Risk Warning: Your capital is at risk. Statistically, only 11-25% of traders gain profit when trading Forex and CFDs. The remaining 74-89% of customers lose their investment. Invest in capital that is willing to expose such risks.

How Not To Be Added To The 95% Of Losing Traders

Author: Martin Moni
Martin Moni
All publications of the author

You have probably already heard the statistic that 95% of all participants who attempt to trade the Forex arena end up losing money. While there is no data to indicate that indeed 95% of participants lose money, the statistic is used to express one thing – there are a lot more participants losing money than there are making it. There is no problem with the arenas themselves as stories of legends like George Soros show, but with the participants. What we find interesting is that the actual statistics show that 80% of day participants quit within two years, 40% actually quit after a month.

What the statistics show is that people tend to try the Forex arena as a way of making quick money like walking into a casino. Very soon, most people realize they were wrong and quit after they lost all their money. This is not the fault of the arenas, but of people who ended up among the 95% of losers thinking they were going to get rich quick. If you really want to become successful like the likes of George Soros, then you need to be different and follow the steps of the successful participants. These take time, so if you’re hoping to become a millionaire in a week, best to back out now. (These are the: 10 steps of successful participants)

Choose your agent very carefully

Your first step to triumph in the Forex industry is to pick the right partner. There are very many Forex exchanging companies out there, all looking to add you to their client base. Unfortunately, there are a lot of scam agents among them who instead of helping you succeed will only make you lose more money. Therefore, it is essential that you pick the right agent in the first place. (Do you know: How Is Spread Betting Different From Forex Exchanging?)

What should a good agent offer you?

In any agent, there are certain key features to expect. The best Forex agents should have most of these to offer you because they are important to help you succeed. The most important is to ensure that they run an Electronic Communication Network (ECN) system to process client transactions. An ECN agent is the only one you should trust to handle your orders because they are directed right to the liquidity provider and the interbank arena without any manipulation. Not only is this the most secure method, but it also ensures the spreads are very tight, thus, cheaper transactions. You can find some of these agents on the ECN agents list to choose from. (Can A Forex Agent Avoid Sending Trades Directly To The Interbank Arena?)

In addition to that, make sure that they are regulated by a reputable Forex regulator. There are several regulators that can really be trusted like those on the FCA regulated Forex agents list while most cannot be as much. The worst kinds of agent are those that are completely unregulated since they are beholden to no one and can very easily abscond with your money. Therefore, make sure they have good regulation behind them to prove that they are trustworthy. (Choose from: The 3 Most Trusted Exchange Authorities in The World)

Finally, make sure that the agent will provide you with enough exchanging instruments to work with. The best agents will have many currency pairs (more than 50 pairs) and CFDs for financial instruments such as stocks, indices, commodities and even cryptocurrencies. Having plenty of options to choose from will help you to diversify your portfolio and increase your profits instead of being confined only to a few options. (Should You Invest In CFDs Or Stocks To Make More Money?)

As long as an agent has got the above locked down, the other features to look out for are quite subjective. Some of these are transaction fees, Forex exchanging platforms available, methods of deposit and withdrawal, etc. For example, you may prefer an agent who offers MetaTrader 5 as a exchanging platform because it has more features compared to MetaTrader 4. Or you may prefer to pay commissions instead of spreads because of your exchanging approach. All of these are subjective, but the key is to choose what you feel most comfortable with. (Is It Time To Upgrade To Metaparticipant 5: Features Of MT5)

Through the above criteria, you will be able to find a good agent that will propel you to the top and away from the 95% of losing participants. This is the first step because a agent can really make a difference between triumph and failure. (How to choose a Forex agent: basic rules and useful tips)

Which agents should you avoid?

Apart from the good agents, there are some companies you should really try to avoid when you’re choosing a Forex agent. As already mentioned, there are some very bad agents who would not hesitate to steal every cent from your account. To find out who to avoid, the most important resource are the Forex agent reviews. In the same way you only buy something on Amazon or eBay based on what other clients have to say, so should you do with Forex agents. Just like in the cases mentioned with Amazon and eBay, former clients report their experiences on various Forex agent review websites. Be careful, though, because some of these websites are bought and paid for by the Forex agents themselves making the Forex agent comparison false, so you should only trust the real reviews such as those we offer from our visitors. If a particular Forex agent often receives bad reviews, then it means their former clients have been wronged and they can’t get you away from the 95% of losers. (Here are the: 10 most common mistakes Forex participants make)

