5 Of The Most Common Reasons why Traders Lose Their Money

7 min read

This article is for those who can not get out of a bad patch and want to improve their way of operating in general.

Let's be honest. Getting stable income as a trader is not easy. Many of the people who have entered the financial markets, leave them empty-handed or even lose their money. There are a few reasons why this happens: some people do not take trading seriously, others see it more as entertainment than hard work, and the rest simply lack the will to learn and acquire new skills.

Why do you keep losing money, and more importantly, how to manage your losses? With luck, after reading this article, you will get an answer to each one of these questions.

For being 'too smart'

Being too smart is not the reason you lose money. After all, smart investors are the most successful in financial markets. But to believe you too smart, on the contrary, could harm you.

What do most 'smarts' do? They believe that they can defeat the market, something that actually happens very rarely and almost always must be attributed to luck, not to skill. In truth, most of them do the operation at the wrong time and end up with a position that is destined to lose.

Very few people can boast of having the quality to overcome a whole market. Be humble, operate with the trend and not against it. Instead of overcoming the market, try to embrace it and understand it.

For being emotional

Trading is not like life. In financial markets, positive emotions do not bring happiness. Both positive and negative emotions should be avoided, as they are likely to hinder your progress. Try to keep calm and temper. It helps a lot.

Greed, the vice that has deprived many traders of deserved profits, is not different from excessive joy. Being able to stop when your trading systems tell you is another skill that you will have to learn to improve your results when trading.

For not having risk management

You can bet all your money in a single operation and win. But after one or two operations in the end you will end up losing, and you will lose a lot. Unlike those who put into practice proper risk management and, therefore, lose part of their trading capital, you will lose everything. Without funds there is no trading.

Conservative investors believe that you should not invest more than 3% of all your capital in a single operation. You can throw yourself at 5% if you feel lucky. But under no circumstances should you put 100% of your funds at risk in "operations that will undoubtedly turn out well".

By operating with robots

There is no single winning strategy and there is no robot that can provide tangible results in the long term. All the people who offer you a unique discount for the 'SuperTrader 3000' are scammers. After all, who in their right mind would sell a robot that always wins? Is not it better to keep the goose with the golden eggs and use it to speculate? Better spend the time you could have spent looking for a robot that works online, in learning and practicing trading in the test account.

By adding to a losing position

You can not even imagine how many traders continue to add to the losing positions. In fact, it is disturbing to see how your position melts as you look nervously at the screen. Also, there is a better decision than to keep pulling more of your money. Instead, consider reducing your expenses. When you see the tendency to turn against you, an immediate exit is often the best decision. If you still find it emotionally difficult, re-read the "Being Emotional" part once again.

Negotiate now

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Source: IQOption blog (blog.iqoption.com)

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