Why 99% of Traders Lose Money in the Stock Market
The main reason is that they do learn, but they don’t learn properly, which causes them to lose. What I mean is that they learn bits and pieces, such as a few things about candles, some things about chart patterns, and they take trades based on indicators they see in YouTube videos. They don’t create their own plan of what’s happening in the market, and they trade without thinking. As they continue doing this, the number of losses keeps increasing.
After this, the news about these losses starts circulating. Eventually, parents and others start calling the stock market a form of gambling as soon as they hear its name, simply because people lose money right after investing it. Gambling also works instantly: you put money in, if the number hits, great, if not, you lose. This is why many people are still afraid of the stock market. They even say it’s more dangerous than card games or darts.
Second Reason: Historical Scams
This isn’t just a recent phenomenon; if you look at history, you’ll find that people have been taking money from others in the name of the stock market. They promise to double the money, and people give them all their savings. In the end, that person runs away with the money. This is another reason why people are hesitant to invest in the stock market.
Third Reason: Market Manipulation
For example, big traders engage in pump and dump schemes. They buy a stock or index, and as soon as the price goes up, they sell it, which causes even greater losses for others.
For people who bring $5 lakhs to $10 lakhs to the market, a loss of $1 lakh or $2 lakhs might not be a huge deal. But for those who bring $50,000 to $100,000, even a loss of $10,000 is substantial.
The Solution: Money and Risk Management
This is why one must always manage money and decide on the maximum loss beforehand. This is the only way to protect your capital and survive against those who manipulate the market. All the big, profitable traders today manage their money and risk, which is how they eventually become successful traders.
But people are not taught this. Instead, they’re only told: “Here is an indicator,” “Set the settings like this on the chart,” and “As soon as the line goes up, buy, and when it goes down, sell.”
I won’t name names, but there are some very big traders who have YouTube channels, drive Lamborghinis, and make $1 core profits. If you check the review of a single indicator setting they’ve created, you’ll see a loss 6 out of 10 times and a profit 4 times. Now, if people take 10 trades a day, they’ll be planning a trade at every moment, and they’ll get addicted. Afterward, they won’t learn anything on their own; they’ll just wait for a new strategy with another indicator so they can trade 10 times a day again.
The Result of Poor Education
This is why the number of losses is increasing day by day. If you trade based on someone else’s indicator settings, it will become impossible for you to trade later when the market sentiment changes. It’s like you learned to drive a car in one day, but you won’t know how to handle it when you encounter potholes, when to change gears while going uphill, or what gear to use when going downhill. You’ll crash straight away.
That’s why you must learn, know, and understand things yourself, so that when the market’s sentiment changes, you can change along with it. Nobody teaches you how to manage money or what is truly essential. They just sell their courses, create Instagram pages to increase followers, and then they can do promotions. People are attracted because these marketers show them huge profits, making them want to learn from them. The marketers then simply sell an indicator with some settings and make a profit.
This is why 99% of traders lose money in the stock market.