Is it Time to Quit Forex Trading?
Forex trading isn’t easy and anyone trying to convince you otherwise is a conman, looking for your money. Although forex is a great market for traders to operate within, there are also a lot of downsides, and it’s very hard to turn a profit if you don’t know what you’re doing. This leads to many traders asking themselves the question, “Should I quit trading forex?”.
Maybe, but maybe not.
In this article, we are going to look at everything you need to consider if you’re on the fence and thinking about quitting forex trading. Let’s get into it…
Quitting Forex – Is It Time?
Ultimately, around 75% of traders fail within the forex markets, so if you’re thinking about throwing in the towel, you aren’t alone. Trading in any market is a huge time commitment, and it can be tough to balance learning, chart time, and trading alongside a full-time job, family, and social life. Not only that, in your first year or more you won’t even be seeing a profit, so you’re investing a huge amount of time, hoping to be successful. In 2018, I almost quit forex trading as I had a very rough quarter in the markets and thought it was time to throw the towel in.
Luckily, I didn’t!
But I’m not going to write a motivational speech to try and stop you from quitting your forex trading journey. We need to objectively look at your trading to figure out why you’re failing and what you aren’t doing. Once we figure that out, we can look at exactly what you need to be doing to reach your goal of profitability.
Why Do You Want To Quit Forex Trading?
To understand whether you should or shouldn’t give up on forex trading, you need to look at why you’re feeling like this. It usually comes down to 2 different options…
Firstly, you are not profitable and earning nothing in the markets. Secondly, you’re somewhat profitable, but it’s not earning you much money, and you have other responsibilities to dedicate your time to. With both of these options, the answer isn’t necessarily quitting forex trading. If you’re unprofitable, you can look at the reasons why and focus your energy on areas that will move the needle of profitability. If you’re just not able to dedicate enough time, you can look at trading strategies using the higher time frames in order to reduce screen time. If you’re not earning enough from trading, you can take on funded trading accounts and have hundreds of thousands under management fairly quickly.
Quitting is rarely the right answer!
Why Are You Failing At Trading Forex?
If you’re reading this, we can assume that you’re not profitable within the markets, which is ok! The reality is that a lot fewer traders are profitable than you might think. The perception can be easily warped when you spend a lot of time looking at ‘traders’ on social media. So, why could you be failing within the markets?
- No trading strategy. Without a trading strategy, you will not be successful. Profitable traders all use at least one trading strategy and have thousands of back tested trades, proving the profitability of their system before they ever touch a live trade.
- Changing trading strategy every few weeks. When most beginner traders lose 2-3 trades in a row, they’re quick to abandon the trading strategy and move on to the next. Drawdown is completely normal, and strategy hopping achieves nothing.
- No risk management strategy. Even with a bulletproof trading strategy, without having a risk management playbook, you will fail to see long-term profitability within the markets.
- No trade management strategy. Once you’re in trades, do you close them? Do you make them break even? Do you add extra capital to winners? These are all important factors that make a huge difference in profitability.
- Over leveraging your capital. We work with many traders that were previously overleveraging their trading capital and blowing through accounts. Once they moved to trading Lux Trading Firm capital and using lower risk, their consistency began to show!
- You simply don’t know enough yet. It’s extremely hard to know what you don’t know. The Dunning Kruger effect rings true more in the forex industry than any other industry I have ever worked in.
- Not sticking to your trading plan. Some traders have a great trading plan, but can’t stick to it when emotions come into play in the live trades. Developing your emotional intelligence within the markets is a skill within itself.
These are the primary drivers for failing to stay consistent in any forex trading journey. Do any of them sound familiar? When analyzing performance, it’s crucial to be objective and honest with yourself. Many traders lie to themselves about “making it” when in reality, they’re trading 0.01 lot size positions on EURUSD and still losing money each month.
How To Get Back On The Right Track With Your Forex Trading
Now that we have established where you may be going wrong, we can start looking at solutions to help bring you back onto the right track when it comes to trading.
Quitting isn’t always the right answer!
Build A Full Trading Strategy
This is ultimately the most important aspect of becoming profitable. You must build a full trading strategy including the actual setups you’ll take, objective rules to follow, risk management rules, trade management rules, and even emotional rules to follow. The more robotic you can make this, the better. If your trading strategy is built around subjectivity and nuance, it’ll be impossible to prove its profitability in a back test and very hard to replicate consistently profitable trades.
Stick To One Strategy
As the saying goes, “I fear not the man who has practiced 10,000 kicks once, but I fear the man who has practiced one kick 10,000 times”. Shiny ball syndrome is huge within the online forex trading communities. You’re trading support and resistance-based strategies, then you have a bad week and see someone doing well with smart money concepts. You change your whole trading strategy to this new style and get excited about the prospect of success. The next week comes, and you have a bad week. You then realize if you stayed with the previous strategy, you would have made a 5% return. Sounds familiar, right? Stick with one strategy and back-test this thousands of times. You’ll immediately know whether the strategy is actually profitable or you’re just breaking even.
Use Resources Available
One huge cause of traders failing is lacking trading capital. This causes risky trading and overleveraging of accounts, ultimately leading to blown accounts and a lack of consistency within your results. Prop firms are a great way to get additional trading capital and earn money in the markets without needing to use 5-10% risk per trade. For instance, we give our Lux Elite Traders up to $1,000,000 in trading capital. We take a 30% profit share of any profits earned each month by our traders. For traders with $500 in their account, earning 2% per month on average isn’t worth doing – although this is incredibly achievable for most people. However, traders with our funded trading accounts earning 2% per month are still earning thousands per month with fairly low returns. Besides the financial benefits of using prop firm funding, prop firms also keep traders accountable for their drawdown and loss limits. This enforces the need to stick to the risk management plan and trading plans. On average, online prop firms typically fund 1% of the traders that apply. However, we have managed to get this up to 20% of traders by working with our traders to build risk management habits, strategies, and a risk desk to allow them to succeed.
If you are serious about reducing how long it takes to become a profitable trader, you need to back-test your trading strategies. It would potentially take years of sitting in front of the charts to take a total of 1000 trades. This could also be achieved in one weekend by using various back-testing tools on the market. I would highly recommend this is something you implement in your own trading career.
In Conclusion – Should You Quit Forex Trading Now?
To summarize, giving up on forex trading is rarely the right answer. It’s certainly not an easy market to conquer, but it’s one worth sticking to. Get the idea of huge wealth and 90% gain months out of your head. There are traders making a consistent 2% gain per month with our funded trading accounts, living great lives. This is what real trading looks like, and we would have a huge amount more profitable traders if all traders were content with just a percent or two in a month.
Are you interested in taking on funded trading accounts? Become a funded trader now!