Why do most retail traders lose money?

[Hoshaso12]

I'm new to forex, and have been learning for a few weeks now, and getting started trading with a demo account currently. I came across the statistic that says 95% of retail traders lose money, and my question is, what are they doing wrong? What are some of the key, main things that separate profitable traders from not profitable ones?

 

[spectra4x]

many loose because not use SL, put big lotsize, not have patience, want see all blue or TP smashed so when momentum change no exit in profit, some one not want cut the loss and place entry in best position

 

[webmastery]

1) Lack proper training: Do not be mistaken that even a great forex learning course will turn you into an expert trader overnight. My personal opinion is a "good enough" course that drills you in solid fundamentals is all you need because more than learning about TA, FA, indicators, price action, timeframes, psychology etc., no course can teach about yourself, your own temperament and how you see your own charts. That takes time...

2) Trade 'live' as soon as possible: Another unpopular opinion: I suggest you take as long as you need to demo-trade, even up to a year or more. If you demo for a full year and survive, you can review your trading experience in the context of how the charts behave through seasonal events and news.

3) Trade smaller timeframes: It's too chaotic in the 'minutes'. If you are not instinctively contrarian, I recommend trading in daily timeframe. You are less exposed to sudden volatility and immediate black swan effects. You have time to react to bad trades or take a new decision and so have less worries. You also spend less time to look at charts (but you will require time to build this level of confidence).

4) Shiny new objects: It's OK to test and experiment but strive to settle down on a few reliable strategies. Trading is supposed to be boring.

5) Micro-accounts: I once read that traders with micro-accounts tend to get stopped out because their accounts are not sizeable enough to withstand paper loss, or because accounts are micro, therefore they don't get serious enough with trading so lack the required discipline to trade properly.

Recommendation is say, you open a normal account with $4000, then with a profitable strategy, trade in small enough lot sizes to make you $280 by the end of a month for a start. Does not look like much, but $280 is 7% of $4000. You beat 99% of traders out there if you can scale from 7%/mth starting today.

 

[Investfox]

The main reason why retail traders lose money is that the markets aren't rigged. The truth is, most traders lose money for one simple reason: They don't have a plan. These losses can be substantial: The bull run during the pandemic saw retail traders lose more than $1 billion, according to a recent study.

 

[Charles Agustin]

Make the best use of available internet to educate you about trading.