Why do traders lose money in trading?

[Distinctin]

I guess for me, the very basic reason why a lot of traders lose money in trading simply because they fail to execute the most basic trading strategy, sell at a price higher than the buying price. Probably because not all traders are real traders in the market, some are just self-acclaimed and just own the title without having proofs. This boils down to the realization that some traders are not well educated and not well aware how trading works. But mostly, only greed and fear matter to them.

[tortic25]

It's a skill issue, like others have said, it's about minimizing risk/managing it.


I think poker is very similar to trading, you have rake "fees" the odds are already against everyone, there's going to be winners and losers.
The ones with more knowledge are still going to lose no matter what, but it's a numbers game, you don't put everything you have on a single bet.
And over time, making marginally better decisions than others will be profitable.

And just like poker, with trading you need a winning strategy.

[MAKInsaf]

When we trade in something, we must first gain enough knowledge about the trade. If we do not gain enough knowledge about the trade, then we cannot trade properly. There are many investors who invest too hastily without having enough knowledge about investing and end up with more losses than gains. Therefore, before investing, we must acquire enough knowledge about investment and be patient. If we can invest with long-term planning, we will certainly earn enough profit through this investment, which will make us more interested in investing in the future. But experience is very important in investment if we can't invest with experience then we will keep losing money in our investment than we hope to invest.

[fuguebtc]

I guess for me, the very basic reason why a lot of traders lose money in trading simply because they fail to execute the most basic trading strategy, sell at a price higher than the buying price. Probably because not all traders are real traders in the market, some are just self-acclaimed and just own the title without having proofs. This boils down to the realization that some traders are not well educated and not well aware how trading works. But mostly, only greed and fear matter to them.

Once we call it trading, it means we are talking about finding profits in the short term (intraday). What would you do if you bought bitcoin at $65k and you expected to sell it when it reached $68k , but things didn't go as you expected and bitcoin suddenly dropped in price to $60k or less? In this case, if you don't cut loss and are determined to hold until bitcoin recovers (which could take months) , is it called trading or are you holding ?

We all know that bitcoin is very volatile in the short term and almost impossible to predict, but many people like to make money quickly and that is why so many people lose money when trading . Even if you have complete knowledge and experience , there is no guarantee that you will always accurately predict the short-term trend of bitcoin.

[Peanutswar]

Trading considered already had a risk and if you get knowledge and experience you can lessen this risk to become your strength to avoid too much losses or even make a decision to not enter the position you are keeping an eye. Also other factor consist too like trader becomes more greedy with his action even though they gain profit because of too much confident the market is volatile and it makes a reversal move, also we can consider the market volatility we know how institution and whales makes a manipulation so people get liquidated unexpectedly still that's the reason why most of the exchange platform offering a SL/TP features to have an option to the trader to protect their money.

[Fara Chan]

No one always makes a profit in trading and has certainly experienced losses when they do it.
Apart from risk management, controlling our emotions we also need to study related to the coins we want to trade.
If our trading knowledge is not perfect then use small money first to train our skills to get better, so that when we master the method we can improve it slowly.

Trading requires knowledge because the market may change and we must be able to analyze this, so that when the market changes we can minimize unnecessary losses.

I also prefer small experiments by using capital that is not too large when trading on any market by buying coins that we think are good enough. Because our mentality and emotions will always train themselves when we have tried it several times on different coins in the same market and this can also train us not to panic too much when we see quite striking changes in the market. And in terms of knowledge, it will remain the core point that needs to be improved in any case, including trading, which is always full of risk of loss before making a profit.

[$weetne$$]

I guess for me, the very basic reason why a lot of traders lose money in trading simply because they fail to execute the most basic trading strategy, sell at a price higher than the buying price. Probably because not all traders are real traders in the market, some are just self-acclaimed and just own the title without having proofs. This boils down to the realization that some traders are not well educated and not well aware how trading works. But mostly, only greed and fear matter to them.

Alot of times we get prices higher than our buying price but greed would not allow us to sell and get our profits. Some traders have an imaginary profits in their head that it will make them to not want to sell until they have gotten that profits. I have meant a trader that said if he doesn't not get above 50% of his capital for any of his trade that he is not going to sell and take profits. He does not open trade always according to him and only open a trade that he has done all his analysis and be certain that he is going to make above 50% gains. What this trader does not know is that it is not all his trade that he can get the value and above. At times we should be comfortable with 10% profits and close the trade then waiting for unrealistic gains that we might not get. As a trader you will always lose money when you underestimate the market.

[knowngunman]

It is important we understand that one can not  trade and make profit every single time they trade, losses are still a normal thing in trading, just same way it is in gambling, the only thing I would say is that; as a professional and experienced trader, your won trades should be way way higher than that trades you lost.

And when it comes to why traders lose money, the only and basic answer I have is, it's due to lack of proper knowledge, skill, and experience.
Someone with a well polished trading knowledge, skill and experience, won't lose trades unnecessarily, because they would already know every thing that could make them lose their trade and try as much as possible to avoid doing such or things in that aspect.

