Investing in stocks is one of the most beautiful thing you could ever do with your hard earned money. Having said that it is the most difficult profession you could ever get into. Market uncertainty is the biggest reasons why traders find it difficult to invest their hard earned money in stocks. Remember stock market is uncertain and everything is dependent on probabilities. So you will have success or failure while trading stocks. Having said that you can make money just by making informed trades. Read on to know about reasons why traders lose money.
If you are here to stay then you have to cross check all your trading strategies. Back test them and make note of what has worked and what didn’t. Below are some of the reasons why traders lose money.
Trading during first half of the session
- If you are really interested to invest your hard earned money in stocks than make sure you don’t invest during the first half of the session.
- First half of the session is driven by emotions, affected by movements, news etc. So make sure you don’t enter trades during the first half of the session.
- This is the time where market noise will be more so let the market settle down to a trend and see where you can move with the present trend.
Ignoring Market Message
- Make sure you keep a close on stock market proceeding and economic condition and policies of the country.
- Follow up news, create a watchlist and see their performance, company profits are some of the factors that affect stock market.
- Closely watch the performance of each and every stocks you are interested in and never ignore stock market messages that might indicate the market trends.
Failing to reduce position size
- Traders should be flexible in reducing their position size whenever they are not clear about stock market situation.
- Make sure you remove stocks from your portfolio when they are not working. These thing generally happen when market is not heading in any direction (mostly it moves sideways).
- Initially don’t look for bigger profits when you are planning to invest your hard earned money in stocks. Take partial profits whenever you are getting it.
Failing to treat every trade as just another trade
- There might be times when you think that particular situation might give you good returns. Undisciplined traders will do this mistake and they simply invest in stocks by taking higher risks.
- Not treating every trade just like another trade will lead to downfall. So make sure you treat each and every trade of yours as normal trade.
- You might get good profits when you are planning to invest in stocks and make informed trading decisions. Super profits won’t be available when you are investing in stocks.
- There might be times when you are expected to have good profits but make sure you don’t super risks that could lead to failure.
There are many reasons why traders lose money, some of them have been narrated above. Its advisable that you follow these rules and regulations to make money by investing in stocks. Undisciplined traders will make it difficult for themselves by taking higher risk thinking they could make good amount of returns.