10 Reasons New Traders Lose money: Reason #2

Forex TraderReason #2) Unreasonable expectations.

Many Forex systems out there promise traders returns of over 100% in the first month. If you think that this is a reasonable rate of return on your investment please contact us as I also am selling bridges. (please note the sarcasm). In reality the best money managers in the world are happy with a rate of 1-2% per month. If you believe that you can buy a Trading system for a few hundred dollars that will infinitely return over 100% a month then you have set your expectations at an unreasonable level.

In order to reach a return of over 100% per month any Forex Trader would have to risk an un- proportionate  amount of their capital at one time. Given the uncertain nature of the Forex market risking such a large percentage of your capital at any time puts the trader at risk to wipe out his or her account. When making your trades it is extremely important to keep in mind that when entering the market there is a good chance that you can lose.

Be warned any Automated Trading system that seems too good to be true probably is. In fact when you think about it if you had a system that could make guaranteed returns on a regular basis would you be selling it on a the internet for a few hundred dollars? I didn’t think so.

My advice to anybody that is entering the Forex market for the first time is this: “don’t quit your day job.” Although there is a lot of opportunity in the Forex Market there is also a lot of risk. Many Traders Lose for years before turning consistent profits. When learning the market make sure you set reasonable goals and work on attaining them.