Topic: Why do traders lose money in trading? - page 6. (Read 892 times)

This particular advices are actually important to a trader but they do not stop one from losing rather we should say they minimize your losses. Traders can follow their own strategy and still be on a long losing streak but the importance of sticking to it is they help you to learn. That’s why one advice I will add is to trade few pairs and not just all pairs, try to have the culture of back testing your strategy on a pair multiple times first before going full in to trade them.


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.


This is a very serious problem to almost every trader, only the few disciplined traders can overcome this, the Euphoria of been on a winning streak can drive one to over trading. This is part of the reason why some traders even take off take profits and allow trades to move until some reverse back. I think this and revenge trading if overcome by a trader will solve more than half problems associated with trading physiology


Over trading can be when you trade multiple pairs just to gain more profits. Or you trade more than you use to, for example you usually trade two pairs a day but after they hit TP you go back to trade again or when you lose instead of opting out of trading you continue trading to recover losses there by surpassing your usual limits.

Some people can open ten trade positions at same time, this makes you not to study the trade well enough before executing them. This is my own opinion of over trading

Over trading ? what is this now, do you mean by taking trades at the wrong time or taking multiple trades in the same time frame, how it can be considered as over-trading.

For the rest, I do agree that people lack in these points when they suffer losses, but you cant be a perfect trader because your loss is your experience and without experience you cant be a good trader.

You can add overconfidence on that list.

It's because that many of these traders think that they know how to read the charts and have a good analysis. But then, it's not all about that. And another thing.

You just can't time the market and it's always highly speculative and with that, you'll never get to see a very accurate reading of the market at all times.

I agree with all that you've said and want to point out overtrading. When the profit isn't enough, a trader thinks that he needs to do more until he lose instead of winning.

You are right on this. there is no way a trader can be successful trader without the proper knowledge of trading, the knowledge just be as a tool for trading without it trading is impossible.  and not just the knowledge their many things a trader need before can be able to achieve his success in trading.  since we all know that trading is very risk. However, the technical analysis is also important, and then emotions and greed need to be overcome before someone can be a qualify trader.


Although. My own opinion on this will be that if someone really has the knowledge of trading, then overtrading will not be a problem because he knows what to do before he trades. I think overtrading can only affect someone who does not have deep knowledge of trading or is greedy; if not, I don’t think it will be a problem. If someone trades and wishes to trade more, it’s fine with him. The main thing is the knowledge to me. 

All of those are without a doubt important reasons why traders lose money, but you probably forgot the most important, and that is because they have to, many people have the unrealistic expectation that they can trade and never lose any money, and this is not possible, at best a trader will earn more money than what they lost, but losing is inevitable, also it is important to remember that by the way the markets work, we are bound to have way more losers than winners, since trading is a zero-sum game.

Greed maybe but not fear because when they are fearful, they won't enter the market. Fear is also what prevents us from knowing something because we are afraid to experience that thing but we can't be fearful if we will only read information about them, so it is still possible for us to know something even if we are only like this. It's okay to take one step forward and more steps backward, than only move forward because there might be dangers that you will face and at least, you still try, than not making any steps at all. As long as we are the ones who do such thing, then it indeed that it is also our responsibility whatever happens to us.

When we are greedy we want more, so temporary profits doesn't prevent us from knowing it.

Losing money in trading happens to many people.The main reason is not having enough knowledge about trading.Not being able to analyze the market.Trading without understanding the market situation.Too much leverage and repeated trading.Due to these reasons almost people lose money in trading.

Fear and greed that makes traders to impulsively enter the market is also responsible for why they lose money. I think that temporary profits prevents them from knowing this first. They because their strategies are not sustainable it like taking a step forward and three steps backwards. Their greed and fear which makes them impulsively enter the market and make profit toady's will also become responsible for their significant losses the next day or two days after.

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.

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.

Another one is the use of high leverage. Another is not having good risk management. Budgeting or bankroll of the amount that you can afford to lose is very important. But do not because of that use high leverage.

This has been my problem in trading. I can have in mind that I should just have $10 PnL for the day and stop trading but after I have $10 profit already, I will continue to trade until the day do not favour me.

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

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.