To be honest, getting consistent returns as a trader is not easy. Around 90% of people who have entered the financial markets lose money and leave empty-handed. There are lots of reasons for losing money. For example, some people are not that serious about their trades, and they just do it like playing a game, others take it as entertainment and not as hard work, the rest feel lazy to gain knowledge and acquire new skills.
So, why do you keep losing money? Your answers are below;
Being ‘too smart’
Being too smart is hardly the reason that makes you keep losing money. Nevertheless, it is the brilliant investors who are more successful in the financial markets. If you think you are too smart, on the contrary, it could get unpleasant.
Now, what do most ‘smart traders’ do? The smart traders believe that they can defeat the market, which is not easy and happens pretty rarely. They believe that it depends upon luck and not the skill. Most of the traders enter the deal at the least suitable time and end up with a position that is intended to lose.
Very less people out there can brag the ability to be smart with the market. One stay humble, trade with the trend and don’t act over smart while going against the market rather you should embrace it. You should rather embrace it instead of beating and going against it.
Trading cant’ be considered as your life. Here one needs avoid both positive and negative emotions as they can hamper trading progress. Try to stay relaxed and patient. It will help you in your next trading.
No risk management
One can bet his entire investment on a single trade and may even earn some profits. But, after a few more trades, he will eventually end up having massive losses. Unlike those traders who follow proper risk and money management & as a result lose just few shares of their investment, you can lose the entire capital at the moment. No more funds equals to no more trading.
Conventional investors suggests that one should risk just 2% of his trading equity on a single trade. Go for 4-6% if you really feel lucky, but under no conditions assign 100% of your funds to even “the deal that will make you win for sure”.
Controlling your emotions place a big role while trading, as said by warren buffett -“If you cannot control your emotions you cannot control your money”.
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