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Why do Newbies Lose?

  • #441
  • Jan 16, 2023 12:01am Jan 16, 2023 12:01am
There are several reasons why new traders in the Forex market may lose money:

  1. Lack of knowledge: Many new traders enter the market without a proper understanding of how the market works and how to analyze currency pairs. This can lead to poor trading decisions and significant losses.
  2. Lack of a trading plan: Without a well-defined trading plan, new traders may make impulsive decisions based on emotions rather than sound analysis.
  3. Overtrading: New traders may overtrade, either due to lack of patience or a desire to make quick profits. This can lead to significant losses as they may enter the market at the wrong time, or they may not have a proper risk management strategy in place.
  4. Lack of discipline: New traders may find it difficult to stick to their trading plan and may deviate from their strategy. This can lead to poor trading decisions and significant losses.
  5. Risk management: New traders may not have a proper risk management strategy in place, which can lead to significant losses if the market moves against them.
  6. Lack of patience: New traders may not be patient enough to wait for the right opportunities to enter the market and may enter the market at the wrong time, leading to significant losses.
  7. Lack of consistency: New traders may not be consistent with their trading, and may switch strategies or systems frequently, which can lead to significant losses.
  8. Lack of research: New traders may not do enough research on the market and may not be aware of the economic and political events that can affect the currency markets, which can lead to significant losses.

It's important for new traders to educate themselves about the market, develop a solid trading plan, and practice patience and discipline in order to increase their chances of success in the Forex market.

Knowledge IS Power
  • #442
  • Jan 20, 2023 9:51pm Jan 20, 2023 9:51pm
Newbie traders lose due to lack of their proper knowledge and they are highly unwilling to learn. They like to dive into trading directly without practicing on demo account. So, they need rectification of this habit.
  • #443
  • May 17, 2023 2:24am May 17, 2023 2:24am
I think here are some of the reasons why newbies lose:
1. The lack of knowledge of forex markets.
2. Too carried away by their emotions and making a poor trading decision
3. Underestimating the importance of risk management and ended up blowing their account
4. Trading blindly without a good trading plan
  • #444
  • May 17, 2023 10:50am May 17, 2023 10:50am
Quoting Maximilian80
Newbie traders lose due to lack of their proper knowledge and they are highly unwilling to learn. They like to dive into trading directly without practicing on demo account. So, they need rectification of this habit.
You're right, I have small amount on my live account but mostly I'm trading on my demo account.
  • #445
  • May 18, 2023 11:05am May 18, 2023 11:05am
1. Lack of experience and knowledge
2. Emotional trading
3. Poor risk management
4. Overtrading
5. Inefficient trade exits
6. Lack of discipline
7. Overreliance on leverage
Recreational trading
  • #446
  • May 19, 2023 2:58pm May 19, 2023 2:58pm
Newbies lose because they don't follow risk management rules. Stop loss and take profit targets should be set in advance, only pros who mastered emotional control can use dynamic TP and SL.
  • #447
  • May 22, 2023 2:19pm May 22, 2023 2:19pm
People think it is all psychology.

Most lack a proven trading edge backed by the data they have collected over time.
  • #448
  • Jun 24, 2023 4:19pm Jun 24, 2023 4:19pm
Because everyone loses, from time to time. But you gain experience.
  • #449
  • Jun 24, 2023 4:37pm Jun 24, 2023 4:37pm
Because they think that the forex game is easy to beat. They dont understand that forex is a trillion dollar business and the competition is fierce. Also, they dont understand that because of that competition, finding an edge is very complex procedure, and that edge is the most important factor that will determine if they win or lose.
trendpips.com
  • #450
  • Jul 23, 2023 10:17am Jul 23, 2023 10:17am
Hm... is a tricky question? is a certain catch supposed to take place in it?
If no, then newbies in trading lose because of the same reasons as they lose in other spheres whether it's a sport, or something connected to occupation.
1) Lack of skills and experience. It's the most common thing that leads newbies to losses, and the crucial thing about is to realize that it's entirely okay! You are just learning! Remember how you were taught to make first steps, you probably fell a lot, didn't you? The same is here.
2) Emotional instability or losing the control over emotions. It takes an honorable second place. Learn how to take control over your emotions, don't be scared of the market, don't think that you will get losses in a row.
  • #451
  • Jul 24, 2023 1:01am Jul 24, 2023 1:01am
1. Over leverage
2. Not following the bare minimum trade rules for their setup
3. The technique they learned is probably not that good or does not have a high percentage win rate.

