why MOST new Forex trader have Poor Risk Management? what psychology behind? How to fix them?
New forex traders often struggle with poor risk management due to a combination of psychological factors and lack of experience. Here are some key reasons and ways to address them: Psychological Factors Behind Poor Risk Management 1. Overconfidence and Optimism Bias - Reason: New traders might enter the market with unrealistic expectations, believing they can easily make large profits. - Fix: Education on realistic market expectations and understanding that even experienced traders have losing trades. Implementing risk management techniques such as setting stop-loss orders can help mitigate this. 2. Fear of Missing Out (FOMO) - Reason: The fear of missing out on a potentially profitable trade can lead to impulsive decisions and excessive risk-taking. - Fix: Developing a disciplined trading plan and sticking to it. Traders should learn to recognize FOMO and avoid making trades based on emotions. 3. Loss Aversion - Reason: T...