Come up with an exchanging approach

Many of those participants in the 95% block forget this stage of the process, which is why they end up there. It’s World Cup season right now, and you can bet the teams that qualify are those that have a good approach. After all, it’s why any football team, or any other sports team for that matter, takes a lot of caution to hire the best manager. They understand, as you should, that there can be no triumph without a proper approach in any field of life. (Learn: How to create a exchanging approach)

To create a exchanging approach, you need to set goals first. For example, if you want to trade the Forex arenas and earn more income on a weekly basis, then your exchanging approach should be one that pays out almost daily. For an individual that wants to get into the arenas to invest for the future, then your exchanging approach should minimize risk and focus on macro-economic information. The next thing to consider is your own style of exchanging and lifestyle preferences. One participant could prefer making many trades in a day because they have time on their hands while another may want to pursue other activities. Both of these participants can be equally successful if only they acknowledge their strengths and weaknesses. In fact, that is the main thing – to recognize your strengths and weaknesses. (Short-term participants should know the: 10 rules of how to earn money with scalping)

The two broadest exchanging strategies are fundamental and technical analysis. The former focuses on exchanging based on global events being released on the economic calendar Forex. Whenever there is a huge announcement on the news, it affects the exchange rates, and a participant can take advantage of this. In the latter case, technical analysis involves a study of the real-time Forex charts displayed on the exchanging platforms. It takes a bit more time to understand how to properly read the charts, but it too can be a profitable exchanging approach. Indeed, there are very many Forex exchanging strategies that could be applied through technical analysis to improve your game and make more money. (How about we try: Comparing fundamental and technical analysis)

Once you have your exchanging approach, it is very important that you stick to it. The best participants are those who act like robots when exchanging the arenas by taking away any emotion involved in the process. Statistics have showed that participants increase their activity when they make a profit and that they are less likely to trade the same asset if it brought them a loss previously. Both of these statistics show that many participants rely on emotion and end up on the 95th percentile. In the first case, the participant quickly made another trade based on the adrenaline rush of a profit, and they possibly did not do extensive analysis before the move. In the second case, it shows that people tend to get attached to assets, which you should not do. There isn’t a single asset that has anything against or for you, so whether or not you lost or gained from it, there is no harm in exchanging it again. (Concepts Every Participant Should Understand: Leverage, Margin And Hedging)

This is why you should only stick to the exchanging approach and take away any emotion. As long as the arena circumstances do not align with your approach, quickly throw it out and move to the next one. For example, if your exchanging approach dictates that you should only place short orders when arenas are below the moving average, stick to it regardless of whether that arena made you money before and you have a ‘feeling’ it will again. It will be hard to keep your emotions out at first, it was hard for all of us, but with practice you will become better at it. (Do you know: Who Are The Best Forex Social Exchanging Agents To Work With?)

Practice extensively on a demo account

Now that you have chosen a preferred agent and have come up with an approach, it’s time to practice on a demo account. Nearly all Forex agents will provide you with a Forex exchanging platform you can download to your computer or smartphone. Afterwards, you get login credentials to a demo account with which to practice and test your exchanging approach before risking actual money. It is at this point that you fine-tune your skills in the trade before making that real deposit of money, and it is very important to do it. (Learn All About The Gambit Forex Exchanging Approach)

More important than to simply practice is to learn deliberately. This is a concept explained by many speakers about the process of learning – that most people simply seem to practice but really learn nothing from it. So what’s deliberate learning? Take an example of two participants who have varying exchanging strategies. The first tries the approach several times with no triumph but still keeps on trying to use it, blaming the arenas or the agent. The second one sees that after some time, the approach keeps losing money, so they go back and try another approach. This is deliberate learning. Like a footballer who realizes that kicking the ball a certain way is better than another. (Some of the: Differences between demo and real accounts)

It is also on a demo account that you get to learn many other things and adjust your exchanging approach accordingly. Perhaps you had set a leverage of 1:200 on the demo account initially, but then realized that you made bigger losses. Through the demo account, you will thus be able to adjust your leverage down to reduce risk and, subsequently, losses. You will also get to know what size of positions you should take also to minimize risk. Perhaps you’re planning to fund your account with $1,000, but you realize that buying 0.5 lots takes away a chunk of your margin placing you at risk of a margin call, so you begin to trade 0.05 lots. (This is: How to protect yourself from margin call)

All of these are learned through a demo account and the knowledge gets you ready to try the actual arenas. There is no recommended time to spend on a demo account because all of us learn at different speeds. The key is not to rush yourself simply because you know someone who is already successful or you get impatient. As long as you don’t want to join the 95% of losers, it pays to learn very deliberately and iron out any of the kinks left. It is also possible to test out various strategies using the backtesting feature available in most exchanging platforms. This feature tries out your approach using past arena data to see if it would have become a triumph. (Find out more about: MetaTrader 4 advanced features)

