Answer would be complex and every single inch adds to that 90% of loosing status, just like profitable system and approach can be completly destroyed with changing one little variable so can be profitable into losing trader.
Lack of backtesting in my view is the largest and the most overlooked reason, its not the discipline. If you havent fact checked what you trade forget about discipline, discipline aloane wont make miracles. If traded pattern hasnt been striped with scalp in and out and disected and studied there is little chance to move forward well, unless you trade a lot and forward testing does the job. Ask any trader in this thead, have they done extensive backtesting of whatever the pattern they trade, majority is going to tell you no they havent. Other forum, same answer. Trading is game about positive expectations, if you dont know what your past created expectations are how can you form any solid view on future expectations.
Another reasons would be lack of discipline, too much emotions on holding trade (overreacting on winners leads to few times worse reactions on larger loses and it creates destructive spiral), too large positions which leads to skewing realitiy to fit the trade (eg having projected bear info on market, but skewing it to be bullish inside traders brain to help cope with distress on DD, which often leads to holding to large loses), holding too much logical sense in trading pattern(eg giving a line of support or resistance or trendline, or indicator) too much constructive sense on how market should react against it, which can lead to being blind to oposite sided signals (bearish against support for example).
Overtrading is one of those lines that history should bury becouse its complete bullshit. Overtrading is not the cause of why trader fails, if you blame it on overtrading it simply means that you failed to follow system at certain point way before the actual overtrading seem to impact account on negative side. Quantity of trades is irrelevant if you execute approach every time the same. Other than that there are lot more reasons which seem to be insignificant and yet they are far more significant than they seem, eg health, lifestyle, info quallity and relevance, extra income vs no extra income etc etc...Just like any statistical data the more you strip it down the more you find that the reason for that number is connected and relevant from many more different angles than it seems on first sight.
One of the very common mistakes that people do when trading Forex is to entrust people with your money and take after their recommendation. It is not always wrong to do that, however, putting your confidence in one person and only taking after their recommendation like a robot with no idea or push to make in the business for yourself is not the best approach to building up your skills.
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Joined Jan 2015
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Status: TIME is the ONLY Decisive Factor
|499 Posts
There is no one reason why 90-95% trades lose their money. Every trader has different trading style and so do have different losing reason. Most of the reasons are psychological like mentioned below:
