In the trading world, there is an unofficial statistic that is frequently mentioned: 90% of traders lose money or blow their accounts within the first 1-2 years. This is not a figure meant to scare, but a warning for anyone looking to step into the market. Below are common reasons why most traders fail – compiled from practical experience and market observation:
1. Trading based on emotions, lacking discipline
Many enter trades simply because they fear 'missing out' (FOMO), cut losses late hoping for a reversal, or take profits early out of fear of losing gains. When emotions influence decisions, all plans become meaningless.
2. No clear trading system
They trade based on rumors, emotions, or rely on 'picks' from others without any high-probability methods that have been validated over time. No trading journal, not knowing where they went wrong, and cannot improve.
3. Poor capital management
Not knowing how to allocate risk, placing positions too large relative to their account, not setting Stop Loss, or arbitrarily moving SL. Many have never calculated the risk:reward ratio before each trade – and when losing 3-4 trades in a row, the account is nearly depleted.
4. Lack of market knowledge
Unable to distinguish when the market is moving sideways and when there is a strong trend. Trading against the trend or completely ignoring macroeconomic factors such as FOMC news, CPI, DXY, interest rates, etc. This leads to 'unfortunate' trades just because of not seeing the big picture.
5. Crowd mentality and the expectation of quick riches
They want to become millionaires just months after starting to trade. This mindset leads them to overtrade, go all-in, and easily get swept up in the crowd effect – where most participants are… losing.
6. Unable to stop
After a series of losses, instead of pausing to review their system, they continue to make trades in hopes of 'recovering'. Trading in a negative psychological state only worsens the situation.
Conclusion:
Trading is not for the undisciplined, and even less so for dreamers. To survive and achieve stable profits, traders need to act like risk managers, not gamblers. Learning to control oneself, adhering to the system, and accepting small losses to protect the account – that is the foundation for being in the remaining 10%.
