Why do traders lose money in trading? - page 12.

SOKO-DEKE

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Quote from: laubeaud on June 23, 2024, 06:58:23 AM

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

Anyone without proper knowledge will hardly be a successful trader. Knowledge is the most important thing we need first before attempting to trade. The main reason why some traders lose money is due to a lack of proper knowledge, along with other factors that contribute to failure. However, knowledge accounts for over 90% of success. If someone has proper knowledge, the factors you mentioned will hardly affect them.

Quote from: laubeaud on June 23, 2024, 06:58:23 AM

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

There are some traders who are very eager to make money quickly. This eagerness leads them into overtrading. Later, they start losing money in trading because they don't have time to monitor all the trades they are making. To avoid failure in trading, try to avoid overtrading.

Faisal2202

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Quote from: laubeaud on June 23, 2024, 06:58:23 AM

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

Speaking about new traders, they also doubt their analysis as well. Even if they have discipline, knowledge, and a rational trading system, and they don't overtrade. I also consider myself a newbie as I don't trade often. So most of the time, I am doubting myself, for example, today news came out of MT GOX, it was confirmed news but I also heard some relevant news about MT Gox Yesterday when BTC was at around $62k or $63k.

Now it's around $60k. Not a big difference though but still overall market fluctuates which is bad. I would like to add, build your confidence by practicing your analysis on paper trading or backtesting trading. Overtrading no doubt a good tip, as I once caught up in overtrading and lost all of my funds back in 2021 or 2022 while I was doing future trading.

tottong

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Quote from: laubeaud on June 23, 2024, 06:58:23 AM

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.

No trade can consistently produce profits even though the trading knowledge you have is very experienced.
Trading is much more speculative and there is a lot to learn, a lack of discipline and knowledge can result in losses.
Taking a lot of trades will create a lot of things that need to be analyzed which will lead to speculation about the coins being traded.

It is better to choose a few coins and study them properly so that not many risks will occur. Trading does not always produce profits and this is where knowledge is needed to recognize potential coins.

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Quote from: Maus0728 on June 24, 2024, 09:39:30 AM

I don't know much if I should agree with the third one though, I feel like it's not a bad idea to have emotions in trading, sometimes those big trade wins are possible because of a gut feel so I don't necessarily agree on that as a cause for losses.

It's true because sometimes people who trade frantically or greedily actually get lucky moments. like panic selling when the pump just happened, but in reality the pump was very short and then corrected very deeply. Of course, everything is outside the plan, but traders can make a profit.
Being emotional in trading is not entirely a factor in traders losing money. but it would be better if in trading, traders could control their emotions better. adapt to market situations and plans that have been made.

Finestream

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Quote from: Webetcoins on June 24, 2024, 01:55:52 AM

You have raised a lot of good points but also remember that it is not possible to never lose money in trading, anything other than trading is what you work in, and nothing guarantees you will always get only benefits and you will never face loss. Also, remember that failure is the first step to success.
When we do something we fail many times and after each failure, we gain experience. Trading is also the same.

Losses are not always caused by greed or fear. Many people invest more than their daily needs in trading, which sometimes leads them to trade coins without making a profit or at a loss, some people want to get more profit they consider themselves maybe more experienced they think the market will go higher and in the meantime they go into loss and the desired profit aren't gained.

Yes, trading has certainly it's own inevitable losses so one should never expect consistent profits in trading as the market can suddenly turn unpredictable which may lead losing in your trades. That's the reason why we can't avoid losses in trading, as much as we can never guarantee profits all the time.

Trading is highly risky as well so anyone who decides to trade and aim profits should have higher experience trading in the market, otherwise all the trading funds will definitely go into waste.

Maus0728

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Of all that you've listed OP, you've forgotten the fact that it's just a bad day for that trader that day, that's basically what it all boils down when it comes to losses in trading, your analysis isn't so on point and you don't have the things that you need to be aligned in the right place at that time, sometimes it's all just losses for you as a trader. I don't know much if I should agree with the third one though, I feel like it's not a bad idea to have emotions in trading, sometimes those big trade wins are possible because of a gut feel so I don't necessarily agree on that as a cause for losses. Maybe it's all just inexperience that has lead you to all of this losses.

davis196

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Quote

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.

What do you mean by "mechanical trading system"? Do you mean a trading bot? I can imagine how the financial markets would look like if all the traders were using automated trading bots. Grin

There's no way everyone on the market to make a profit and nobody to lose money. Somebody has to make poor decisions and somebody has to fail at timing the market. All the things you mentioned in your list are true, but so what? There will never be a situation on the market, where all traders are perfectly disciplined, perfectly competent and have a perfect strategy.
I don't consider overtrading to be a bad thing. The day traders are gaining experience by trading more, even if some of the trades aren't profitable.

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Quote from: laubeaud on June 23, 2024, 06:58:23 AM

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

The plan is to make a profit but whenever that plan and profit is hit, you do not follow your discipline and plan. You want to profit more and that is because that type of trader lacks discipline.

From a to c, they are all correct. You do not respect and honor your plan and the rules that you set for yourself.

You are so distracted by adjusting new rules and new goals.

michellee

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Lack of knowledge is the problem that many traders face, not just beginners but also people who already starts trading. They don't trying to learn more about trading and all the things because they thinks that is difficult. That's why some people depends on the signal trading from others to trade.

Overtrading can be solved if they have knowledge so they will not confuse with their trades. They can manages their trades without a problem and could takes their profit. They can also knows when they can trade and quit from the market.

The important things if you wants to trade is have a knowledge of trading so you will have a chance to know when to trade. You can analyze the market and trade with the current situation. You can use all your skills properly while you still learn more about trading.

