Why Newbie Traders Lose money? | Risk Management Basics

[puertorikosena]

Many successful traders always advise beginners to cultivate discipline and risk management. The most important thing is to develop your own system and not deviate from it, otherwise you will incur losses.

[Shasha80]

Many newbies are lazy to analyze the market, moreover regulate the capital that will be used for trading. So there are many
newbie traders lose money. Thank you for sharing about risk management basics, thereby minimizing newbies experience
running out of capital when trading. I pay more attention to step 3: don't risk everything in one day, this is the most point
influential for the newbie in my opinion. Because most newbies when trading directly all in with their capital, because believe
in the trading signal pump and dump that he gets. But if it happens it is very risky, especially following trading signals that
are not yet clear its accuracy.

[el kaka22]

The instant answer could be because newbie traders don't know the details of trading as much as a veteran one?
I mean simply when you first start the only thing you can think of is "buying cheap and selling high" and that's it, you have no clue how that is not, you have no idea about indicators, trends, big whales, the manipulators, the resistance/support levels and many other stuff, all those things with ways to buy and sell like stop loss, buy order and many others all still unknown to you when you first start.

It means there are still a lot to learn but of course would end up with losing a bit of money while people are still newbies, with time they will learn all of it and every single detail and become a veteran themselves as well, nobody born veteran, they become one.

[teosanru]

I think your second point about the power of compounding is something a lot of ppl forget, thanks for the well-written post. 2% a day would be a great target, and isn't too far off. Especially if you do some arbitrage trading as well.

Actually it's easier said than done.  I have nowhere said that it's something anyone can achieve because you might get 2% one day but when you will face a loss the next day you will try & earn the 2% you lost previous day too and would go for 4% and things could become worse after that. So it's better to forget the previous day and focus on getting 2% today.

If you're especially new to trading, you don't necessarily need to set profit targets for yourself to reach at first either. I found that I got extremely stressed and performed worse when I started out trading and trying to hit my own personal targets, even when those targets were low, and most people extremely new to trading crash and burn a few times at first as well. You should still be adhering to your risk management plan whether or not you've got a profit target, though.

Also realize that you should not be basing your stops only with the R/R ratio. The market does not care about where your stops are, so use technical analysis whenever possible first before worrying about whatever R/R target you want. You'll be stopped out less this way. I also don't believe in having a certain minimum R/R per trade; this varies from situation to situation and there's times when the R/R of one trade's lower than another, and that's just fine.

I agree that varies from situation from situation but what newbie traders do is that they keep a low R/R and satisfy themselves with some prophecy to convince them what they are doing right but instead all what they are doing is holding a trade which is going on the opposite side and not selling it in time.

[BitHodler]

It means there are still a lot to learn but of course would end up with losing a bit of money while people are still newbies, with time they will learn all of it and every single detail and become a veteran themselves as well, nobody born veteran, they become one.

I don't think many people reach that point. If we look at how people keep losing with stocks, a more calculated market that has been trading for decades, they will never learn anything in the crypto space.

Crypto comes with even more risk, plus when you trade on platforms as BitMEX the whales there just wick the price up and down to get your position to liquidate. It's a very brutal market people will not get comfortable with.

[iamsange]

Honestly i am not read every post yet, so i will ask question that still on my mind. When market like in a dump trend, and we set stop loss in that percent from our capital, what can we do if we keep losing. I mean, not all people know in what price they can buy a coin and maybe this need people's own analysis. So, in a dump trend when we cut lose every price reach our limit of loss, is that means we have possibility to get more lose than a win? or maybe there is a way for people to know where good price to buy a coin.

[Murat]

This post should not be applicable for all the newbie traders, There are a lot of newbie traders who've managed a good amount of money by this system, whatever the issue is, Your risk management factors are really appreciable. in addition to this post, I also think that sometimes newbie people could have a huge expectation from the trading platform so they often with huge money, That's way too much trading bring back to a massive loss. another mentionable is that newbie sometimes often makes a decision based on their emotion rather than experience. so a bit careful could prevent themselves from their loss by the trading platform.

[Amel]

It means there are still a lot to learn but of course would end up with losing a bit of money while people are still newbies, with time they will learn all of it and every single detail and become a veteran themselves as well, nobody born veteran, they become one.

I don't think many people reach that point. If we look at how people keep losing with stocks, a more calculated market that has been trading for decades, they will never learn anything in the crypto space.

