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4 reasons why you can lose money on trading

Friday 15 July 2022

Trading is becoming more and more popular. People do it as a hobby or completely change their lives so as not to depend on the employer and rely only on themselves. A great chance to earn money is FBS broker in Nigeria. However, there are some moments that will not allow development.

Trading as a market forecasting

The vast majority of traders are engaged in market forecasting using various techniques. Basically, it is the analysis of charts using indicators. Traders associate earnings on the stock exchange with the correct determination of the price movement direction.

Successful trading is not related to the correct forecast of the price movement. All successful traders know that success comes from using trading systems that have a statistical advantage over random inputs and outputs. 

Lack of a trading system — that is, clear rules that a trader should follow in his trading

The trading system must have a certain statistical advantage. It means that if 100 transactions are made using the system, the overall result is assumed to be positive. It is clear that random 100 trades are unlikely to give a positive advantage. That is, the rules of this system should assume a positive result obtained in a non-random way.

A trader loses money without paying attention to risk management

These are the typical mistakes:

  • the trader does not put a stop loss;
  • removes or moves the stop loss;
  • if the market goes against the position, the trader increases the position’s size in the hope of a market reversal;
  • the trader exceeds the acceptable risk in the transaction.

However, it is essential to manage risks and be able to accept them.

A novice trader is at the mercy of his emotions

A successful trader knows how to manage his emotions so that they do not interfere with profitable trading. The market teaches the trader to do the wrong thing — to hold on to unprofitable deals and quickly grab small profits. The market always tends to arouse negative emotions in a person, which is inevitable in conditions of uncertainty, when a person plans one thing and puts his money on it, and the market does not do what a trader expects from him.

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via: Information Nigeria

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