There are various reasons why most forex traders fail in Kenya. It is not a secret that almost 75 % of all forex traders in Kenya fail. According to statistics, there are over 100,000 forex traders in the country.
As the popularity of forex trading grows, there is an increase in the number of traders getting into the industry without the necessary skills and knowledge of the market. This makes it among the major failure causes in this market.
Below is a summary of why most forex traders in Kenya fail.
1. Lack of adequate knowledge
Lack of knowledge is the main reason why most forex traders fail in Kenya. Although forex trading is lucrative, it is a very complex industry that requires adequate knowledge to succeed.
The majority of beginner investors normally watch a few YouTube videos or read some articles and assume they are ready for success in the market. The reality is that this is not enough. It requires a lot of learning and experience to make it in forex trading.
Some of the key areas you need to learn and understand are types of currencies, risk management, and both fundamental and technical analysis.
Sometimes, the learning curve could take years to master. The more you invest in knowledge, the higher the chances of success in the market.
Some of the learning sources that you can use include attending formal classes, getting a mentor, and utilizing the materials available online.
Greed is another major cause of failure in forex trading. The expectation to make the most without putting in the work is a fallacy that only leads to losses.
Naturally, humans always want more. A key limiting character in forex trading. Greed results in making wrong decisions due to a lack of objectivity.
It is key to note any wrong decision in forex trading results in financial losses. Notably, persistent loss results in blowing up the account. An experience that the majority of traders go through due to a lack of greed control.
Learn to keep your greed in check if you want to become a successful forex trader.
3. Poor risk management
Due to the risky nature of this market, a good risk management strategy is of utmost importance. This also helps to keep greed in check when you follow the rules in this strategy.
A risk management strategy should be part of the overall trading strategy. Occasionally, all forex traders make wrong trading decisions that put them at losses.
However, when this happens, you should exit the trade as fast to avoid getting into further losses. However, traders with a poor risk management strategy usually wait in the market with the hope the losses will reduce.
An approach that results in even bigger losses.
This brings us to the fourth reason why most forex traders fail in Kenya.
4. Lack of emotional control
Success in forex trading requires you to have a high control level of your emotions. This is why a strategy is necessary to ensure you only make trading decisions as per the set rules, not through feelings and wishes.
It seems easy but it takes a lot of time to gain the necessary levels of emotional control. You have to practice it over time to become better.
One of the ways to control your emotions while trading is embracing the use of technical analysis tools that guide on when to enter and exit the market. Some of these tools include moving averages, stochastic indicators, and price action movements.
5. Lack of the necessary trading tools
There are various tools necessary to facilitate the trading process. This involves items such as a computer or a smartphone and access to reliable and fast internet.
These tools are critical as without them you can’t trade. Hence, factors such as lack of access to reliable and fast internet make it harder to compete in the market. Remember, some trading decisions happen in a matter of seconds and any challenges in connectivity may result in missing opportunities.
A good example of traders that require fast internet connectivity is scalpers. These are traders that make short trade sometime in a matter of seconds. Hence, any delay in connectivity could affect market entry and exits resulting in losses or missed opportunities.
The trading devices should also have the capability to support the trading software. Without these, you will find it hard trading.
5. Using trading signals
This is becoming a common occurrence with traders who try to use other people’s trading signals. We analyze the market differently.
There are various people online who are always selling signals. However, although some of these are correct, the majority of signals don’t work.
You should take it upon yourself to analyze the market and make independent trading decisions. However, if you are to get market signals, ensure you only do it from a reliable source.
Why most forex traders fail In Kenya take away
These are among the key reasons for forex trading failure in Kenya. However, they all have a remedy. It is however important to note that it doesn’t happen overnight to overcome these challenges.
It requires dedication and months of practice to overcome some of these challenges.
However, profitable forex trading is possible with millions of traders doing it daily.