Losing money in trading is a bad situation for each trader. Mostly, retail traders face such conditions.
Real-time trading in forex needs experience and knowledge. Sometimes, mistakes can occur by experts as failure teaches you a lot.
Have ever tried to know why most traders fail in this market? Or Where your losing money goes?
It’s important to get info about it as without knowing the reason, you will not be able to correct the mistakes.
When you lose money in forex where it goes actually? The main benefit of your failure in trading goes directly or indirectly towards brokers, market makers, and opposite trader’s accounts. All of them try to fill their own pockets with your losing money.
Scam brokers try to misguide you so that you fail in trading by getting lost. That may be later transferred into their accounts.
Such obstacles will come in your trading life again and again. But you may not be afraid. Don’t quit your trading. Just try to overcome it by getting more and more info about this trading market.
Hopefully, this post will help you to avoid the major causes of failure and the account that swallows your hard work money.
Let’s dive into it!
5 Reasons That Why Forex Traders Lose Money
It is a commonly known fact that a big number of forex traders fail in the trading world. According to a survey of different websites, about 90% of forex traders lose money and quit trading.
Professionals or experts easily come out of losing conditions. But new traders, on the other hand, have to face a tough time on the ground of this market.
The following list will help you to understand why forex traders fail to make money and how to control such situations. Let’s have a look at 5 major reasons for losing money:
- Over Trading
If you are trading too much without knowing the loss ratio and market trends, it is the main reason for a trader to fail.
Many traders do overtrade because of high profitable goals, insufficient investment, or market addiction. So, don’t try to trade much as it brings loss instead of profit.
- Not Adapting Market Conditions
It is necessary to know about market conditions. If you don’t adapt to market condition you will badly lose money. If you think one trading strategy is enough to get a winning trade, you are wrong.
Don’t consider markets as consistent. If they were, trading will never be possible. Markets always change their terms and conditions over time.
A trader must have the ability to develop to detect these changes and adjust in any situation that may happen.
- Poor Risk Management
Another main reason to lose money quickly is improper risk management. You must become a master in a proper trading platform that will help you to improve the chances of your success.
Paying attention to risk-reward in “stop loss and make a profit” is very important for good risk management and trading psychology.
- Not Following a Trading Plan
How would you trade successfully without any trading plan? Poor attitude and no preparation for recent market conditions play an important role in losing money.
No plan, no business… Each trading project needs a proper plan. If you skip it you will not trade professionally and definitely lose money.
- Silly Expectations
There are two types of traders, first who move from financial markets to forex and the second are retail traders who never trade before.
The first one has realistic expectations that will be helpful to relieve the psychological pressure that comes with trading.
On the other hand, retail or new traders have silly or unrealistic expectations. So, they get lost in emotions while trading, which leads them to poor decisions.
When You Lose Money Where it Goes
Each trader has a query in his mind: where his losing money goes? Have you ever tried to solve this mystery?
It’s important to know about it. Three main sources get our losing money in forex trading. Let’s discuss them.
Money Goes in Broker’s Pocket
As you know, forex traders start trading with the help of a broker. There are about 80% to 90% of traders who lost money because of scams created by the broker.
All this happens because brokers are not sincere with you. They have no concern about your profit. The only purpose of their existence in the market to fill their own pockets.
Money Goes in Market Maker’s Pocket
As you know there is another person at the end of dealing while buying or selling in the forex market. He is known as a market maker.
A market maker helps you to find clients when you are willing to sell or purchase shares. Market makers have brokerage companies that are always ready to buy or sell shares.
So, it’s easy for them to take advantage of your failure. They spread the bids which they want and get all your losing money. So, they remain in profitable condition.
Money Goes in the Opposite Traders account
You can see a big platform of competition in this biggest trading world. Everyone is busy leg-pulling each other. To get more and more profit is the most trending purpose of traders.
The main benefit of your loss goes towards Opposite traders. Yes, it’s true. If you have to face loss in trading, your competitor gets the benefit of it.
All your losing money is transferred to the opposite trader’s account.
They do so by dealing indirectly to buy and sell currency or shares.
Frequently Asked Questions (FAQs)
Where does your losing money go?
Directly or indirectly, losing money from forex trading fills the pockets of brokers, market makers or your competitor.
Does forex trading lose money?
Yes, forex trading loses money. Infect, 80% to 90% of traders fail to make money in this world-famous market.
Why do 90% of traders lose money?
The main reason behind it is human nature. We are driven away by the emotions that lead us to make bad decisions and consequently we have to bear the loss in trading.
Here we have come to an end. We have clearly mentioned above the main reasons as well as the accounts where our losing money goes.
Hard work, proper research, making plans, and adapting to markets are the main tips to be a profitable trader.
Furthermore, to increase the chances of success in future, you have to upgrade your trading platform.
Try to make a profitable trade and avoid losses in trading as your hard work money goes into the pockets of brokers and market makers.