All of us know most traders quit their trading journey early on as they can not make profits. Leave alone making profits, fact is that they loose large sums in start up phase of their trading journey. Here I have listed 6 primary reasons why beginners loose-
1. Intra-day Trading:
Beginner mostly starts with intra-day trading as they are made to understand that intra-day trading is the easiest way to earn daily money. There are other reasons for starting with intra-day trading- like added leverage (limit) and no risk of carrying a positions. What beginners don't understand is that intra-day is one the most difficult forms of trading. One needs to have lot of practise, study, decision making ability, mind control, fast entry and exit ability, discipline etc. It takes lot of time to develop these qualities.
Don't start your journey with intra-day trading.
2. Trading based on news from multiple sources:
Beginners tend to trade markets based on news from various sources like- TV, promotional SMS, friends, brokers etc. Avoid it. Learn and do your own analysis.
If at all you want to follow- follow any ONE person/source or advisor.
3. Trading with Leverage:
Trading in Futures and Options is one of the biggest and primary reasons of loosing money in markets.It is like taking a loan to earn interest. Futures and Options trading requires deep understanding of risks involved.
Don't trade in Futures and Options unless you thoroughly understand the dynamics.
4. Trading for 'doubling' investment in very short period of time:
It is not easy to double your investments in stock markets even in intra-day trading, though prima-facie it looks very easy.
Have small targets to begin with. Then scale up slowly and steadily.
5. Over-trading:
Most beginners over-trade as they do not have defined trading framework of their own. They over-trade when they make profits and thus loose whatever they had earned. They over-trade when they loose, to make up for what they have lost, and thus loose more.
Have defined trade plan- don't over trade.
6. Lack of knowledge:
Many traders begin trading just because some one has forced them to open the trading account. They do not learn the nitty gritties of trading before they begin with
Learn Learn Learn
There can be many more reasons apart from these. However I feel primarily these are the mistakes, which, if avoided, new comers will sustain these markets for long time.
1. Intra-day Trading:
Beginner mostly starts with intra-day trading as they are made to understand that intra-day trading is the easiest way to earn daily money. There are other reasons for starting with intra-day trading- like added leverage (limit) and no risk of carrying a positions. What beginners don't understand is that intra-day is one the most difficult forms of trading. One needs to have lot of practise, study, decision making ability, mind control, fast entry and exit ability, discipline etc. It takes lot of time to develop these qualities.
Don't start your journey with intra-day trading.
2. Trading based on news from multiple sources:
Beginners tend to trade markets based on news from various sources like- TV, promotional SMS, friends, brokers etc. Avoid it. Learn and do your own analysis.
If at all you want to follow- follow any ONE person/source or advisor.
3. Trading with Leverage:
Trading in Futures and Options is one of the biggest and primary reasons of loosing money in markets.It is like taking a loan to earn interest. Futures and Options trading requires deep understanding of risks involved.
Don't trade in Futures and Options unless you thoroughly understand the dynamics.
4. Trading for 'doubling' investment in very short period of time:
It is not easy to double your investments in stock markets even in intra-day trading, though prima-facie it looks very easy.
Have small targets to begin with. Then scale up slowly and steadily.
5. Over-trading:
Most beginners over-trade as they do not have defined trading framework of their own. They over-trade when they make profits and thus loose whatever they had earned. They over-trade when they loose, to make up for what they have lost, and thus loose more.
Have defined trade plan- don't over trade.
6. Lack of knowledge:
Many traders begin trading just because some one has forced them to open the trading account. They do not learn the nitty gritties of trading before they begin with
Learn Learn Learn
There can be many more reasons apart from these. However I feel primarily these are the mistakes, which, if avoided, new comers will sustain these markets for long time.
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