Like a start should atleast be 55% win rate for a 1 to 1 to be worth it.
Trading is gambling. So gamble responsibly.
  • #452
  • Jul 24, 2023 6:46am Jul 24, 2023 6:46am
Quoting Sovy
1. Over leverage 2. Not following the bare minimum trade rules for their setup 3. The technique they learned is probably not that good or does not have a high percentage win rate. Like a start should atleast be 55% win rate for a 1 to 1 to be worth it.
Protecting capital becomes a pressing matter when you use high leverage, burned many accounts before I realized that leverages carries more drawbacks than advantages
  • #453
  • Jul 24, 2023 6:57am Jul 24, 2023 6:57am
Quoting pizd0s
{quote} Protecting capital becomes a pressing matter when you use high leverage, burned many accounts before I realized that leverages carries more drawbacks than advantages
Indeed. because trading is gambling. We want to risk a little and let the gods of chance work their magic
Trading is gambling. So gamble responsibly.
  • #454
  • Aug 26, 2023 7:02pm Aug 26, 2023 7:02pm
Quoting rooicol
Hi all, Just wondering what exactly do newbies do to lose? I mean when you open a trade, regardless of any analysis you do, you are issued a 50:50 chance of winning/losing, so how do you lose overtime?
This is a commonly propagated misconception.

The idea that a monkey can beat a trader by simply randomly throwing darts at a board, whereby the direction of the trade depends on whether the dart lands on odd or even, (up, down) only applies when trading with no Stop Loss, holding the trade for a set amount of time, and then closing it out and taking the loss or the win. Doing something like that, with unlimited funds, will eventually pan out around 50/50.

As soon as you add leverage, you must have Stop Losses, otherwise one bad trade could wipe you out 100%. As soon as you have Stop Losses, you are in the business of drawing arbitrary lines on a price chart, snaking and whipsawing around all over the place and saying, price will go to this line before it goes to that other line, which of course is much much harder, especially when the market is being routinely driven by the big banks into Dumb Money liquidity zones, and chances are, the trader has spend hundred of hours (and bucks) learning to think like Dumb Money, despite their trading educator assuring them they are thinking like smart money....(good business for the banks).

The question should be:

How can anyone possibly get good enough to consistently win?

Like a deceptive fairground game, looks easy enough when looking back over a price chart, but actually, the odds are heavily stacked against anyone participating in these markets (except the banks).
  • #455
  • Aug 26, 2023 7:09pm Aug 26, 2023 7:09pm
Because chance.
Trading is gambling. So gamble responsibly.
  • #456
  • Aug 27, 2023 4:01am Aug 27, 2023 4:01am
Quoting GusParker
{quote} This is a commonly propagated misconception. The idea that a monkey can beat a trader by simply randomly throwing darts at a board, whereby the direction of the trade depends on whether the dart lands on odd or even, (up, down) only applies when trading with no Stop Loss, holding the trade for a set amount of time, and then closing it out and taking the loss or the win. Doing something like that, with unlimited funds, will eventually pan out around 50/50. As soon as you add leverage, you must have Stop Losses, otherwise one bad trade could...
Most newbies lose because they prioritize finding the best entry and exit methods while they should spend most time on the psychological side to get consistent. Because they don't they have no way to withstand the inevitable losses that will come your way. They close profits early and let losers run against them in the hope they will reverse and become profitable after all.

How can anyone possibly get good enough to consistently win? Get good at losing. In this game, the best loser wins

Best of luck to you all!
  • #457
  • Aug 27, 2023 6:58am Aug 27, 2023 6:58am
Quoting CaesarCrypto
{quote} Most newbies lose because they prioritize finding the best entry and exit methods while they should spend most time on the psychological side to get consistent. Because they don't they have no way to withstand the inevitable losses that will come your way. They close profits early and let losers run against them in the hope they will reverse and become profitable after all. How can anyone possibly get good enough to consistently win? Get good at losing. In this game, the best loser wins Best of luck to you all!
The whole cliched 'Trading is 85% psychology', only applies to traders with thousands of hours of screen time and an ingrained understanding of how the market moves.

Until someone is at that point, Trading is 85% analysis.
  • #458
  • Aug 27, 2023 7:35am Aug 27, 2023 7:35am
Quoting GusParker
{quote} The whole cliched 'Trading is 85% psychology', only applies to traders with thousands of hours of screen time and an ingrained understanding of how the market moves. Until someone is at that point, Trading is 85% analysis.
I wouldn't call psychology in trading cliché, as it is the least talked about topic in trading.

