WHY 90% OF TRADERS LOSE THEIR MONEY IN STOCK MARKET- EXPLAINED SIMPLY

Have you ever entered a trade confidently and still ended up with a loss even after learning strategies? Or have you ever felt like the market always goes against you no matter what? Well, we will discuss why exactly this happens to many traders and why most traders end up with a loss.

Intraday trading is a very popular kind of trading because it gives quick returns in a short period; however, this type of trading contains high risk. According to research, more than 90% of traders lose money in the stock market. Even though there is no official data that proves the number is right, the actual number may be much higher than expected.

In this article, you will understand why most traders bear losses and how you can avoid some common trading mistakes beginners make that lead to making losses in the market.

Reason 1: No Risk Management Many traders enter a trade without any planning and risk management and end up making losses as the market moves opposite or becomes volatile. To manage their risk, they should keep stop-loss and triggers if the market moves opposite and exit from the trade to avoid further loss. For more efficient planning, traders must learn about the risk-reward ratio which helps in effective risk management.

Reason 2: Emotional Trading Trading with emotions is one of the drawbacks every trader faces in their journey. Emotional sentiments lead to entering a trade with fear or greed most of the time. Both emotions lead to making insignificant decisions which are not backed by any strategy or technical analysis confirmation. The more you keep your emotions aside while trading, the better performance you can see over time.

Reason 3: No Trading Strategy Trading strategies are the most significant factor that states how effective your trading plan is. If you are entering trades without any strategy, then it is high time to make one, as it will help your trading decisions. To build a solid foundation, enrolling in an advanced diploma in stock market can help you create a professional strategy.

Reason 4: Trading Against the Trend Most traders don’t understand the market trend and its sentiments, leading to entering a trade which is opposite of the direction of the market. Especially many beginners make this mistake. Before entering the market, understand the trend the market is in.

Reason 5: Not Understanding Charts Chart reading is the most crucial thing every trader must learn. Charts help to understand market trends, breakouts, and reversals by the use of patterns and trendlines. You can master these skills through a dedicated technical analysis course. Trading without understanding the chart is risky as the market is unpredictable.

Reason 6: Trying to Cover the Loss In the beginning of the trading journey, most traders make losses, but trading to cover it is a major mistake. If we make a loss, it is essential to stop trading for that day. If we enter a trade for the purpose of “recovering” it, we will eventually make more losses.

Reason 7: Depending on Tips Stock market tips are very common, but solely relying on them is foolish. We must make decisions on the basis of our own analysis and observation about the market rather than depending fully on such tips.

HOW NOT TO BE IN THE 90%

• Use Stop Loss: It helps in risk management and avoids losing money. Use stop loss before entering the trade and exit if the price hits it.
• Follow 1-2 Strategies: Avoid following too many strategies. Follow only one strategy that works for you to maintain trading vs investing discipline.
• Keeping a Journal: Journaling is one of the best ways a trader can analyze their performance. Record your entry, exit, and emotions to avoid repeated mistakes.
• Avoid Following Tips: You must have your own analysis to back your trading decision so you never enter market traps.

CONCLUSION: Trading is all about execution and decision making. Many traders lose their money because of a lack of risk management, analysis, and involving emotions. To avoid being in the 90%, focus on strategy, chart reading, and keeping a journal. This way, you can become a professional and profitable trader.