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The Reason Why Traders Lose?

Discussion in 'Beginners Bootcamp' started by Shevvy, Apr 27, 2017.

  1. Shevvy

    Shevvy Private, 1st Class

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    There is only one reason why traders fail to win and the answer is really simple,traders lose more than they win”. That's it in a nutshell, everything elseis just pure conjecture.

    To be successful in the financial market of your choice does not require that you are fully aware of the basics of that market, i.e. What is forex? What is the stock market? You don't need to understand how indicators work. In fact you can successfully trade any financial market without any prior knowledge of that market whatsoever. What's more you don't even need to follow a trading plan, (a golden rule for the trading connoisseur).

    If you have the ability and understanding to be able to read and analysis a financial chart you can become more successful than you ever thought possible.

    What's more chart reading and analysis is the same for every financial market that uses trading charts. Therefore learning the ability to read and analysis one financial chart means you can do the same for any other financial chart, whether they are stocks, commodities or even the more exotic traded funds.

    What is 'Trading'?
    The first thing you need to understand is the concept of 'Trading' and what 'Trading' actually means? Although in most financial markets today 'Trading' has become all encompassing but you will find that the term 'Trading' really does have a raison d'etre, a specific meaning.

    Trading only begins the moment you click trade execution (buy or sell) and trading stops the moment you click stop trade. And that is all 'Trading' is. Regardless of what others may try to infer to you anything else is simply not trading.

    Those other so-called 'Trading' tasks which appear under the 'trading umbrella' come under totally different headings. For example the 'trading strategy', it does not trade, it simply tries to locate entry points from which you can then trade.

    The Problem
    An article on the DailyFX* website in which the author had access to 40 million real trades derived from a major FX broker across 15 most traded currency pairs from 3/1/14 to 3/31/15 appears to verify the belief that it is the inability of traders to make more profit than losses which is the sole problem for traders losing in all markets.

    The article quoted that the evidence revealed that the average trader when winning gains $50 but loses $500. This confirms that it is a lack of 'Trading' knowledge which makes it difficult for the new, inexperienced and even the more experienced traders from getting a foothold in to the market.

    However, while the article clearly identifies the problem, the failure of the author to grasp the simple answer behind the analysis shows how deep seated this problem really is.

    The answer to the problem of, Why do traders lose? is, most traders lack the ability to trade. But how can treaders be expected to understand a concept they genuinely have no idea exists?

    Conclusion
    Traders need to be educated in the art of 'Trading'. To be taught that they influence their trades while still in progress.

    Without this type of 'Trading Education' traders will continually fail at a high rate.

    * Article quoted: D Rodriguez@DailyFX.com
     
    #1 Shevvy, Apr 27, 2017
    Last edited: Apr 27, 2017
  2. downtrend

    downtrend Sergeant

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    I can not specify any one reason. It can be many things related to loss. Mostly we suffer from low experience and knowledge then we take wrong decisions about risk taking. these two are most important , Just make realistic trading as analyze market then decide what to trade and how to trade.
     
  3. Shevvy

    Shevvy Private, 1st Class

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    Hi downtrend, there are many reasons one can relate to loss when trading but none of these reason actually cause loss.. I totally agree with you that lack of experience and lack of knowledge are the two most important issues facing new and inexperienced traders. But I don't believe risk is such an issue to the vast majority of traders. In fact I would dare to say that most new traders never get to the risk problem as they have lost their stake well before.


    Risk does not cause loss but can be related to loss. If a trader places a wager with one standard unit or leverage, of say 10 units the risk is exactly the same. The perceived risk however of employing leverage is naturally greater though. Risk only comes into the equation if you have a successful trading plan or not. If you had a trading strategy that say produced 90% winners then whether you trade with high or low risk you are going to produce the same returns albeit proportionally to your stake value.


    If we use the current argument that 95% of traders lose their money. Then the 5% holds those retail traders who have worked at financial institutes as a professional trader while the 95% is made up of retail traders who have never worked in the industry.


    To me this reinforces that my original conclusion was correct and it is this lack of trading education that differentiates the two camps and by learning how to trade is all a trader needs to learn to be successful.
     
  4. TrapLok

    TrapLok Recruit

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    There can actually be a lot of reasons for why traders lose and the author covered only a few of them. To my mind, one of the main reasons is selfishness and a lack of knowledge.
     
  5. Kokomaster

    Kokomaster Private, 1st Class

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    One main reason what I feel is greed.
    When a trader start to get some profit he wants to increase it exponentially and this is the hit. Being disciplined is difficult but it is the only way to avoid major losses.
     
  6. sadip.tammat

    sadip.tammat Spamming from the offices of JustForex

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    I agree with you.
    Most newbies lose, as they consider Forex as way to get easy money, so they lose their deposit and say, that Forex is a scam.
    Everyone should understand, that Forex trading is a hard work. You should learn all the time, be up-to-date, be aware of world news and be able to analyse and predict price changes.
    If don`t realise it, you`ll keep on losing money.
    And also, choose broker carefully, it`s important. There are a lot of scammers in this market. But if you make xome research, you`ll find reliable broker.
     
  7. Jeff Martinez

    Jeff Martinez Recruit

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    There are many reasons why most of forex traders can’t survive here in this world largest market. From my view of point for losing here is they do not study well and get educate themselves to get ready for forex market, so, they do not understand actions of this market. As an ultimate result they lose.
     
  8. alaska27

    alaska27 Recruit

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    Many traders lose money because of their self confidence, stupidity and selfishness.
     
  9. hitfx

    hitfx Corporal

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    Losing is not the failure, it give the more motivation and lesion towards success. I would like to say that most of the people are getting loss due to lack of learning and interest, they think that they can not survive after getting first loss, I would like to suggest that they should learn from their mistakes for efficient survival.
     
  10. Kokomaster

    Kokomaster Private, 1st Class

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    There are many reason for loosing in forex. Inadequate knowledge about forex being the first one and greed is another important factor. If a person don't stay patient and do not use stop loss in forex the lose is quite disastrous as well.
     

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