$ENA Why do most new traders lose their money?
Most new traders lose their money
For several main reasons, which are often a mix of inexperience, poor management, and psychological factors:
* Lack of knowledge and education:
* Lack of understanding of the market:
Many beginners enter the market without understanding its fundamentals, how it works, the factors influencing prices, and the different types of assets.
* Ignorance of technical and fundamental analysis:
They ignore learning how to read charts, technical indicators, or analyze news and economic events that affect prices.
* Relying on unreliable advice:
They follow advice from "influencers" or trading groups without verifying its credibility or understanding the reasons behind the recommendations.
* Unrealistic expectations and greed:
* Dreams of quick riches:
* Fear of missing out (FOMO): They buy assets when their prices rise significantly, fearing they will miss out on profits, often at the price peak before a reversal.
* Greed drives excessive risk-taking: When they achieve some small profits, their greed increases and drives them to increase the size of their trades or take much larger risks than necessary.
* Poor risk and capital management:
* Risking large amounts of capital.
* Lack of stop loss:
They do not set stop-loss orders.
* Averaging down incorrectly: They add to their losing trades in the hope that the price will reverse direction, which increases the potential loss size.
* Trading with large volume (Over-leveraging)
* Psychological and emotional factors:
* Emotional trading: They make decisions based on fear, greed, anger, or frustration instead of logical analysis.
* Revenge trading: After a losing trade, they try to quickly recover the loss by making random and reckless trades.
* Lack of discipline: They do not adhere to their pre-established plans and strategies.
* Panic selling at a loss:
* Lack of trading strategy:
* Random trading
* Not testing strategies
* Constantly changing strategies