Crypto comes with even more risk, plus when you trade on platforms as BitMEX the whales there just wick the price up and down to get your position to liquidate. It's a very brutal market people will not get comfortable with.

Amongst that, of course they keep learning from experience, maybe only those who are looking for money will never learn. But for those who want to explore and research this brutal market will surely find the answer behind it, I'm sure there is a secret behind this market that we might not know about.

When the whale is able to make the price go up and down then why can't we, we just have to play like the whale is playing.

[Genemind]

I think it will be too hard for newbies to understand and apply this strategy. However, it will be helpful as well. Every beginner could make their own strategy by simply applying the basics. Dealing with the market's vootality is another advantage. Trading is like a trial and error thing so we have to keep on learning.

[wajik-tempe]

I think it will be too hard for newbies to understand and apply this strategy. However, it will be helpful as well. Every beginner could make their own strategy by simply applying the basics. Dealing with the market's vootality is another advantage. Trading is like a trial and error thing so we have to keep on learning.

Yeah some newbie are not bother about the basics and they're just jumped to the market and they will find the knowledge like this when they're experienced a big loss. This is an usual thing happens in crypto and even the experts who alraedy mastered the knowledge of trading is also experienced a big loss due to the crypto agility and unpredictablity in terms of price

[fullhdpixel]

Are you one of that "Trade Gurus" and decided to reveal the secret?
Well, I appreciate what you wrote, don't take it wrongly but please can you answer me on one question? When you profit, it means someone loses yeah? So in any way someone has to lose, doesn't matter how experienced these traders are, one can't profit without another ones' lose.
And what about to forget targets? I think you can't plan economy because your plan of daily 3% may ruin chance of getting 10% profit or you even won't reach your target so this means your plans failed? And some may start digging to get that planned profit next day combined with tomorrow's plan and it will ruin everything, especially when we talk about newbies.

Thanks for calling me a trade Guru By the way. And yes atleast read the whole post before writing anything merely for money, don't take it wrongly yes I can answer your questions if they really are questions.

Lol, I think he's really confused.. The only thing that matters to me is myself when it comes to trading. Whether someone is losing or not is none of my business. I don't see why I should be worrying about what others are making and what they are losing, when my main concern should be on my own trade and whether I'm earning or not. If someone is losing then it's best for them to quit.

I appreciate that you took time out to write and teach all these because it's not everyone that has this kind of time, I can't even write this much. And to be honest, this is the first time I'm seeing anyone break down risk management to this level where it's easy to understand. There are many people who don't know this, and they will find this helpful. There are lots of things to learn in trading and here is one of them.

[teosanru]

I think it will be too hard for newbies to understand and apply this strategy. However, it will be helpful as well. Every beginner could make their own strategy by simply applying the basics. Dealing with the market's vootality is another advantage. Trading is like a trial and error thing so we have to keep on learning.

But it's better atleast to learn from someone's else mistake than to do same mistakes again and lose money.

It means there are still a lot to learn but of course would end up with losing a bit of money while people are still newbies, with time they will learn all of it and every single detail and become a veteran themselves as well, nobody born veteran, they become one.

I don't think many people reach that point. If we look at how people keep losing with stocks, a more calculated market that has been trading for decades, they will never learn anything in the crypto space.

Crypto comes with even more risk, plus when you trade on platforms as BitMEX the whales there just wick the price up and down to get your position to liquidate. It's a very brutal market people will not get comfortable with.

The best thing is to go with a pretty less capital. Like $100 which won't hurt when you lose it. It still is enough but you have to stick by the rules and create discipline. This way you can save your capital from brutal market unless you familiarise yourself with the rules. If you stick by the rules it would take around 40-50 losing trades to lose entire capital of $100

[Hamphser]

I think it will be too hard for newbies to understand and apply this strategy. However, it will be helpful as well. Every beginner could make their own strategy by simply applying the basics. Dealing with the market's vootality is another advantage. Trading is like a trial and error thing so we have to keep on learning.

The safest way to trade is doing the long-term trading and by doing this you can easily spot the movement of the market in a wide view unlike those who do short-term trading which has a very limited view of the movement of the market specially the day traders. That's why it is recommended for newbies to start the basic first before jumping to the complicated strategy.

[teosanru]

I think it will be too hard for newbies to understand and apply this strategy. However, it will be helpful as well. Every beginner could make their own strategy by simply applying the basics. Dealing with the market's vootality is another advantage. Trading is like a trial and error thing so we have to keep on learning.

