Why do traders lose money in trading?
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.
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.