It's impossible to escape from losing while trading as it's part of the game and that's why people are advised to stay away from trading if they don't have sufficient knowledge about it. The bitter truth is that even your sufficient knowledge can not save you completely from losing thou it can be limited when you are properly trained and applied the knowledge. The only way to stop losing from trading is to stop trading. However, traders can not just abandoned trading simply because of losing, measures to curtail the lose should be implemented. The first among these measures is acquiring the knowledge of trading sufficiently before any other thing. Knowledge will guide you through on the application of other measures.

[gunhell16]

It's a skill issue, like others have said, it's about minimizing risk/managing it.


I think poker is very similar to trading, you have rake "fees" the odds are already against everyone, there's going to be winners and losers.
The ones with more knowledge are still going to lose no matter what, but it's a numbers game, you don't put everything you have on a single bet.
And over time, making marginally better decisions than others will be profitable.

And just like poker, with trading you need a winning strategy.

When you have a deep understanding of trading, you will definitely get a real profit every day that you engage in trading activity. But if you are still in the current exploration here, it will be normal for you to lose because you are still discovering for yourself if the strategy you are using in the actual trade is correct.

So, it means that losing in trading can't be avoided anymore, so the only thing that matters is if a trader should also accept such chances of losing. Even as professional traders, we still lose, so why not? Let's just improve ourselves with every mistake or defeat we experience in trading.

[uswa56]

I also prefer small experiments by using capital that is not too large when trading on any market by buying coins that we think are good enough. Because our mentality and emotions will always train themselves when we have tried it several times on different coins in the same market and this can also train us not to panic too much when we see quite striking changes in the market. And in terms of knowledge, it will remain the core point that needs to be improved in any case, including trading, which is always full of risk of loss before making a profit.

By experimenting with a little capital, this will make us more alert to our emotions in the trading we do and we will be able to easily make decisions when choosing coins that have the potential to make a profit and with a little capital, of course this will not happen. makes us mentally fall when we experience failure in trading so that we will be able to easily find out where we made mistakes and continue trading again to be able to do it carefully, yes you are right of course we have to continue to increase our knowledge in the field of trading considering that some people Even those who have experience may still experience losses, so it is important for anyone when trading to continue to update their knowledge about trading so that they can continue to trade well and of course make a profit.

[Russlenat]

I don't believe traders can completely avoid losses; it's all about having strategies to minimize them. Human psychology, particularly greed and the desire for more profit, is a significant factor. Controlling these emotions is challenging unless you have strong emotional management around money. Experience benefits everyone in business, regardless of the field

It's not possible to trade without losses but we can always prevent increasing the chances of losing by sticking to our goal price, that is not buying and selling until our set goal price is achieved. And this can only be done if we eliminate our greed of money, and instill discipline in all that we think and do.

However, I'm aware that everything will not be easy as it is. But with good experience trading in the market, all these things will get done slowly until mastered.

[OrangeII]

It's a skill issue, like others have said, it's about minimizing risk/managing it.


I think poker is very similar to trading, you have rake "fees" the odds are already against everyone, there's going to be winners and losers.
The ones with more knowledge are still going to lose no matter what, but it's a numbers game, you don't put everything you have on a single bet.
And over time, making marginally better decisions than others will be profitable.

And just like poker, with trading you need a winning strategy.

Well, in the end it all depends on what abilities we have. If the person has often traded, then it is a matter of ability. Meanwhile, if he is new, then it is a matter of ability and knowledge. Many new traders experience losses, so I think it is normal. However, if he has been around for a long time, then he needs to develop a better strategy to avoid losses occurring.

[Kelward]

And when it comes to why traders lose money, the only and basic answer I have is, it's due to lack of proper knowledge, skill, and experience.
Someone with a well polished trading knowledge, skill and experience, won't lose trades unnecessarily, because they would already know every thing that could make them lose their trade and try as much as possible to avoid doing such or things in that aspect.

Trading is hard and newbies that are entering it needs to understand that it's not a get rich quick scheme like some influencers will hype it on social media. Crypto trading is something that someone needs to diligently learn before putting their funds into it otherwise there's a very high chance that they will lose their money in trading. Experienced and professional traders will be able to minimize loses because of their years of experience of how the crypto market works, they understand the fundamentals and technicalities of how to analyze trades, therefore they'll not fall prey to many mistakes that will make them to have loses.

So it's important for inexperienced traders to start with demo trading and when they've gained knowledge, they should trade with the amount that they can afford to loose.

[Barikui1]

From my experience, here are 4 reasons I discovered:

1/ Lack of Discipline— a) Not sticking to one strategy, b) not respecting your trading rules, c) not sticking to your plan.

2/ Lack of knowledge—Inadequate understanding of the market, trading strategy, financial instruments, and fundamentals can lead to poor decision-making.

