In this article we want to concentrate on the traders who suffer loss and potentially never come back. Those amongst us who take a break from trading, due to financial losses and hardship and as a consequence, are statistically far less likely to ever return to trading then the ones who walked away from trading due to career change or a change in life circumstances.
In providing this encouragement, as to how traders should return and why they may reconsider trading as a part or full time career, we will indirectly be pointing out the most common mistakes that cause traders to exit the Forex market and never come back. Therefore, if you can avoid making these typical mistakes, you'll have a greater chance of staying in the industry, without ever needing to take the enforced break.
How long does it need for a trader to give up?
Perhaps the most pertinent fact in the recent study by American brokers, is the time spent before giving up. Apparently, most retail traders lasted 2-3 months before giving up the idea of trading and the early and presumably bad experiences, caused these novice traders never to return. It would appear that they lose, a not insignificant sum of circa $8,000 each, and never return.
Now we can point to lots of other fascinating parts of the report, but it's this aspect that we'd like to focus on, as we want to use it as firstly; an example of what not to do when you first discover and then enter our world of trading and secondly; use it as a potential template, as to what we need to do second time around, when we come back after a break period.
-To have bailed on our industry inside 2-3 months, with an average loss of $8k, screams of:
-Risking too much per trade
It's often worth asking the question, if you've found yourself in this position; "what would you have done differently?"
You would have probably:
-Risked less of your account per individual trade
Stretched out that first deposit you make in your trading account, for as long as possible, whilst you get to grips with every aspect of the quite daunting and complex nature of our industry.
This retrospective analysis should provide the cornerstone of your rules, when you return to trading.
-Setting realistic targets
You have to be realistic, if you have circa $8k to trade, which is a decent sum to trade with, then you need to set yourself a reasonable target; both in terms of return on that investment and the time taken to bank the return. This will immediately focus your mind on what's achievable and set a horizon that automatically demands patience.
If most novice traders, who leave the industry with a loss, do so inside 2-3 months, then set yourself a target to stay in the industry for an initial 12 months. In doing so you'll be extending your knowledge base and experience exponentially, by up to 400% in theory. The longer you can stay in, the more you'll learn and the greater chance you'll have of turning the initial losses around. You'll be able to learn from your mistakes and if you adopt a more realistic ambition, you'll be far more likely to succeed.