out as a trader:

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  1. no workable trading system or methodology;
  2. not following the trading system.
Trading system

A successful trading strategy, system or methodology has one important requirement: it should have an edge.

An edge ensures that you have a statistically positive chance of success over a number of trades. Where most traders bite the dust, is that they evaluate their success over one or two trades. The less trades you use to evaluate your success, the higher the chance that you will fail. The more trades you use in your evaluation, the better your chances of success.

Strategy

There are as many strategies as there are traders because every trader adds his own preferences to a trading strategy. We list a number of basic forex strategies on this site.

Keep in mind: a successful trading methodology does not mean that it succeeds every single trade. It means that it it has a positive result over a number of trades.

You will only make profit if you are professional, and to trade professionally means you have to trade successfully most of the time.

Your forex trading strategy with an edge will ensure success, if you can overcome the trader’s curse: deviating from your strategy because you think you know what the market is going to do.