3/ Not having a mechanical trading system—This leads to emotional trading. Decisions driven by emotions like fear and greed rather than rational analysis result in significant losses.

4/ Overtrading—Taking many trades will affect your decision-making ability and lead to poor decisions.

If there are other reasons why traders lose money, share them with me.

I totally agree to all the the point you listed here, and to me they are all valid, but I think that their are some other things that also needs to be corrected in other to be successful in trading, and one major things that was excluded in your post was;

Proper risk management: bro, as long as trading is concerned, if you don't know how to manage your risk properly, you can never be successful in trading, because technical, fundamental analysis, knowledge, plus discipline makes you money, but proper risk management protect your money.

And lastly, another thing that mostly makes traders lose money in trading is lack of patience, most traders don't have the required patience to wait and trade only the right set- up, they just enter the market believing that they would be making money that time they should be waiting, and because they can't wait for the set - up they are sure of, they lose money in the process.

[Zanab247]

Lack of patience can make many traders to lose their money, because they will be an hurry to trade without considering the season in the market before trading, and it can lead some traders to loss their money.

Yes, lack of knowledge can make you to lose money which I agree with you, because you will make a wrong choice to invest in a wrong investment that will not going to bring out the capital you use to invest in the investment, because you lack the knowledge of the investment which is what some traders are experiencing right now in the industry.

If you want to stop losing money in decentralized trading, try to create a good time to learn some basic skills of decentralized trading, and it will help you to put an end to losing of money in the decentralized trading.

[Zoomic]

Not all losses in trading are as a result of the trader's mistakes, some factors that are beyond the control of the trader like technical issues or systems malfunction can influence the losses of the trader. In most cases,  market volatility can be so unpredictable thereby giving room for losses. In all this, a good trader is not expected to feel discouraged or take decisions that might end up worsening the whole situation. Losses are inevitable in trading therefore, traders should learn to accept this fact so they can handle whatever comes their way in the course of trading.

[terrific]

I guess for me, the very basic reason why a lot of traders lose money in trading simply because they fail to execute the most basic trading strategy, sell at a price higher than the buying price.

That's the logic.
They won't be able to make profit if they don't sell at the right price and that's because they haven't met yet the price that they should sell and have a margin with.

This boils down to the realization that some traders are not well educated and not well aware how trading works. But mostly, only greed and fear matter to them.

You boiled them down mate and that's true, not every trader in the market is a real trader but thanks to them. The real traders are making profit off them.

[Psynthax]

I guess for me, the very basic reason why a lot of traders lose money in trading simply because they fail to execute the most basic trading strategy, sell at a price higher than the buying price. Probably because not all traders are real traders in the market, some are just self-acclaimed and just own the title without having proofs. This boils down to the realization that some traders are not well educated and not well aware how trading works. But mostly, only greed and fear matter to them.

well of course everyone want to sell at price higher than the buying price but things doesn't always go like expected you know sometime market just turning bearish out of the blue and caught many people off guard.
there's reason why there are billions of dollars liquidated in the perpetual market because doesn't matter how good you are, you can't predict the future, at best you just bet on something that makes more sense such as shorting when bitcoin is reaching all time high or longing when bitcoin reached RSI index of oversold.

trading is just more of risk managing, knowledge can help but really the market doesn't really follow textbook guide or whatever theory is available out there.

[pusaka]

It's a skill issue, like others have said, it's about minimizing risk/managing it.


I think poker is very similar to trading, you have rake "fees" the odds are already against everyone, there's going to be winners and losers.
The ones with more knowledge are still going to lose no matter what, but it's a numbers game, you don't put everything you have on a single bet.
And over time, making marginally better decisions than others will be profitable.

And just like poker, with trading you need a winning strategy.

Well, in the end it all depends on what abilities we have. If the person has often traded, then it is a matter of ability. Meanwhile, if he is new, then it is a matter of ability and knowledge. Many new traders experience losses, so I think it is normal. However, if he has been around for a long time, then he needs to develop a better strategy to avoid losses occurring.

In fact, even long-time traders or professional traders can still experience losses, because trading is not always profitable and we have to be prepared for the losses we will experience. If profits were all we could get, I think we would all be very rich here.
However, the difference is that when traders are old or professional traders, they will remain calm when they feel a loss, because they already have experience. This is different from new traders, where they might become very panicked if they experience a loss and they need time to recover their mentality to return to trading.
However, the most important thing is that both professionals and beginners must continue to learn to develop their knowledge and make the strategies they have even better.

[Jegileman]

Losing money in trading cannot be avoided but can only be managed to avoid plenty of losses. Even the most profitable traders today come across losses and its natural which they cannot also avoid. This proves that no one can be 100% perfect in whatever they do in this life. Years of perfection and consistent trading can make your skill great and be a profitable one, and once you are perfect, you will be more profitable and will have more gains than losses. That is to say, one win can cover all of your losses you’ve accumulated several times.