Trading in the forex markets can be a profitable or loss-making venture. In Hong Kong, you will come across a number of hugely successful forex traders who made it through hard work. At the same time, there is no shortage of Hong Kongers who couldn’t make it in FX trading and had to bail out.
Forex trading is an attractive opportunity for those looking for an active investment channel they can make some money. All the tools you need as a trader are easily available. At the same time, the SFC is on top of the whole FX business in Hong Kong so traders are reasonably protected from fraudsters.
That said, some traders end up making losses in FX and have to give up their entire venture. Here are the five top reasons why ordinary Hong FX traders fail.
1. Wrong Trading Platform
The first thing a forex trader need to do is to find a trading platform. Most traders end up choosing the wrong trading platform based on what they see on adverts. Some platforms don’t have a comprehensive deposit and trading features, thus keeping traders in the dark when things go wrong.
2. Greed Always Leads to Losses
In Forex trading, greed often leads to big losses. Most traders who failed were too greedy to get out when a trade they had faith in was doing well. While forex trading can give handsome rewards to the big risk takers, you need to know when to get out. It is important to have a clear exit plan and stick to it even when things are looking good.
” Be Fearful When Others Are Greedy and Greedy When Others Are Fearful”, Warren Buffet.
Some traders prefer to adjust their strategies dynamically as the market changes. However, even experienced traders reach a point where they have to count their gains and get out of a trade. The dreams of transforming a tiny trading deposit into a million-dollar one often leads to losses and failure.
With this in mind, it’s important for you as a trader to approach FX trading as a normal venture and not a get rich quick scheme. Focus on making small, realistic gains on your initial deposit over a while until you reach your goals. Most winning strategies are based on small but incremental pips spread over a long period.
3. Being Too Aggressive
It is often common to find inexperienced FX traders trying to outsmart the market. They do this by adopting aggressive trading strategies aimed at beating the trend and making a kill. They will often put their money against a prevailing trend hoping they will have bigger gains should the market turn in their favor.
This might work sometimes but also fails 99% of the time; it’s like a lottery. Smart traders devise long term strategies and understand how to identify a trend and jump on it at the right time. They also know when to ignore a trend and hold out until it calms down to accommodate normal, tried and tested trading strategies.
Very Small Trading Deposits
They say ninety-six percent of new traders quit after a few trades. Most of these quitters are either experimenting or don’t know what they are doing. Some trading platforms even allow beginners a small bonus thus enabling them to start trading with zero deposits. Tiny deposits don’t allow traders to hedge or diversify their trading portfolio. A single bad movement can wipe out a small trading deposit and send the novice trader packing.
4. Lack of Trading Discipline and Work Ethic
It’s amazing how casual some FX traders can be with their trading accounts. Most don’t see it as a legitimate way to do business and make money consistently. They throw some money on currency pairs based on news and political events or instinct. Some don’t test different FX trading strategies before making big trades. It’s is this type of trader that often loses money and bails out.
Trading forex in Hong Kong is easy and can be lucrative provided you have the right mindset. There are thousands of successful FX traders in Hong Kong alone based on figures and FX brokers in this city. You too can become successful while trading forex and become a part of the many successful entrepreneurs in this trade.