Why do traders lose money in trading?

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Why do traders lose money in trading?

From my experience, here are 4 reasons I discovered:

1/ Lack of Discipline— a) Not sticking to one strategy, b) not respecting your trading rules, c) not sticking to your plan.

2/ Lack of knowledge—Inadequate understanding of the market, trading strategy, financial instruments, and fundamentals can lead to poor decision-making.

3/ Not having a mechanical trading system—This leads to emotional trading. Decisions driven by emotions like fear and greed rather than rational analysis result in significant losses.

4/ Overtrading—Taking many trades will affect your decision-making ability and lead to poor decisions.

If there are other reasons why traders lose money, share them with me.

Cinthia ETH Answered question June 27, 2024
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No matter what you do OP, this won’t give an excuse for losing, all traders commit mistakes.
You have all the points as to why traders lose their money but even how careful you are, losing is still possible. Therefore, don’t assume we can avoid this because of the volatile situation of the market, you can’t put everything in our hands and know what will happen next. In fact, even pro-traders still lost which means that there is no perfect trading strategy to be found and it never existed. The only thing we can do is to minimize losses but can’t stop it.

If you are really a trader, you know the situation already. Losing is a part of trading but I don’t see it in a negative way instead, it helps me think that trading is risky and hard to rely on.

Cinthia ETH Answered question June 27, 2024
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It is important we understand that one can not  trade and make profit every single time they trade, losses are still a normal thing in trading, just same way it is in gambling, the only thing I would say is that; as a professional and experienced trader, your won trades should be way way higher than that trades you lost.

And when it comes to why traders lose money, the only and basic answer I have is, it’s due to lack of proper knowledge, skill, and experience.
Someone with a well polished trading knowledge, skill and experience, won’t lose trades unnecessarily, because they would already know every thing that could make them lose their trade and try as much as possible to avoid doing such or things in that aspect.

Jason Johnson Answered question June 27, 2024
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I don’t believe traders can completely avoid losses; it’s all about having strategies to minimize them. Human psychology, particularly greed and the desire for more profit, is a significant factor. Controlling these emotions is challenging unless you have strong emotional management around money. Experience benefits everyone in business, regardless of the field

Eric Mades Answered question June 27, 2024
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