Day traders get an easy entry into the Forex market. Remember that making money is not as easy as getting entry into the market. They do some mistakes for which they face a great loss. Some are discussed here which are the reasons behind their failure.
Not Maintaining Win-rate and Risk-Reward Ratio
Your win-rate indicates the amount of winning trade. This is manifested through percentage. For example, if the trader has win 40 trade out of 100, the win-rate will be 40%. Remember that this is necessary to keep the win-rate over 50 %. On the other hand, the Risk reward ratio is the ratio of the stop-loss and the take profit. As a trader, you have to decide how much loss you can handle instead of how much reward. For example, if the trader sets stop-loss at $200, and take profit at $400, the risk to reward ratio will be 2. As a day trader, you need to maintain this over 1 to make profitable trades.
Not focusing on the Stop-loss
Sometimes, the people do not emphasize on setting stop-loss. You should remember that your plan must include stop-loss. This helps you to reduce your cost. If you do not set a stop-loss, your capital can be finished. The market is unpredictable, so sometimes the market can go against you. Stop-loss will help you to not facing great loss that you cannot handle. So, concentrate on this issue. If necessary, take help form the experts of Rakuten Trade. They will give you the proper guideline to take the trade.
Taking High Risks
Businessman frequently take high risk to earn more. As a day trader, you should not take risk more than 1% of your deposit. So, you have to set your stop-loss in a way so that it closes the trade before the losing streak goes more than 1%. Stick to your plan to do your trade properly. For making money quickly, most of them do overtrade, and take high risks. You need to avoid this because it can cause a great loss. Your foremost duty is to save your deposit as this will help you for long-term trading. Try to increase your deposit more than your expenditure which will help you to go in the long run.
Selecting a Wrong Broker
A broker is very important for your trading. Brokers offer the trading platform which is very essential for the buying and selling process. The trading platform facilitates you by providing the latest indicators and tools. So, before choosing a broker you have to consider five things. Such as specify your requirements, find out the facilities are offered by the brokers, take references from the other, trial the broker through a demo account, and do not accept their proposals of bonus with their service. Before selecting a broker, you need to identify whether the trading platform is user-friendly or not. Many day traders choose the wrong brokers, and face problems. Sometimes, the traders do not get supports from the brokers. Remember that you can face difficulties at any time. So, find out the broker who can provide you information when it is necessary.
Having no plan
If you want to fulfill your goal, you have to make a plan. Without making a plan, you cannot trade properly. Professionals always make their strategy to execute their trade properly. Before making a strategy, you need to analyze the market. Try to observe the discrete points of the market to gain knowledge about the variables factors which influence the market. If you do not make a plan, you can make a decision emotionally, which will force you to see a destructive loss. If you have a plan, you can understand how to manage the risk and secure the capital. Sometimes, you need to make some minor changes to your plan. Make some practical changes. Remember that trading is not gambling. This is a serious place. So, do not execute your trade, without a plan.