Why Do 90% of Forex Traders Lose Money? You Need to Look at It Differently

In a sense, 90%-95% of traders lose money. The reasons vary—failure to control emotions, excessive greed, lack of trading records, not setting stop-loss or take-profit levels, or even jumping into live trading without enough practice on a demo account. Some rely on self-invented, immature trading strategies. We’ve discussed these common pitfalls countless times. But today, let’s set them aside and consider: What other factors contribute to most traders’ losses?

Indeed, some factors are less obvious but equally critical. Everyone admires top forex traders like George Soros or Bill Lipschutz, dreaming of joining that elite circle. But most are just dreamers, hoping for overnight success. Over 95% of beginners can’t achieve this, at least not at the start. Trading demands years of relentless effort and refinement.

Everything follows a similar process—fantasizing about instant success guarantees failure. Forex traders, especially those with months or years of experience, must accept this reality. Truth is, most traders never seriously reflect on what trading truly entails. They’re essentially gambling, and as we know, gambling ends in ruin—lose nine times out of ten, and you’ll eventually go broke.

Fundamental Analysis

Forex trading is no different from other commodity trading. I’m unsure why some think it’s unique. Take Warren Buffett, dubbed "one of the most successful investors" by Wikipedia. As a stock investor, he doesn’t stare at screens all day tracking account fluctuations. His speculation doesn’t rely on chart-filled monitors. Yet, how many forex traders actually follow economic news related to their traded currencies? Most can’t be bothered to study fundamental trends.

For example, when news broke that Google might abandon Google+, how many stock traders analyzed its impact? It clearly wasn’t positive—if it could significantly affect the stock, the logical move was to sell early.

The forex market is no exception. Economic calendars list daily events that could sway the market. If more traders studied these, the loss ratio might drop. That said, emphasizing fundamentals doesn’t negate the importance of technical analysis.

Shockingly, many beginners trade with zero fundamental knowledge. Some believe technical analysis alone suffices for profitability. Maybe. But I’m convinced any analytical method indirectly requires fundamental support.

The clearest example is Expert Advisors (EAs). EAs lack fundamental awareness—they don’t understand Non-Farm Payrolls or FOMC decisions. That’s why most EAs profit briefly but fail long-term. Pure technical analysis is like trading numbers. To me, ignoring fundamentals is a waste of time and money.

Of course, these views aren’t imposed on anyone. Every trader thinks independently. The above simply explores loss reasons from different angles.