Yes, different stock traders have different dynamics. And the reasons why they lose money, it varies widely.
However, on many fronts, they do share a common ground.
There does exist some common (and quite evident) reasons why the majority of traders sustain losses. And you can learn a lot from those reasons to help your own journey.
Not Enough Market Knowledge
(Profitable) Stock trading is much more than what its basic definition underlines. It’s more than buying low and selling high.
Was it so easy, don’t you think we would be living in a trading paradise?
It requires sufficient market knowledge and dexterity. To stay at the top of your game and maximize your returns, you must understand the basic and advanced concepts of technical analysis.
This is why stock market courses for beginners are so important.
The right stock market trading courses provide you with not only sufficient theories but also arm you with efficient tools that supplement your decision-making.
So, do not enter the game clueless. Make sure you’re ready to tackle market challenges adequately through proper knowledge and critical thinking.
Being too emotional
You’ve heard this many times. There’s a reason why!
Because emotional trading paves the way to irrational behavior.
You wait when you should really exit the trade. You still hope when the trade isn’t bound to go right. You buy into the market FUD even when you know it’s the wrong choice.
Your emotions, more often than not, puts you in the wrong spot and you end up making wrong trading decisions.
This is what many traders do. And this why they lose so much of their money.
If you aren’t proactively working to keep your emotions away from trades, there’s a good chance that you, too, will make losing trades.
Recommended Read: Are Your Emotions Limiting You As a Stock Trader?
Not spending enough time
Your dreams to make big wealth out of stock trading demands a ridiculous amount of hard work and commitment.
And this hard work and commitment come at a cost of efforts, of course, BUT also, and most importantly, time.
You need to give It enough of your time every day. You must stay glued to your computer screen for hours, reading charts and analyzing trends.
Not many traders are ready to do this. Because…
- They are sold “quick money” dream.
- They aren’t ready to work hard.
- They are part-time traders with a day job; so they can’t spare enough time.
In any case, whatever may be your reason, it’s essential that you give sufficient time to it every day… to learn new things, to understand the market better.
These are the three biggest reasons why stock traders lose money.
If you want to get to the top of the game with a high-worth portfolio, it’s essential to eliminate these reasons. Of course, it’s not going to be easy and quick. But then you have no other option, do you?!