Why traders keep losing money?

90% of traders lose and only 10% of them win on the markets. It is a fact!



It is cruel! I mean let’s say that you are a plumber. If you are good enough, one of the best 10 of a 100, you can make money. But if - for some reason - the quality of your job does not reach 90%, you fail. You do not even make money - but you will be charged for that work. Tough, isn’t it? Would you want to be a plumber with these conditions? And would you try to become the best plumber without preparation and education? It would be silly, wouldn’t it…

But believe or not many people make this silly decision time after time, day after day and trade after trade.



There are so many mistakes that can be made during trading. And people keep making those mistakes.


I always try to help traders when they are having trouble with their account. Sometimes it’s really hard to fix the problem, because they come to me too late. I mean really late.After all, all of us wants to make money. People can hear success stories about winning trader and they decide to start trading. Unfortunately most of them are lazy and impatient to learn so next day they open an account and take a plunge into the deep water. (Real money trading). Naturally, most of them have no idea how it really works; they just jump into a trade without any knowledge or analysis.
At this stage it is pure gambling. Not having enough trading education and risking real money are the most common mistakes.

On the top of that they are greedy, as well. Inexperienced traders tend to focus only on the big money they can hear about in the success stories, so they unaware (or ignore) all the Money Management rules and put all their money in one instrument.
This is called lack of diversification it can be extremely dangerous. When the market moves against their positions the only strategy is in their toolbox is hope. They just hope for a miracle instead of using a Stop Loss order which could protect their capital. Usually this is a stage when they come to see me to discuss the possible scenarios. After working out the best scenario for their situation they go home and do not implement it. They simple do not trust the trade signals or do not trust as much as they do their emotions (hope, greed, impatience, revenge, fear, etc…)
Well, to cut the long story short they continue losing money because they break the rules. Later, when it turns into a disaster they come back to me to get more help.At this stage they often suffer from serious financial and emotional damage, but I always try to emphasize that huge mistakes are not necessarily huge problems as long as you learn a “huge” from them.

Traders’ reactions are different under these circumstances.This is a breaking point when the majority is giving it up. They are the losers.
Another big proportion of them promises to follow the rules however, they never learn the lesson and keep making the same mistakes and keep losing money. They are the fools of the market.

Only a small group of traders learns the lesson and invests in their education and turns into a successful and consistently profitable trader. No wonder this small group represents only 10%.


Next time I am going to write about how to plan your financial goals with trading.