The safest way to trade is doing the long-term trading and by doing this you can easily spot the movement of the market in a wide view unlike those who do short-term trading which has a very limited view of the movement of the market specially the day traders. That's why it is recommended for newbies to start the basic first before jumping to the complicated strategy.

And if you think only long term trading is profitable then maybe you haven't seen the scalpers trading. They trade like each minute for them is equivalent to an hour. I think long term trading is nothing but a self fulfilling prophecy. People would just buy or sell with the flow of market and would earn profit if they are right and if they are wrong they will blame the whole market to have been gone on the opposite side. Complications would be solved only if you practice the same thing multiple times.

[FanEagle]

This is really a very big secret that you have exposed to people and I must commend you for being a selfless person because we have so many traders that would not want the newbies to know this and they enjoy when they see them make some mistake or want a situation where they would want them to consult them to trade on their behalf so they can get some money from them, some rather than showing them the secret would even tell them to come and pay for a signal that will eventually not work at the end of the trade.

But, I strongly believe that if there is any newbie that will pay attention to this strategies and advises of yours, the sky would be their limit and even me that feel I am good at trading, I have been able to pick one or two things from these points that you have here which I will apply also form now.

[teosanru]

This is really a very big secret that you have exposed to people and I must commend you for being a selfless person because we have so many traders that would not want the newbies to know this and they enjoy when they see them make some mistake or want a situation where they would want them to consult them to trade on their behalf so they can get some money from them, some rather than showing them the secret would even tell them to come and pay for a signal that will eventually not work at the end of the trade.

But, I strongly believe that if there is any newbie that will pay attention to this strategies and advises of yours, the sky would be their limit and even me that feel I am good at trading, I have been able to pick one or two things from these points that you have here which I will apply also form now.

Thanks a lot for your appreciation. I think growth is always better when it happens together. I have learnt these things because someone was kind enough to teach me this so It is my duty to spread the word even more. But really truth is newbie are still pretty reluctant to apply this information in their trading simply because following these rules takes effort and everyone wants to get rich quick. When it comes to trading people really think that it's magic Wand but I would really like to tell you that there is no IqOption or Olymptrade in reality. Making Money overnight is either sheer luck or a complete scam.

[carlfebz2]

•Risk Reward Ratio
•Compounding
•Dont go all in on a certain day.

3 important factors that should be considered first but these things can be acquired through experience.
Trial and error for short.These things might be very basic but these are the crucial ones that needed to be learned.

[beerlover]

Veterans may end up not looking or caring about these things because they already know them and they sometimes get too confident.

Not because they don't know them or they don't understand them, they do know all of these if they spent a bit of time but unfortunately sometimes they get too snob and confident about how they trade and forget to check these things which ends up with them not caring about it.

Yes, that is still a mistake and they should be checking every single risk management but it is not the same as newbies not even knowing what these are and that is why losing money, both end up with the same result but they go there from the different routes. I don't know if it should matter if their routes are different when their results are the same but there is that difference for sure.

[palle11]

Are you one of that "Trade Gurus" and decided to reveal the secret?
Well, I appreciate what you wrote, don't take it wrongly but please can you answer me on one question? When you profit, it means someone loses yeah? So in any way someone has to lose, doesn't matter how experienced these traders are, one can't profit without another ones' lose.
And what about to forget targets? I think you can't plan economy because your plan of daily 3% may ruin chance of getting 10% profit or you even won't reach your target so this means your plans failed? And some may start digging to get that planned profit next day combined with tomorrow's plan and it will ruin everything, especially when we talk about newbies.

I surely get your point about one losing for another to profit 
But on the issue of setting a 3% profit target and either you take it out and the market rolled out a 10% profit eventually on that same instance after you had gone out, if this thought of had I known or feeling of sadness keep going on, then you now see a trader over staying in a particular market and might be punished with losses.

[tambok]

•Risk Reward Ratio
•Compounding
•Dont go all in on a certain day.

3 important factors that should be considered first but these things can be acquired through experience.
Trial and error for short.These things might be very basic but these are the crucial ones that needed to be learned.

Yes exactly, most important thing too is learning to control the emotion, not just taking risk every day as you wanted to earn everyday as not every time the market condition is good, not everyday is perfect to trade at, so let's not be too greedy for that, that we are aiming for everyday income as it might lead to us to higher loss for being too aggressive in trading.