I say, more than 90 percent loose money in market before 5 to 10 years ago.
But as of today, there are many traders or retail traders who is earning a good amount of money from trading. Some also became a full time trader.
There are thousands of reasons because of which people are not able to make money out of stock market.
But to summarize this points, some reasons came out for why 90 percent loose money are,
-
No knowledge about stock market, financial world, stocks and of option trading
Some start with the knowledge of one reel and one youtube video. Some influencer shows them how easy it to be earn money. They enter. They realized how hard it is. They dont teach how to trade, they only teach how easy is to make money as they were making money.
They dont show capital, strategy, risk reward plus their psychology. They just give you dreams. Common people take risk because they want to earn money easily.
They wont get knowledge from other sources rely on only one source. Plus they dont get real knowledge of market fully trust on the one of guru or teacher on social media.
2. Psychology
If you want to trade, you need a psychology of yourself on how you are going to make money in the market.
It also includes how you handle the ups and downs from the market.
You are planning to make money from market, but ignoring the struggle, hurdles, difficulties, risks and mental pressure arises out of the trading.
For you, trading is simple a game of candles with profit and loss. People wont feel when they loss. They feel after marker closed that how much money they have lose.
This all happens because their is no psychology while you are trading. It is simply gambling where you randomely think and put your money on anywhere without hesitation plus with the belief of the marker is a pure game.
It is not a game. It is your feeling because you don’t want to learn trading. If you do so then you realize how much you need to learn. But you want quick money or someone who guide you. Those people cant teach you the psychology.
They will teach you concepts but main psychology you need to develop for yourself.
In psychology one need to understand that market will give loss, how to avoid overtrading and also how to earn money without stress and overtrading.
Psychology is a process of knowledge, experience, skill and expertise.
So on 1 day or in 2 months you will develop psychology this will not happen.
Summarize psychological problems are,
- Huge mental pressure while treading
- No proper psychologically preparation for the market
- Overexpectations from market
- Overconfidence
- Overtrading
- Poor self control
- Lack of experience and expertise
- Taking random trades entry and exit
- Thinking market is easier for me
- Thinking you can handle loss
- Thinking it is easy to make money from market just need buy on green candle and sell on red candle
3. Strategy issue
90 percent retail traders trade on support resistance, indicator and buy sell signals.
They wont understand prise action, smart money concept, candle psychology.
Because if you want to be successful you should know all the things.
You cant became successful only if you have one strategy or one indicator or only you are trading on any one aspect like prise action.
You need to balance it. This is called a trading skill. This helps you to avoid poor trades and have only good trades for you.
Any profitable trader take trade on their setup, strategy. Retail trader trades on emotions feelings and assumption with market will move or not. What he thinks.
Marker wont behave on assumptions, it behaves on data. So data driven decisions is only taken via applying the smart money concept plus the setup.
Last one strategy, one setup and proper psychology helps you to build income from trading.
Other strategy issues are,
- Strategies gives more loss and less profit
- Strategy is not allign with your personality
- Every strategy has only 50 to 70 percent win rate
3. Overtrading
It is the very core problem of retail trader. Retail trader lose all money in 4 to 5 days due to overtrading.
It prevents the persons growth from market. By daily investing in market builds personality suitable for trading. It is the attitudes that develops while you trade.
If you didnt develop through the process you miss learnings that come with time. And i bet the time will bring you money.
So follow your plan and strategy. Then you will definitely have a good trading career.
4. No idea of stop loss and target
Some retail traders dont know where to place the stop loss or they dont exit on their stop loss. They think market will again move in their direction. This lead to big loss.
Next is target problem. Retail trader mostly dont exit on target. They want more money so they wait till market reverse and lose money. Market rarely gives more profit in a desired direction.
So, the point lies in managing this risks and reward. If you are not able to earn then how would you survive in the market. So first every trader should know when to cut loss and when to book the profits.
Most of traders randomely exit on candle fear this is where their psychological analysis of profit and loss gets disturbed and they mess up the trade.
Not hold the trade
It is also a big reason. When a trader enters in market. For a small moment trader exit from market and take sl. Because for him this loss is big. And thereafter market moves in his direction and trader ended up in the loss.
But the point here is that, hold the trade untill your strategy seems to be fail or your setup is not work. You should hold the trade untill the market is moving in your favor. This does not mean getting bigger losses, never it means avoiding the unnecessary losses.
So they are some reasons for lossess. I quickly give some points that will help you to avoid such mistakes.
- Look for good green or red candle for entering in a trade
- Apply smart money concept
- Use support resistance for levels and key buyers and sellers area
- Avoid taking next trade when you get 2 loss take trades one hour later
- Alway analyze and then take a trade
- Dont do overtrading instead of that close your trading day completely
Follow above advise and you will also became a profitable trader. Add more points in the comments…