Are you ready to lose money to become a profitable trader? Can you accept a $20k loss or more with a smiling face? Could you still want to continue trading after wiping off your account?
Ask yourself, if you get the answer YES, FOREX IS FOR YOU.
Behind every success story in forex, there is a sad story of a huge money loss. It’s not a loss of money in a sense, it’s actually a cost of your forex education.
Let’s read the post: How much money do you lose before becoming a profitable trader?
The amount of money traders lose is different for everyone. On average fresh traders lose 50% of capital before becoming a profitable trader. While experienced traders’ win rate is above 70%. Most professional traders with 5 or more years of experience tend to lose less amount.
Traders who learn to risk low actually learn to lose low. They use high capital accounts with reasonable leverage.
They don’t risk more than 1%to 2% of their average capital to earn a return.
How Much Money You Lose Before Making Any Profit from Forex
All profitable traders have to lose thousands before becoming consistent traders. You might have heard traders losing $5k, $30k and never making it again.
The stigma of losing plays a vital role all along your trading journey.
The question is how much you lost before you started to turn a profit?
The amount varies from person to person. Beginners mostly lose 1 out of 3 or 4 positive trades. Most traders lose 50% of actual trading volume before becoming profitable. That’s why only a few traders less than 5% succeed to make regular profits.
Losing is part of this game. It’s actually the cost of your forex education. When you lose you are educated about risk management.
Even most profitable traders do make mistakes. Sometimes 1 loss- trade is enough to wipe off your account.
It depends on how much you risk, what’s your risk-reward ratio. Smart traders never risk more than 1% of their trading capital
How Much Money Beginners Lose Before Becoming A Profitable Traders
Nowadays beginners tend to lose more as they are less patient. They watch webinars, few videos and jump quickly to a real money account.
Almost 80% of fresh traders want to try their luck. It’s true that luck may workout one time or more than a couple of times, but it’d never work continuously.
That’s why they lose when the market does not favor their trades. They join trading without proper strategy.
Such traders soon give up forex trading saying “they are unlucky”. They rely more on luck rather than skills. That’s why they blame luck and quit.
According to rough estimation, newbies lose 50% of their actual trading volume before becoming profitable traders. When they learn to minimize loss and maximize win trade, they become consistent. Unless they achieve 75% of win trades for more than one year, they can’t become a profitable trader.
How Much Experienced Traders Lose Before Becoming Profitable Traders
If you think experienced traders never lose at all you are wrong. Losing is essential whether you are a fresh trader or experienced.
However, the loss ratio or percentage of experienced trader’s losses is low as compared to beginners. Sometimes it takes 5 years of consistent trade to cut losses.
According to rough estimation, expert traders’ win rate is 75% on a regular basis. They never set a high-risk reward ratio. Moreover, they are mostly day traders or full-time professional traders. Such traders use leverage factors cautiously. To become a profitable trader like this you need patience and time.
Is This Right to Count How Much Money You Lose Before Becoming A Profitable Trader
From a psychological perspective, this question itself is wrong.
You need to stay positive. Instead of counting your loss, you should focus on how to control your loss. Your win% may not matter A LOT if your losses are small.
According to research, with a low risk-reward ratio, a day trader can make 5% to 15% of his actual trading volume monthly. It’s enough.
If you are a dedicated trader, you can also make regular profitable trades. But all you need to have is discipline in your trade, patience, and time. Counting your loss and thinking about it every time is a wrong practice. It can make you quit sooner.
5 Tips to Avoid Losing Money in Forex
About 90% of traders fail or lose money in forex. A big % give up and quit this field. But those who continue will succeed one day. As consistency is a key factor to win this financial war.
Below are few tips to avoid losing money in forex:
Be Cautious When Using Leverage
Leverage can make you and break you. Traders should use smaller leverage when opening a position size.
For example, for the account of $10,000, one standard lot would utilize 1:10 leverage. To open a larger position, a trader can maximize leverage. But it will risk more. So, use this factor with great care.
Start with Small Capital
After switching from demo to real money account, don’t use big capital. Get started from a small amount and gradually add to it.
When you think you are capable enough to handle a big sum then add money to your capital. The best criteria are when your win ratio is 75% on a daily basis you can boost your capital.
Maintain Trading Journal
Keeping a record of your trading performance is important to grow your portfolio. Many expert traders maintain a trading journal on a weekly monthly and yearly basis.
For fresh traders, it’s good to keep the record of losses and wins and then compare it. This way, they can learn from their mistakes.
Don’t Get Emotional with Every Win
Over-excitement kills. Be realistic because this money market is unpredictable. Keep your emotions under control. Your emotions can lead you to overconfidence, greed, and fear.
So set realistic expectations and accept your win and lose with a cool heart.
Open Account with Authentic Broker
Sometimes traders who put in hard efforts still lose money. A third party like your broker may also be responsible for your failure.
As you have read a lot about broker’s scam and broker’s manipulation then beware of this fact. Do proper research before choosing a broker for you.
Read reviews and personally inquire other traders about the broker’s reputation.
The ending result is that it’s impossible to avoid losing money but you can minimize your loss rate.
Being fresher you need more practice and skills to handle big capital. If you are still losing, you need to hire a mentor.
Don’t give up as many profitable traders were once losers. Learn from your mistakes and keep moving.
Don’t forget to share how much you lost before becoming a profitable trader. Good Luck!