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The 5 most common reasons why traders lose their money

Trading

6 min read

This article is for those of you who fail to achieve a breakeven situation in trading and wish to improve their business overall.

We are honest. Getting stable gains as a trader is not easy. Many people who have entered the financial markets will come out empty-handed, if not after losing their money. There are several reasons: some do not take trading quite seriously, others see it more as a form of entertainment than hard work, the rest is simply lacking in willingness to learn and acquire new skills.

Why do you keep losing money and, more importantly, how can you handle your losses? After reading this article you will probably have an answer to these questions.

Being "too smart"

Difficult to be too smart will cause you to lose your money. After all, the smartest investors are those who enjoy the most success in the financial markets. Believing that you are too smart, however, can lead to unpleasant surprises.

What does most "intelligent" people do? He believes he can defeat the market, which actually happens very rarely and is generally attributable to luck, not skill. In practice, traders who think they are more "awake" open an operation at the wrong time, remaining with a position destined to lose.

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There are very few people who can boast of being able to win on the market. Stay humble, trade on the trend and not against it. Do not try to defeat the market, follow it and understand it.

Emotions

Trading is not like life. On the financial markets, positive emotions do not bring you joy. The emotions, positive or negative, must be avoided, as they will probably be a hindrance to your progress in trading. Try to keep calm and cold blood. It helps a lot.

The greed, the vice that has deprived many traders of their hard-earned gains, is not so different from an excess of joy or tilt. Being able to stop when your trading systems tell you this is another skill you will need to acquire in order to improve your results.

No risk management

You can bet all your money on a single transaction, and you could win. But, after a time or two, sooner or later you will lose, and you will lose great. Unlike those who put in place an adequate risk management and therefore lose only part of their trading capital, you will lose everything. No funds = no trading.

Conservative investors believe that you should never invest more than 3% of your trading capital in a single transaction. Reward 5% if you feel lucky. However, under no circumstances should you invest 100% of your funds for "guaranteed winning transaction".

Trading with the robot

There is no single winning strategy and there is no robot that can guarantee tangible results in the long term. Who offers a special discount "SuperTrader3000" is a scammer. After all, who, sane, would sell a robot capable of winning always? Would not it be better to hide the hen from the golden eggs and use it to make money? Better to devote your time to training and trading with a demo account, rather than looking for an online robot.

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Add funds to a losing position

You can not imagine how many traders continue to add funds to losing positions. Certainly it is annoying to sit and look at your position while sinking on the screen. But there is a better decision than throwing more money. Consider rather to cut expenses. When you see that the trend is aimed at you, an immediate exit is often the best decision. If you are still emotionally difficult, read the part on emotion.

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Source: IQOption blog 2018-10-04 09:46:08

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