2 questions pop up in my mind in regards to your answer:

- Who is "the market"?
- Can I have a real understanding of how the market will move in the future and, if yes, will I be able to predict how the market moves after 1000s of screen hours?
  • #459
  • Edited 2:14pm Aug 27, 2023 2:01pm | Edited 2:14pm
Quoting CaesarCrypto
{quote} I wouldn't call psychology in trading cliché, as it is the least talked about topic in trading. 2 questions pop up in my mind in regards to your answer: - Who is "the market"? - Can I have a real understanding of how the market will move in the future and, if yes, will I be able to predict how the market moves after 1000s of screen hours?
It is a cliche, if tons and tons of people are all saying it, vast majority without having earned the right to say it, or understanding what it truly means to say it. Every trader and his dog says trading is 85% psychology, 15% analysis. But the reality for the 85% of those who say that, is that trading is for them, 85% analysis, 15% psychology (or at least it should be).

When someone is at the top of their game, whatever that might be, then to them, psychology might be everything. Mike Tyson often said the place where he won the fights was in the psychological games prior to the fight, but erm, best of luck winning the fight on the back of the psychological brinkmanship, if you haven't had years of training combined with natural ability to back you up.

1) The market is lots of things. But in it's most mundane day to day bread n butter form, it is a game where those who control the game (Smart Money), routinely suck off wealth from all the other Dumb Money participants. These days, they have algo's that do most of the work for them, in targeting all the intraday and swing price zones that driving price into, will make as much Dumb Money as possible, lose. I had an interesting video call with someone from this forum today. I was showing my trading style, which is largely based on largely taking the counter thesis to everything that I had been taught to do. I asked him who taught him. He said nobody, he just started watching the markets and teaching himself. Then starting showing me his trade, which without him knowing it, was actually a counter thesis to classical TA principles, that most other traders adhere to, and spend untold hours trying to hone and perfect, cos that is what some fuckwit that they paid hundreds or thousands of bucks to, taught them to do. This guy was 'untainted' by tarder education, and just tried to piggy back on the sort of moves he observed for himself.

2) I don't know about being able to consistently predict where the market will go, or more pertinently for a trader with arbitrary TE, SL, and TP lines drawn on a chart, how the market will get there......but the more thousands of hours a trader spends studying and observing the market, the better he is going to get. Dumb Money is trapped in the habits of doing similar things over and over again, whilst Smart Money is in the habit of exploiting the Dumb Money's habits, over and over again. Thus, patterns can, and do emerge.

The market is there to take your money off you. Thus when you get a sense of where the market has to go to deprive the mass aggregate of Dumb Money participants of their capital, then you can start to get a good sense of how to position yourself.
  • #460
  • Aug 27, 2023 3:31pm Aug 27, 2023 3:31pm
Quoting GusParker
{quote} It is a cliche, if tons and tons of people are all saying it, vast majority without having earned the right to say it, or understanding what it truly means to say it. Every trader and his dog says trading is 85% psychology, 15% analysis. But the reality for the 85% of those who say that, is that trading is for them, 85% analysis, 15% psychology (or at least it should be). When someone is at the top of their game, whatever that might be, then to them, psychology might be everything. Mike Tyson often said the place where he won the fights...
I still find it hard to see it as a cliché when 90% of topics about trading are about TA and 5% about psychology Most newbies don't ask "Hey, how can i improve my mental game in trading" instead of "Hey, give me a system that pulls a lot of money out of the market".

You say exactly why I am of the opinion that psychology is the most important factor: "Dumb Money is trapped in the habits of doing similar things over and over again, whilst Smart Money is in the habit of exploiting the Dumb Money's habits, over and over again. Thus, patterns can, and do emerge."

This is herd mentality to the core, which is ingrained in our primitive brain just like the fear of losing is. This side of human psychology is well-studied and proven. And the people who are consistent in their trading have found a way, consciously or unconsciously, to deviate from this quite natural behavior.

I have done my hours on the charts. Patterns, waves, indicators, experts, etc. Been there, done that, got the t-shirt. Now I am only trading a very simple system. You could learn it to a dog. 2 very simple rules without any feeling or thinking, all very mechanical, and just make sure my fears or hopes don't interfere with the system. An EA could do it 100% but I just don't like to give away control and don't want a computer to do my trading. But it is so simple that anyone could do it if they have the ability to execute without any emotions, fears or hopes. It is simple, but not easy.

We all have our truths. We, hopefully, all can find something that works for us if we put in the effort. What works for you might not work for me. What works for me might not work for you. There is no one good way, enough very profitable people have never even decently looked at TA but are all about fundamentals.

Let's just agree to disagree, and I hope the market rewards you with many profits!
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