Topic: Why newbies lose huge money in trading - page 3. (Read 3301 times)

I agree with you.Even they don't have any knowledge how to do technical analysis.To avoid losing money in trading new users must have to learn proper trading tips and have to use stop loss in every trade.

Newbies tend to lose a lot of money in trading because they fail to learn before trading. They forget trading is not a get rich quick scheme. They also lose huge money when they trade their emotions in a particular market trend. Newbies also lose money and get frustrated when they fail to do a proper analysis on when to enter and take profit from a trade.

Newbies are generally un-experience and nothing knowledge og Crypto. They just observe the market and any coin which are in fomo they take entry in it. They have no knowledge if usecase and any update if the token. They just check market and take entry.
Sometime when they teke entry. Token downs hard because whale game and they loss huge money in trading.

But you wont acquire knowledge if you dont tend to experience because experience is one of the most common way of learning things.
Theories and write ups might be good or beneficial but that wont really be that sufficient in terms of overall aspect of trading.
You do need to test for yourself and the rest of learning will be there.

The main meaning of entering cryptocurrency is that you have to acquire knowledge first and earn later. There are many people who have gained a little knowledge and think that I have become useful enough to earn. But this is where the biggest mistake is made in trading.

I think the biggest mistake that every newbies done is first focus on earning then on learning. They did not try to learn anything their main focus is that how much we can earn money from our investment. And that is the biggest mistake I think. Without learning we cannot make money. Knowledge is power

Newbies lose huge money in crypto because Many newbies done the same mistake that they sell their token in loss it is a very big mistake. I want to suggest newbies. They should research the project in which they want to invest.

there is a saying "experience is the best teacher" beginners don't understand the best experience, they only understand the basics.  I think beginners should be patient before daring to publish and speculate.  That's why beginners often experience loss

Lack of knowledge and patience is the common reason why mostly newbies lose huge amount of money in trading cryptocurrency. Another reason is fear and greed. When they saw  market is moving downward they start panicking and selling even they will face losses. Sometimes when they saw market is increasing they don't want to sell even they are already in profit because their aim is to have huge profit until price suddenly change direction and moving down while their selling price still not reach and that is because of greedy.
Trading really needs knowledge and understanding the market which newbie should know.

Most of the novice who came up here in the cryptocurrency loss their investment due to lack of knowledge or lack of research, then some are greedy, and some are don't care about what amount of money they are putting in the coins where in the end their capital will melt all of a sudden due to because of their negligence.

Well spoken, newbies sometimes believe that once they have the basic knowledge of the technical indicators and training analysis, they feel too proud to put huge amounts of money for investment, not knowing that experience really matters in crypto trading. For example exchanges like Binance provide room for newbies to partake and gain little experience in trading as they will be provided with virtual trading illustrations. So we have to gain some experience in practicing before put a huge investment in crypto trading to avoid huge lost.

Anywhere you invest and expect a good return, practical experience is needed. Yes its good to learn the fundamentals and Technics to be successful. The lesson are just a format and a set theory. When its practiced and experienced, the overall picture differs. Its common with every newbie and at times with experienced traders to loose. But yes, looses will teach more where to get in and not to get in.

Yes, to become a trader one has to be consistent and one has to learn more about the market and current market developments. Beginners who only have the basics then decide to trade without doing a good analysis, this will lead to chaos in trading. They will not be ready if the market suddenly drops. which beginners have to learn about crypto knowledge, it is also necessary to discuss the experience of traders before they are successful. so that they are motivated and not in a hurry to make decisions.

We should mind off that there is no trader who do make out 100% rate of making money.Of course we do lost money no matter how experienced or  knowledgeable you are.

We do all commit mistakes and its up to someone whether they do learn from it or would simply ignore it sound because they do know
that theres a big support into those teams specially on soccer or football.

As we can see on which we do all starts from money.

Take losses as experience to trade in the future. if you look back further, successful traders have experienced losses. Be it the first trade or the next trade. Do not think that if beginners have learned well, they will not cause losses, in fact this is returning to market conditions that are not on our side. And for beginners, you must have experience so that in subsequent trading you can be more careful in trading.

Most of what happens to newbies is why they lose big because they prioritize emotionality, so it's not called trading but gambling. without good knowledge, newbies are always unrealistic about the current market, and after floating minus, they are reluctant to cut losses, because they think the price will definitely recover soon, and eventually panic sell and lose a lot of money

The following 10 reasons why a new trader is more exposed to losing the entire funds in a few days; will help you to understand the process and avoid making the same mistakes. Before getting started as a trader, you must understand the blunders that most of the traders make, as this will help you take calculative steps increasing your probability to be successful.

1. Trading without knowing the fundamentals


Most often, new traders plunge into trading without knowing about the market resulting in making wrong decisions and incurring losses.

How can you risk your money in a market that works on prospect theory without having any knowledge or training about trading? Before you start trading, it is very essential to know the basics of trading. A new trader should extensively read about the market trends, the scenarios, the way it functions, and everything related to the Forex market. Gaining adequate knowledge will help you to make wise and informed decisions on the basis of your personal needs and goals.

New traders should gain some experience by trying out the demo account. Demo account works with virtual money and there is no emotional stress involved. Though the real market responses differ to quite an extent from that of the demo account, it is still a good way to gain experience before you enter the actual trading market.

