I admit that fundamental analysis is not something I am particularly good at. And because I am not good at it I generally try to avoid trading during events that shape the market from a purely fundamental point of view.
I may be new to forex trading, but when i see an overly simplistic statement like the title to this thread i know exactly why 90% of traders lose money. First money doesn't appear out of thin air, so if somebody wins big, somebody has to lose big or many have to lose a small amount. Although there is some natural inflationary growth to be gained. Second there are many ways to make a bad trade but a good trade has to be made with accuracy and skill.
That skill cannot be acquired with a few simple lessons. It is acquired after thousands of hours of dedicated learning and hard work to be in that top 10%. If you only had to reach a moderate standard to be successful and everyone could make money where would the money come from. where are the losers. Then even if you put a group of people through a college degree in trading it would improve those that completed the courses chances greatly, but some would still fail because they did not have they mental aptitude to succeed when there own real money was on the line.
My own success strategy is to only rely on what i know works for myself. To practice on demo accounts until i can sustain demo account growth over long term periods. I expect this to take more than 2 years. then transition carefully to live accounts to see if I can manage the psychology of real trading.
While fundamental and technical analysis plus psychological skills are important, a long term vision as to what it takes to succeed is even more important.
Another big reason newbie traders lose money, apart from lack knowledge and experience, is scams. Take Australia, for example. Back in 2015 Australians lost over $229 million due to investment scams. (https://smnweekly.com/2016/05/16/asic-report-on-australians-losses-from-investment-scams-2015/). Newbies are the most vulnerable group in that regard, because most experienced traders can figure out at least the more obvious scams and have learned to trust only reputable, regulated brokers. Newbies often have no idea what they're doing and are easy prey, unfortunately.
Without Fundamentals you are gambling... trading on the CHANCE that a pattern if traded enough will eventually win....
There are tons of different approaches for making profits on financial markets and stating that one thing is gambling and the other thing is THE THING is arrogant. If you are making a living with fundamentals, good for you but it doesn't mean you can't be profitable with technicals or algorithms or whatever. Everyone chooses a strategy according to his mindset.
You refer to Wall Street traders who have to support their trades with fundamentals only because they are trading not with their personal money, of course they need solid reasoning for every trade they make. That and for backing up the myth that only geniuses can work on Wall Street.
I agree 100%, Fundamentals is NOT the only way to trade... Technical Analysis, Chart Patterns and Price Action can also be used. Ideally you would want to combine them all together to give yourself the best chance of getting in on a good trade with market follow-through that will generate a descent profit.
I personally think if you understand how Price Action works and you understand the fundamental drivers behind market participants, you stand the best chance of making good profits. Where most traders fail, is not with using Fundamentals, Technicals or Price Action. I think it has more to do with a lack of Education, Experience, Discipline and Risk/Money Management. Without the basics in place a trader will always be guessing and 'gambling', no matter if he/she is a Fundamental and/or Technical trader.
Both fundamentals and technical are important. Fundamental answers your 'why it happened?' and technical answers your 'when to execute?' Most of the traders using technical and less worrying about fundamentals...
True both are important,it just takes the fundamentals longer to kick in when the market corrects its self to the real price.
Another unfortunate statistic regarding loss of money and trading - a financial fraud is committed in the UK every 15 seconds and between January and June this year there have been 1 million such scams reported. Who knows how many remain unreported. (https://smnweekly.com/2016/09/20/financial-scam-committed-every-15-seconds-uk-watchdog/) A large percentage of those are Forex and binary options scams. Under such circumstances is it surprising that traders lose money?
@mlawson71 good info, thanks. Right, to all reasons why new traders fail, besides not involving right psychology or underestimating trading difficulties, fraudulent activity of others remains one of biggest problems.
There is so much information out there available for the novice traders to digest, so I think most of them just get overloaded, also with advices. Fundamental gives one perspective but does not tell you the whole story. Focusing only on one aspect can keep the unexperienced traders blind for what could make or break their strategy (if strategy exists at all at the beginning).
mlawson71 posted: Another big reason newbie traders lose money, apart from lack knowledge and experience, is scams. Take Australia, for example. Back in 2015 Australians lost over $229 million due to investment scams. (https://smnweekly.com/2016/05/16/asic-report-on-australians-losses-from-investment-scams-2015/). Newbies are the most vulnerable group in that regard, because most experienced traders can figure out at least the more obvious scams and have learned to trust only reputable, regulated brokers. Newbies often have no idea what they're doing and are easy prey, unfortunately.
i agree with you. i heard a lot also about brokers in US being charged for manipulating the trades. you seem to be very enthusiastic about exposing such cases. this is good!
Ostrzeżenie o wysokim ryzyku: handel walutami obcymi wiąże się z wysokim poziomem ryzyka, który może nie być odpowiedni dla wszystkich inwestorów.
Dźwignia stwarza dodatkowe ryzyko i ryzyko straty. Zanim zdecydujesz się na handel walutami, dokładnie przemyśl swoje cele inwestycyjne, poziom doświadczenia i tolerancję ryzyka.
Możesz stracić część lub całość początkowej inwestycji. Nie inwestuj pieniędzy, których nie możesz stracić. Zbadaj ryzyko związane z handlem walutami i zasięgnij porady niezależnego doradcy finansowego lub podatkowego, jeśli masz jakiekolwiek pytania.
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