Why 95% of traders lose money in the market
Current statistics are not in favor of beginners! According to a number of brokers, most newcomers lose money. The funniest thing is that neither the broker nor the force majeure is guilty of a deposit, and the traders themselves, it is their mistakes that prevent them from receiving a stable profit. That is, the broker does not have to merge his clients. This will make for them an initially negative expectation mat (Wednesday and commission) and statistics.
Today we will take a thesis on the key mistakes of beginners and see if they can be avoided.
Any transaction is based on market analysis. The trader has a checklist and checks by points the fulfillment of the conditions for concluding a transaction. If not, forget about stability.
Emotional decisions are made when the main phase of tilt occurs. The trader does not control himself, after the loss he is trying to immediately recoup, can not be out of the market.
Shopping in a falling market and selling in a growing
It sounds absurd, but many traders work in this style. Strong movements always end with correction, and sometimes with a reversal, but such moments are difficult to catch.
If the chart made a breakthrough by 100+ points, this does not mean that a U-turn will take place right now. It seems to you that further decline / growth is impossible, but the movement continues, and you accumulate loss.
After all, how does a beginner trade? I opened the chart, saw that the price is locally at the high / low and begins to sell / buy. Although, what can be a confirmation of the trend, if not another hi / loy?
Increasing losses and cutting profit
The main principle of work is to allow profit to grow, but we cut off losses in the bud. Paradoxically, traders work differently:
• they constantly push the stop farther away, thereby increasing loss;
• due to greed and fear of missing a profit, transactions are closed prematurely.
In addition to emotions, this type of error is also associated with the inability to determine the correct stop and take profit levels.
Indecision and constant search for ideal entry points
Excessive caution will not help, but rather harm. Of course, you need to filter the signals, but if you will indefinitely postpone the moment of conclusion of the transaction, then you will be left with nothing. Often this is due to fear, fear of losing money.
Having missed some good entry points, such traders are bored with staying out of the market, they lose their vigilance and take the first signal they get. As a result, several reliable signals were missed, but one unprofitable was taken - instead of profit, we have a drawdown on the account.
There is no need to be afraid of losses, if during testing the strategy proved to be profitable, then at a distance you will be in the black.Self confidence
This type of trader is a mirror example in relation to the previous category. If a fearful trader is not sure of each decision, then the situation is different - there is only one true opinion and this is your opinion.
If a market analysis is made, an entry point is determined, then any other scenario is not considered. If the stop is triggered, this is explained by anything, but not by its own mistake. Of the favorite arguments that such traders justify their failures - broker manipulation, force majeure, conspiracy of market makers.
Even to himself, he cannot admit that the error lies in the incorrect analysis of the market. The best medicine is lost money, after a couple of merged deposits unwittingly comes an understanding of the fallacy of their actions.
All of these reasons come down to one thing - the trader’s inability to control himself. All traders experience the same emotions - fear of losing money, greed and a desire to close a position right now, a desire to enter the market early, indecision at the time of a deal.
The difference between a successful and merging trader is that the former does not allow emotions to get the better of you. If you learn to trade with a cold head, most will disappear by itself.