I came across this great article from Tradeciety.com titled "Scientist Discovered Why Most Traders Lose Money" and it grabbed my attention. The conclusion of the article is not surprising and I've spent a lot of time over the years teaching students how to manage this one major area that drives the most loss.
But, before I share more about, here are some eye-opening stats from the article:
Just understanding the pitfalls above and avoiding them can make a huge difference in your trading.
But the biggest reason traders lose money is not any of the above. It is because they trade on emotion and do not have a solid ruleset and trading plan to keep them grounded. As I stated at the beginning of this article, I have spent years teaching students that the biggest obstacle to trading success lies between their ears. You must separate emotion and logic and have a tried, tested, and solid ruleset/process for you trading - and then you must be disciplined to follow it. That is how you keep emotions in check. And that is how you become a profitable trader and investor.
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