Dip your toe in the water

Your exchanging approach is solid after testing and retesting it to confirm that it does deliver profits. Nevertheless, you’re not quite ready yet to jump into the deep end on the Forex sea, so it’s best to dip your toe first. The problem is that a demo account does not actually provide any pressure because you know you’re risking nothing, but the actual arenas are different when you know your money is on the line. Many participants have felt nervous when exchanging the actual arenas, despite their preparation. (This is: The Trade Volume Analysis Forex Exchanging Approach)

So, how do you do this? Start small. There are various types of accounts that an agent can offer, with the ‘smallest’ being the cent account. With this account, you’re exchanging in micro-lots and usually only have to put up a margin in cents. It is real money, so you get to experience the nerves of the actual arena, but the risk is still minimized. If a cent account is not available, a micro account is more common and it should provide you with the necessary pressure of live exchanging. (These are the various: Types of Forex exchanging accounts)

When none of these are available, you simply have to control yourself. Say, you have $1,000 to use in Forex exchanging. You can start by depositing $50 or $100 first to see how it goes before making the rest of the deposit. Remember, at this point your goal is not to start making money but rather to get yourself acclimatized to the exchanging environment. Think of it as the warm-up athletes do before the game begins. (Have you ever wondered: What Is The Future Of Cryptocurrency In Finance?)

In the meantime, as you’re still ‘warming up’, you can still put your money to work by placing it in a managed account. One of the best ways to do this is by using PAMM account where an account manager pools all the funds into one account and executes the trades. The PAMM accounts are ranked into a PAMM Forex agent rating so that you can see the ones that have the highest return. When you’re finally ready, you can always withdraw your money and use it for your own exchanging. (This is: How to select a PAMM account)

Learn from your mistakes

At this point, you should already be exchanging the arenas with your own capital. If you followed all the steps above, then you should already be making some money. Now you should be getting better, and the only way to do so is to learn from your mistakes and avoid them in future situations. This is what we discussed earlier as deliberate learning. We always advise that you keep a journal where you can write down some of your experiences. When the arenas close at the end of the week, take some time before hitting the bar to review your exchanging week and planning for the next one. Take note of those trades you lost and why you did so, then vow not to do the same mistake – if it was a mistake. For example, if you find out that a trade went wrong because you had not accounted for the release of a news announcement, make sure you never overlook this fact. Do the same with the winning trades, finding out what you did right and vowing to keep doing the same. (This is: The Keltner Channel Indicator Forex Exchanging Approach)

Stay updated with current events

You should always be aware of whatever is happening in the Forex industry so that you don’t get any surprises. The economic calendar is one of those ways. Knowing which big events are going down week by week will make sure nothing important catches you off-guard. The most important news events are those by the central banks of the G10 countries because they have the most impact to a country’s currency. Moreover, various economic statistics are released regularly within the week that also have an impact on the exchange rates. (Keep an eye out for these: Main central bank meetings)

On top of the economic news, other events will also affect the way you trade such as changing legislation. Recently, MiFID II was implemented across EU and EEA countries, and this had a huge impact on the way Forex agents handle their clients’ orders and records. GDPR was also implemented only recently, adding to the changing environment of exchanging in the EU. Meanwhile, the Dodd-Frank Act may be appealed in the US, which would allow Forex agents back into the US. All these and other events can have an impact on the arenas as a whole and how you trade in particular, so it’s crucial to be aware of the happenings around the world. (Expect some: Changes In Forex Regulation Through MiFID II)

Keep learning

Ever since the retail Forex arena boomed in the early 2000s, there have been various developments to the industry aided mainly by technological advances. Speaking as a computer nerd myself, the only way to stay ahead of the curve is to keep learning new things. Features like VPS may come in handy to you somewhere down the line, and so can exchanging robots. To take advantage of these, you have to keep learning of the new advancements. Think about cryptocurrencies, for example, and how much money could have been made had people known about them. Do not let another opportunity like that pass you by next time by keeping your ear to the ground. (Find out: Why Participants May Need To Use a VPS Service)


We now know what we need to do to get out of the 95%, but what about what not to do. Listen to an expert tell it:

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Risk Warning: Your capital is at risk. Statistically, only 11-25% of traders gain profit when trading Forex and CFDs. The remaining 74-89% of customers lose their investment. Invest in capital that is willing to expose such risks.
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