Why do 95% of people lose money in the stock market?

As a trader, you might have heard about the statistical data that shows, 95% of traders fail in the stock market.

Why 95% of Traders Lose Money?

  • When you start trading, treat yourself as a student and businessmen as well.

  • Don’t trade with job-mind-set. You need to understand that trading is a business, not a job.

  • When you start trading with job-mind-set, this creates bias in our mind toward periodicity of income. That means we start expecting specific income in specific time period. It may create trouble in your trading journey.

  • So, remove job mind-set, when you start your trading in stock market.

  • You need to start trading with discipline and keep your emotions away from yourself.

  • As, you are independent trader, there is no-boss it doesn’t means that you will do anything in the market. With the discipline, you need to regularly follow the market and keep updated with it.

  • At the end of the day, review your trade, note down the reasons behind the trade. This exercise will help you to lean from your own trading experience.

  • There are four expected out-come from trading – Big Profit, Small Profit and Small loss. But, Big-loss is not acceptable. So, always work with stop-loss.

  • Big-loss will easily blow-off your trading capital, so you need to understand that to recover 20% loss; you need to earn 25% profit. In the stock market there is only and only one thing in your control, that is loss.

  • When price moves against your trade, don’t wait for price to move in your favour. Always accept small loss, and immediately exit the trade.

  • When new traders comes into market, they always think about profits in mind and with this mind-set when their trades covert into losing trade, they start trading to take revenge. And with this revenge in mind, they take trade against their setups and again loose the trade.

  • As a new trader, you can decide risk per trade, that means prepare your mind for particular (you can take 1% risk of your total capital) amount of loss is acceptable per trade.

  • Whenever you make profit, make habit of withdrawing your profit. – It will impact very positive on your trading skills.

Reasons why most people lose money in stock market

1. Not doing enough research and investing based on ‘TIPS’.

2. Trying to make money quickly.

3. Sudden overexposure to market and non-diversification.

4. Holding onto losses while booking profits early.

5. Lack of patience.

6. Blindly following the crowd.

95% people do fail because they don't do research properly and their strategy failed so that they also got failed in trading and initially made looses while trading.

Those who trade with the proper analyse and guidance of any experienced person earns well.

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