My reasons and Your reasons behind losses while trading.

Why do people take losses in trading?

The reasons or mistakes behind a trader make losses. I suggest you these reasons should not be repeated. If you might have also come to cross from this reason and got losses, you can type in comment number of specific reason what you have faced.

In case, you also have another reason except in this post, please or kindly specify it in comment section. We will discuss it for a solution.

1). Stop following the right/perfect "trade-setup strategy" even if you are earning from it.
  • For instance, you're going good in "breakout setup" but not following consistently, change suddenly/started to follow another pattern the setup.

2). Not enough Technical Knowledge.
  • New traders just learn from YouTube or another resource about basic charting reading & indicators, such as MACD, chart pattern, trendline, etc. directly jump in practical trading with using full margin and later convert to loss. They believe trading is very easy but it's theoretically. In the practical, you need experience & practice a lot to earn.

3). Believing blindly on Other's Tips.
  • A lot of traders pay high prices for tips/research/analysis and follow them blindly without applying margin management rules. As a result, they wipe out. I am not saying to ignore/avoid other research or analysis but you should apply margin management rules and also do paper trading on their research.

4). Try to cover loss, Expecting huge profit.
  • When traders take a loss, they think to recover the loss by taking entry huge quantities to recover from little pips/points and fall into a huge loss.
  • After taking a position with the perfect trade-setup, some traders expect more profit than the per-defined target. Later, they convert into loss because of changing setup.

5). You take risks that you can't afford to lose.
  • Taking Unlimited Risk means, neither protective stop nor mental stop.
    Some people keep a 1:1 stop-loss and target ratio.
    Don't do this: "Holding losers trades while selling winners trades".

6). Lack of Emotion Control.
  • Not following your own per-defined setup, for example, changing stop-loss or not exiting and expecting to recover, sometimes not booking profit and expecting more profit and finally convert into a loss. In more clear words, change your set-up frequently while real-time trading.
  • Don't believe in Exit or Marry with Beliefs/Hopes(Hope is not a strategy). Believe in recover loss without any specific reasons and finally had to take a huge loss.
  • I have seen in many new traders, they let Loose Grow and take a small profit.
  • Avoid the words ‘hope”, “wish” or ‘feel’ when talking about a trade-setup.
  • Believing that price cannot move higher/lower.


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