There is a popular misconception that trading involves learning technical analysis, profitable option strategies, or back testing indicators and strategies, when it is really more about discipline. Furthermore, Not 90%, 99% of active traders lose money.
Following discipline is the most difficult thing to follow.
It is rare for people to succeed at getting into the habit of risk management, much like making a New Year's resolution to lose weight. The way you manage your risks as a trader will determine your success.
Below are the top 5 reasons why traders lose money.
A lack of a trading plan led to poor entry and exit methods.
Losses incurred from day trading. Traders have very high expectation when it comes to day trading, they want to earn all the money in one single trade.
The failure to understand Risk management and stop losse :-Everyone knows what risk management is, but no one practices it, we all know what stop loss should be kept for a particular trade, but we always plan to keep it for the next trade.
Inadequate understanding of the principles of Money Management.
Negative Psychology:- Your attitude toward money also impacts your trading results. Some good books on financial psychology include Rich Dad Poor Dad and Psychology of Money. You should change your approach to money from greed to contentment.
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