How do traders lose all their capital?

Traders losing all their capital is never an overnight event, but rather a series of accumulated mistakes, each of which seems quite 'normal' until the moment of liquidation.

The most typical 'paths to losing everything' are as follows:

First, going in heavy right away. Many people want to make quick money as soon as they enter the market, and they find a 10% fluctuation too slow, so they go directly for high leverage and large positions. After making one good trade, they think they are geniuses; after one bad trade, they start holding on, hoping to 'wait for it to come back.' As a result, the market doesn’t turn around, and their account is directly halved.

Second, not setting stop-losses + adding to losing positions. A stop-loss is set, but when it reaches the stop-loss price, there’s hesitation, and the thought of 'let’s wait a bit longer' becomes the deadliest idea. When they see larger losses, they simply refuse to cut losses; when they lose more, they add to their positions to average down. As a result, the market trends against them, and their small account is beyond saving.

Third, frequent trading and losing emotional control. After losing, they rush to make it back; after winning, they are not satisfied, repeatedly placing orders and facing losses, their account keeps shrinking, their mindset becomes increasingly volatile, and they end up in a state of 'just wanting to gamble everything back,' leading to total loss.

Fourth, having no system and purely relying on feelings. Today they chase trends and kill dips; tomorrow they guess tops and bottoms, without any logical support, relying on emotions and blindly guessing the market trends. Over time, it all comes down to luck, and sooner or later, they will go to zero.

In the end, many people are not technically poor but are unwilling to admit mistakes, refuse to cut losses, and reject facing reality. Losing all their capital is not due to a difficult market but rather because of their stubbornness.

In summary: Capital is not lost due to a single mistake but is slowly consumed by a series of 'reluctance' thoughts.