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Quote from: TheUltraElite on June 24, 2024, 04:34:19 AM

You don't need to trade like a robot. You could have you algorithm and rhn it through a bot to automate your trades but be flexible with your targeta depending on how much the daily swing is.

Here I would honestly disagree with you and in my opinion this is exactly what OP describes in his first point.

Newcomers in particular lose trades (or far too much money in unsuccessful trades) because they don't stick to a predefined plan and are "flexible in their target". But that's exactly when mistakes happen and you end up pouring money into poorly performing trades, for example.

This is where bots are a great help and prevent you from making emotion-driven decisions regarding trades.

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So anyway, I applied as a merit source :)

You don't need to trade like a robot. You could have you algorithm and rhn it through a bot to automate your trades but be flexible with your targeta depending on how much the daily swing is.

Traders lose money to give that money to other traders. That is how this works because of the former would not exist there would be less profitability from trading and people would stop doing it.

Knowing how to handle emotions is important often lacking from traders.

Dr.Bitcoin_Strange

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Well, @OP, I will agree with you that some of these problems that you have listed are also factors that can make a trader lose money while trading, but I hope you will understand that trading losses are a natural phenomenon; no one can control the price movement of cryptocurrency, which is why it can go against your predicated price, and when it goes against you, you will definitely incur losses.

Normally, all traders encounter losses most of the time, and the reason for such losses may not necessarily be because of the reasons that you have pointed out.

GreatArkansas

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Quote from: laubeaud on June 23, 2024, 06:58:23 AM

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.

(...)

Among the list, this one is crucial for me. Why? Because consistency, emotion control, and risk management are involved here.
For example, not sticking to one strategy, not respecting your trading rules, not sticking to your plan - these are the common things that traders is doing that talks about "lack of discipline".

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Quote from: Zaguru12 on June 23, 2024, 04:22:24 PM

I don’t actually see using high leverage as a very big problem if at all you have a very good risk management. Even at a 100x leverage if your position size is well calculated you will not get into huge loose because you will have gotten your perfect stop loss.

Good traders that make money than lose use low or no leverage at all. For traders that are using high leverage, they mostly later lose. Using high leverage means you are not patient and that can lead to big loss. Are you trading, using high leverage and not losing? It has been 4 years that I have been trading and I am more practical with my experience. High leverage is very bad. It makes trading to be more like gambling. Go to those exchanges, check the leaderboards and see if those people use high leverage. Most of them use 1x.

Webetcoins

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You have raised a lot of good points but also remember that it is not possible to never lose money in trading, anything other than trading is what you work in, and nothing guarantees you will always get only benefits and you will never face loss. Also, remember that failure is the first step to success.
When we do something we fail many times and after each failure, we gain experience. Trading is also the same.

Losses are not always caused by greed or fear. Many people invest more than their daily needs in trading, which sometimes leads them to trade coins without making a profit or at a loss, some people want to get more profit they consider themselves maybe more experienced they think the market will go higher and in the meantime they go into loss and the desired profit aren't gained.

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Quote from: mich on June 24, 2024, 12:57:05 AM

Well I think the crypto traders want to make fast profits and this does require some big risks. When we make crypto trades we also must have to pay the fees to the exchanges. And I think this does add up over all the times.
This does take some of our profits we make from trading. But making money can make the crypto trader greedy and he will not know when to stop. Trading and making profit every day is not a easy thing for the trader to do.

If a trader does not take the costs of the trades into account, he has no business on an exchange in my opinion Wink

It's a bit like when a plumber forgets to calculate his material costs ...

The fees are usually quite low, especially for those who trade large volumes on the exchanges. You can also talk to the exchanges and negotiate fixed amounts per year, for example, if you use them very often and generate a corresponding turnover.

mich

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Well I think the crypto traders want to make fast profits and this does require some big risks. When we make crypto trades we also must have to pay the fees to the exchanges. And I think this does add up over all the times.
This does take some of our profits we make from trading. But making money can make the crypto trader greedy and he will not know when to stop. Trading and making profit every day is not a easy thing for the trader to do.

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When traders lack knowledge of trading, it will be difficult for such trader to achieve what other traders are achieving from the market, because he or she will not trade when it is time to trade because he or she lack the knowledge of cryptocurrency trading. Lack of patience can make traders to lose their funds in the cryptocurrency trading, because you need to apply long term holding even though the price is still decreasing in the market, because the price will not remain like that forever in the market and if you can endure for the bullish season to appear, it will make you not to lose in your trading. If you don't want to lose your funds in trading, try to eliminate fear in your trading which is the major thing that is causing some traders losses some time in the cryptocurrency trading.

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Too greedy with their profits. They wants more profits while they don't check and analyze the market so they making a wrong analysis about the market situation. They becomes in a rush to analyze the market movements and makes them buying in a wrong coins in a wrong price. I have experienced that many times so I still needs to learn more about the analysis because that will not easy to analyze the market in the unpredicted situation.

They can not control their emotion when they trade so that makes them too worry with their trades. Besides that, they don't have much skills to follow the market movements but they force themselves to analyze and makes them in a wrong situation.

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Quote from: laubeaud on June 23, 2024, 06:58:23 AM

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.

You can trade manually or trade with bots but trading bots are set up by human. If you use bad parameters to set up your trading bot, trading result from the bot will not be good even it is not human and isn't affected by emotion.

Focus on investment is safer and better in capital protection against loss and it can help to get better ROI than trading. Trading manually or with bots, is always more risky than investment.

DCA for investment in Bitcoin is enough for me and I don't need to trade.
https://dcabtc.com/

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