Fear has the power to become your greatest trading liability if it is not understood. Most people are afraid of risk, not only because they are afraid of failure but more so because they are afraid of loss. Let’s look at what research tells us are the reasons that most traders fail. Successful traders agree that these are the things to justly be feared.
The high rate of failure for beginner forex traders (as well as all other securities, stocks etc.) has been found to be directly due to these six things, in order of significance:
- Poor understanding and knowledge
- Undercapitalization
- Unrealistic expectations
- Lack of patience
- Lack of discipline
- High risk aversion
As we look over this list, it becomes apparent that fear of failure and loss is the by-product of trading without having in place a proper Forex Trading System – one that includes a high element of mind training and a high quality forex education. The last one on the list, high risk aversion, however, is not pointing not merely to a dysfunctional Trading System, it is talking about the need to understand risk in order to succeed...
Clearly if the fear of loss is coming up for you because you are trading money that you cannot afford to lose, this type of fear is a healthy and sane response. If this is the case then forex trading is not the place for you. The Forex Market is considered a High Risk market. Every responsible forex training and trading site makes that same high risk disclaimer in no uncertain terms. That is why stringent risk management should be factored in every single trade you ever enter. However, it has often been said by successful traders that the Forex Market is one of the risk-management safe trading markets for many reasons, which are covered in the beginning chapters on ‘The Advantages of the Forex Market’.
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