7 reasons why traders are losing their money

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Top 4 Reasons Why Future Traders Are Losing Money

by Trading 101 Aug 16, 2020

Futures are some of the riskiest assets in the financial world as they can yield great profits, but also completely burn a trader’s capital if executed incorrectly. Here’s some Trading 101 for you: futures are the same as options except they’re not optional. Futures are a legally-binding obligation that you need to see through as it’s a proper contract. An option gives you the choice to be able to buy or sell a certain asset at a predetermined price. With futures, the principle is the same, but you’re essentially committing to buying or selling a certain commodity at defined quantities and prices at a determined date in the future.

It’s common to hear stories about traders who made a good amount of profit off of a good futures trade, but then end up losing all their profit in the following two, three or four futures. This often spirals into not only eating up all the previous profits but also leads to loss in trading capital. Let’s look at the biggest mistakes future traders tend to commit, which often lead to strings of losses.

1.Not protecting themselves.

There’s always risk involved in trading (something anyone who is getting into trading should know!). It’s paramount to lower the risk as much as possible or find measures to protect oneself. Sell and buy stops have a place in the futures trading business too, and can be one of the most effective ways of protecting one’s portfolio.

2. Losing focus.

To succeed in the futures market, the ability to read market trends is an absolute must. A trader’s focus should be on whatever market they are planning to have futures in, not deviating from those until a future is guaranteed to profit. Misreading the market because of a lack of focus is a fast way commit to futures that will result in losses. The commitment to use a future trade to buy a certain stock implies that the trader has seen a trend of sorts to believe that setting up a future now will allow them to set a lower price than what the stock will be worth by the time they have to buy it, allowing them to sell it for immediate profit.

3. Losing track of the strategy.

An alarming trend among newer and less patient traders is that many tend to abandon their plan or system as soon as it gets into full swing and their trades starts being profitable. There’s a reason why the most successful traders have an extremely disciplined approach to their systems and plans, never deviating from them unless extraordinary circumstances present themselves. It is smarter to adapt one’s system to match a trend in the making, or to prepare for other changes in the market’s condition; but that should never be the sole reason for abandoning a system that made a trader profitable in the first place.

4. Narrow point of view

There is simply no way to guarantee anything in the trading game. Whether it’s a new market, new fund, new strategy or most importantly, new information – traders need to be flexible and adapt to new trends and realities faster than anyone else in order to gain a competitive advantage. Too many traders have sunk due to the belief that they were experts who already knew everything, causing them to lose sight of trends they didn’t understand because they didn’t do their homework properly.

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Why Over 90% of all Traders Lose their Money on IQ Option

Over 90% of Traders lose money on IQ Option. But why and how can you join the 10% that make money?

IQ Option states that up to 90% of the active accounts lose money. That means about 10% of all active accounts make money on the platform. The truth is, many losing traders don’t plan to lose their cash.

In fact, they do make some winning trades every once in a while. However, their winning trades won’t make enough money to offset losses. But why does such a high percentage of traders lose money?

The main reason why traders lose money is inconsistency. They know dozens of trading strategies and try to use them in every market they trade. They also trade several markets at the same time.

They will also rarely follow through on their trading plans. Sound familiar? All of these coupled together will eventually lead to huge losses.

90% of IQ Option traders who lose money are inconsistent

One of the main reasons you will lose your money is trying out too many trading strategies. Consider this scenario. You’ve discovered a hot trading strategy online and decide to apply it to your trades.

The first few trades are winners. Then you decide to invest more money in your next trade. It loses. Frustrated, you write the strategy off as luck and go in search of a new trading strategy.

Wouldn’t it have been easier to identify what actually made the strategy work? You might find out that it works best in specific market conditions (trending or ranging). Now that you know what guarantees losses when trading on the IQ Option platform, how do 10% of traders make money?

The reason why only 10% of traders make money on IQ Option

Consistency is the main reason why only 10% of traders actually make money on IQ Option. But consistency in what? For starters, these traders will choose a trading strategy that has been proven to make profits.

No trading strategy is superior to the other. It’s how and where the strategy is applied that matters. That said, traders who make money only have a few trading strategies.

Each is applied on a specific market. For example, one strategy is used in currencies markets and only when the prices are trending.

That same strategy cannot be used in commodities markets when the prices are ranging. This means that successful traders understand that what works in one market won’t necessarily work in another.

What successful traders do at IQ Option

Steps to take to become a successful IQ Option trader

The first thing to always do when you come across a new trading strategy is to test it in your demo account. Not once, but several times in different markets.

Keep the trading strategies that work best for you. Also, decide on the markets you want to trade in. I would recommend just a few related markets.

For example, if you prefer commodities you could choose gold and silver, if you prefer currencies, you could choose just a few pairs. Why? Choosing a few markets to trade in gives you the chance to study them.

With time, you can instinctively know how a market is likely to move just by looking at its charts. And that’s an advantage you will have over 90% of the unsuccessful traders.

Your next step should be choosing the appropriate money management strategies as well as the timing of your trades. I usually, use 5 minute candles when entering trades that last between 15 and 30 minutes.

This makes technical analysis easier. The trading indicators and chart type you use are also important. You can use candle charts which are easy to read.

Money management involves deciding both how much to trade and how to protect your capital. Trading a small fraction of your account each time ensures that you have some money left to trade if that trade doesn’t win. Applying stop losses also helps to protect your capital.

Which trading strategy is best for IQ Option?

As mentioned, no trading strategy is superior to another. Success as a trader is the result of consistency in selecting the appropriate strategy and using it in the right markets. It’s also about capital and emotional management.

Understand which market you’re trading in

You should choose a specific market to trade in. This article will show you how: Instructions for choosing the safest currency pair to trade at IQ Option.

Understanding the market you’re trading in simply involves following the most recent price movements.

Simply looking at the price charts can give you an idea whether the market is in an uptrend, downtrend or ranging. With this information, you can decide whether to enter a trade or sit back until the markets are more favorable for trading using your particular strategy.

Understanding the market you’re trading in

When to trade is as important as when not to trade. The markets coupled with your trading strategy should give you an idea about when it’s most appropriate to enter into a trading position.

Why should you trade just one market on IQ Option when starting out?

If you’re starting out, I would recommend trading with one financial instrument and preferably a currency pair. Why? You primary objective should be to make money.

Trading several instruments at a time won’t make you money. However, the probability of making money increases if you have a better understanding of the markets as well as using the appropriate IQ Option trading strategy.

Focusing on one financial instrument makes it easier to identify the trading strategy that makes money in that market. In addition, you’ll have a better understanding about the time when the markets are best for trading.

As such, you will be more confident every time you enter any trades.

7 reasons why traders are losing their money

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