2. Improper/ No Trading Plan


A trader should always have a detailed trading plan before they enter into any trade. The trading plan should have entry and exit positions defined, a risk to reward ratio calculated, the choice of a currency pair in which trading would be done and money management strategies. A trading plan will always help you to follow a strategy allowing you to measure its performance and make decisions. A trading plan will always assist you in making thoughtful trading decisions keeping you away from making emotional decisions. Also, when you make a plan, you should trade based on your plan. Any second thought may completely change your trading activity and may work against your favor.

Trading without or with an inappropriate plan creates odd results. You may win but it will be short-term finally ending up in losses.

3. Being impatient

New traders often make hasty decisions with the intent to make early profits. However, being impatient will land you nowhere. Remember, Forex trading is not easy; it takes a lot of time and practice to earn big profits. Traders who think of trading shortcuts which can make them affluent and rich are the ones who blow up their funds early.

4. Getting anxious with the reverse trade movement

New traders are often anxious or stressed out when they incur losses or the trade moves against them. They either try to recover their losses or exit from the market, both of which are bad decisions.

If you are a new trader and have experienced the movement of trade against you, do not be emotional or tensed; instead, wait for the market to work in your favor. All that you can do is, stop trading for a while till you identify the positive market situation or decrease the size of trading.This will eventually help you withstand the situation, without allowing your emotional responses to take over the situation.

5. Trading too much

A new trader may eventually make this mistake thinking that trading more will bring them more opportunities to be rich. However, aggressive trading may result in greater risk towards losses. Trading too much would expose you to losses in bits which may be enough to blow out your funds easily. Besides too much trading will expose you to take emotional decisions which may spoil your portfolio completely including your confidence.

Therefore, you should always practice trading at a low frequency based on risk to reward ratio calculation and decided position size. Try and enhance the quality of the trades you enter as this will increase the reward to risk ratio and make your trading more profitable.

6. No/Improper tracking of trade activity

If you’re new to trading and unable to give adequate time to monitor trading activity, you may take wrong decisions or enter a not so profitable trade, resulting in heavy losses. Therefore, you should always focus on daily trading activity, understand the charts and interpret what will be good and what may result in losses.

Predictions based on conviction do not work in Forex trading. Therefore tracking the activity will help you trade better increasing your chances to succeed.

7. Not using the stop loss tool correctly

New traders may find it difficult to use the protective stops correctly or some may even not use it. If you do not use the stop loss tool, you may land up making heavy losses and blowing up your funds quickly. Using the stop-loss tool will help you in limiting your losses thus protecting your capital. If a trader uses stop loss he is actually able to control the risk.

Besides, the stop loss should also be placed correctly. If you put a stop loss too early you may end up exiting the trade before it would have headed towards the profit-making direction.

8. Incorrect determination of exit points

Lack of experience and knowledge can compel a new trader in making wrong exit point estimations or not use them at all. Estimating the wrong timeframes will eventually result in losing out money and this may work both ways, moving out early or moving out late. If you exit too early, you may earn small profits but may lose the chance of earning bigger profits in the winning trade. If you exit late, you may incur losses.

A correct exit strategy should always be put in place as this will help you decide when to exit a trade. If you are aware of the time when the trend you have entered is going to change, you can always make the right move and make an exit without risking your capital.

9. Big Position Size

Most often traders set larger position sizes increasing their risk of losing funds as the bigger is the position size larger is the risk. When the position size is big, there is a fear involved both financially and emotionally. If you have lost in four trades, and hoping to win in the fifth trade, you are subsequently increasing your position size based on the emotional aspect, increasing your risk to lose again. This way your funds may finish soon.

Determining an optimal position size will not only reduce the risk but also allow you to use your funds appropriately in earning profits. You should always determine a position size which even if lost does not affect your life emotionally and financially

10. Emotional and Psychological responses

Often new traders make impulsive decisions based on the market trend drifting away from the strategic way of trading, resulting in losses. Often new traders in the hope to earn more money land up doing a lot of trading. Fear of losing money can cause an early exit from a trade that would have earned profits. Traders can blow out their funds completely if they trade emotionally.

While trading Forex, you may encounter several emotions like fear, anxiety, greed or stress. However, if you can overcome your emotions and be unaffected by any negative market situation; you are surely going to survive long term and make profits.

This detailed overview on the causes of failure for beginners in the trading business will surely enlighten all new traders to take strategic decisions and make their trading career a promising one. Now that you know what can hold you back from earning profits; all you need to do is manage your risks wisely and trade strategically.

It's not a good practice being too confident while doing your trade, you need to carefully analyze everything and aimed for the best information to use as your basis, many newcomers thinks that trading is easy access to attained wealth, not realizing that they are mostly prone in losing their money.

You need to be focused. There are many available materials online that will guide you in properly dealing with this business.

Make sure you keep doing your best, enhancing your knowledge.

Trading does not have perfection or having basic knowledge doesn't make you a pro, you can't be too confident while trading because even when you feel its the best time to enter into market you can still end up loosing. Its like gambling where anything can happen no matter the odds. Having knowledge about trading is good as the odds will be in your favour and less the chances of your loss.

Mostly many of newbie don't understand much about trading and they eager to make huge money out there, not knowing that they need a lot of knowledge about trading strategy. Some losing huge money because they have been hearing that some guys are making 30 percent of their capital daily or weekly from trading , so with this thought they trade with huge capital and later on if change they lose much,some of them don't study chart first before they just jump into a coin, just because their friends make it there last week thinking that marking will continue flowing with that method.