Not every trader will be profitable to begin with, in fact not all traders will be profitable at all, the majority will lose, this is the warning that you see wherever you are looking when it comes to trading forex. Trading is accessible now, it is incredibly easy for almost everyone to open up an account, to deposit money, and then to trade, but it is a lot harder for them to do it profitably.
There are hundreds of questions that you could ask yourself in regards to your trading, to help work out why you are not being profitable. We always consider things like whether we are good traders if our strategy works and why we are having some losing streaks, but we need to be able to ask ourselves the right questions. When we answer rhythm honestly, it should give us an indication of where we are with our trading and potentially what we need to do to improve it and to then become profitable.
One thing that you have to keep in mind is that these questions and answers will not suddenly make you an expert, or prevent you from making any losses, losses are as much a part of trading as the wins are, so bear that in mind, these questions are tools to help you improve, not solutions.
Are you making basic mistakes?
There are a lot of mistakes that people make and there are some which are far more common and basic than others Some of these basic mistakes include things like trading without a stop loss or take profits, risking too much with each trade, having the wrong profit to loss ratio set up, letting emotions like greed and overconfidence get the better of them and more. These mistakes are very easy to commit without even realising that you are doing them, so it is even more important that you take notice of what you are doing. If you find that you are doing these things, then take a step back and think about why you are, there is no room for them and so you will need to stamp them out. Do not let yourself become too overconfident, 95% of traders quit or go bust in the first month, do not think that you are invincible, if you commit these mistakes, you will be one of the 95%.
Do you have a proper system and strategy?
You would be surprised how many people actually trade without a properly formed trading strategy or even a strategy at all. Those people will lose, and they will lose quickly. Consider whether you trade specific pairs or do you trade the first thing that looks interesting to you? What makes you pick your indicators, is it the colors, the names, and do you use that for your trading signals? Do you use specific timeframes or do you just select any of them and trade?
If you have a proper trading plan in place then there should be a very clear answer to those questions, your plan should be detailing everything about what you need to do to trade, the time frames to use, the pairs to trade, and the conditions needed to trade them. If you do not have one of those things in place then you do not have a fully formed trading plan which can make trading profitably quite difficult. If your plan is not complete then before doing any more live trades, get it complete. If it is already done, great, you can move on to the next question, that is as long as you have tested it properly on an emo account and it is working correctly.
Do you check your trading journal?
A better question may actually be, do you have a trading journal? A trading journal is where you jot down everything that you do when you trade. It will tell you which trades you took and the reasons why, it will tell you your exit points, the reason for exits, the risk on each trade, the different indications used, and more. Pretty much everything about every single trade. You can use this journal to help you to better understand your trading habits. It can help you to find the good points and the bad points within your trading. It is also a fantastic way to help you to see the progress that you are making, if you are using one, then look at it now, check to see what your habits are, are there any similarities with the losses which are different to those trades that you win? If not, then continue to look at it, see if your trading is evolving, if it remains consistent even with the losses, then it may show you that there is something that needs tweaking in order to become profitable.
Do you manage your risk?
The risk that you are taking should match your trading strategy and what is required by it, it should also be in line with your own risk tolerance levels. You need to work out whether your risk to reward ratio is right for you and your strategy and whether or not you are coming out of trades too early or late. It is very easy to get this wrong, so if you have it is not a problem. It may take some time to get exactly right though. This is where you need to take a demo account, it is far too risky to change things up on a live account, you need the demo account so that there is no danger of you losing any money as you fiddle with your settings, stick to the demo account until your risk management has shown to have improved over a months period and hopefully over a number of different trading conditions.
Is trading right for you?
You may need to ask yourself the big question, whether or not reading is right for you. For a lot of people, this is a difficult question as you may want to trade, you may want to be good at it and profitable, but for some, it just won’t happen. It takes a certain kind of person to be profitable and consistent over a long period of time. If you are finding yourself constantly bored or distracted, or are constantly stressed by the markets, then there is a chance that this is not the right hobby or career for you. You need to consider this, it is hard to do, but it is the most important question that you can ask yourself.
Those are some questions that you need to be asking yourself, you are not answering them to show whether or not you are doing anything wrong, it is more to look at what you can change to be more successful. It can sometimes be hard to tell yourself that you are doing something wrong, but as soon as you are able to, you will be able to trade to a much higher standard as soon as they are remedied.
