6 Reasons Why Most Stock Traders Fail

Foreign.

Welcome back to my YouTube channel. Today we're going to talk about the six reasons why most traders fail. If you don't already know, the failure rate of traders is extremely high. 8 out of 10 people that start trading fail. And the the biggest, the reason most of these traders are failing are all very similar. And today I'm going to go over all the six reasons that I personally think most beginners are failing at trading and, and hopefully you avoid making one of these mistakes. The first reason, which isn't obvious is most traders have a lack of knowledge. They don't know what they're doing. A lot of people start out with trading and they think, oh, I know a few technical indicators, I know what the MACD is, I know what the RSI is, I know what this, I know how the Blinger bands work. With that being said, I'm going to go out and I'm going to trade. I figured it out. No, it's not just that. There's way more to it. You have to know price action, you have to know, you know the trend, you have to know volume, you have to understand news, you have to understand sentiment. There's a lot of factors that go into trading. You can't just rely simply on technical analysis and always go based off that. You have to fully understand that there's a lot of information out there and you have to fully understand it and know how to apply it. One of the best ways to go about it is open up a trading account, a paper trading account where you can trade the real markets with fake money. That's after you have obtained all the information. That's what you should do to actually get over that. And once you can make money with the paper trading account, then you kind of have a little bit knowledge on what's going on. The second reason most traders fail is risk management. Now a lot of people that are watching this, I have no idea what risk management is. Risk management is a very, very, very, very important thing that you need to know about when you start trading. Risk management is very crucial. If you want to be in the stock market as a trader for a long time, you have to have risk management. When I first started out, I didn't know what risk management was. I never applied it, I didn't know how it worked, I didn't even know it existed. And that actually wiped me out. When you apply risk management, you have to understand how much of a maximum loss you're willing to take on each trade. And there's so much strategies and things that are taking place that you guys should learn now what? When people don't know risk management, guess what they do? They take their full portfolio, dump it into a trade.

And put themselves in a position where they're losing 10 or 20 or even 30% on one trade, which should never happen with proper risk management. My personal opinion, you shouldn't be losing more than 2% of your total account size. Reason number three, people that start trading don't have a trading plan. They do not have a trading plan. They don't even know what a trading plan is, just like risk management. So now a trading plan is very, very crucial to you becoming a successful trader. People that have failed and you can ask people that traded before and they said, ah, I don't like the stock market, it didn't work out, I didn't make money. Ask them, hey, did you have a trading plan? They probably don't even know what a trading plan is. So with that being said, you have to have a solid trading plan. You have to understand your entry points on stocks. And the biggest thing about a trading plan is you have to know where you're willing to take a loss. Before you get into any trade. You have to know, hey, I'm getting in this stock at 10, I'm comfortable in taking a loss at 9, $9.50 because the support level is at 970 and it's moving around the 200 day simple moving average. Just using some terms along with that, you have to apply risk management. You have to say, hey, this is the position size I can take on this trade. So to lose 2% and all those factors, you have to have to know and have a solid trading plan to be a successful trader. And that's one reason a lot of traders are actually failing. Reason number four, emotions. A lot of new traders that start out don't realize how important and huge emotions and psychology basically plays in trading. People think, hey, I know all the technicals, I know how to read price action, I know how to read charts, I'm the best trader in the world. No, there's a lot of emotions involved when you trade. There's a lot of fear, there's a lot of greed, there's a lot of hope that gets involved. When you start out trading, you have to learn how to control your emotions. And one of the best ways to control your emotions, in my opinion, is have a trading plan if you have a trading plan. And when you have a trading plan, have it written down. Don't think about a trading plan in your head. Don't think about a stop loss in your head. Have everything written down. Because once the screen is in front of you and you have all the numbers fluctuating and you see everything from a different perspective, you are not going to go based on everything in your mind. So if you have it written down, guess what you're gonna do? You're gonna say, oh, when I was looking at this stock, I knew I'm gonna have a stop loss at 350. The reason I'm gonna have the stop losses at 350 is because of X, Y and Z. And with that being said, I'm going to go ahead with this trade. When people don't have it written down and they're in a stock, they mess up. They're not comfortable in taking a loss. A stock, they get into a stock at 4, it goes to 3, which they should have sold. But guess what they do. They hold thinking, hey, it's gonna keep going up. Next thing you know, the Same stock is a 2, the same stock is at 1, and they end up never selling, and they are down 75% about one trade. They get wiped out. Another reason a lot of traders fail when they start out is they focus on having money, money goals. What I mean by that is they would. They would start out with trading and they would say, you know what, my goal is to make a thousand dollars a week, or my goal is to make 5,000 a week, or my goal is to make 500 a day. Now think about this. If you start trading and your goal is to make 2,000 a week, right? Obviously you need the right capital amount and position sizing and all these things to actually set up, put yourself in a situation to say that you want to make 2,000 a week. But besides that, if you put out a goal to make two grand a week, and let's say up until Thursday you didn't make two grand or you didn't make any money at all, guess what you're gonna do Friday. You're gonna go out and you're gonna force trade. Because now you have to make two grand by Friday. So on Friday, you're gonna take on big positions, you're gonna make dumb choices, and you are going to take a major, major hit. And then after that major hit, guess what you're gonna do next? You. You're going to take on another bad trade, take another major hit, and another bad trade, and take another major hit. Just because you had these goals that set out and you wanted to make 2,000 or 1,000 bucks a week. Or a day or whatever the situation is and you didn't hit it. So now you get yourself worked up and you make bad trades. The final reason a lot of traders fail is they want instant results. A lot of traders come into the market and they want to start making money right off the bat. Right off the bat, the entrance, they're like, oh, I want to make 10,000, I want to make 20,000, I want to make X amount of money. Trading does not work like that. If anyone told you that you'll start trading in a week and you'll make this crazy amount of money, they are lying to you. Trading is not that easy. Can you make money from trading? Yes. Is it hard? Yes. Is it doable? Yes, it's very doable. But it takes a lot of time. You will not enter trading and start making an enormous amount of money right off the bat. I will tell you that right now. You are not going to make an enormous amount of money when you start out. You will not get instant results. It takes time to get results. It's gonna depend on how much time you're putting in, obviously how much capital you're putting in, your proper strategies, risk management, you having a trading plan, you understanding price movement, and all these things have to be combined for you to have a successful trading career. But remember, it's not going to happen in a matter of days. It takes a few months for you to be very, very comfortable and, and actually become a successful trader. These are the six reasons that I think most traders are failing. I'm pretty sure if one of you guys have traded before, you guys probably noticed that you fell into one of these traps. These are one of the reasons you've traded. If you haven't traded and you're looking to get started, avoid being one of these people that fail because of these reasons. You know, work your way up. Put yourself in a situation where you avoid these six reasons and you actually get over them. And keep in mind that trading takes a lot of time. You're not going to become rich overnight. And if anyone tells you that, they're lying to you. It's not real. Be patient, give it time, and I promise you, you'll be successful. But you have to be patient and you have to give it time. Thank you for watching the video, guys. If you guys have any questions or want me to talk about any other topics, comment down below or DM me. My Instagram is down below as well. And I'll. I'm going to start making more videos and start talking about more stock topics or whatever topics you guys want me to talk about. I'll see you guys next time. Thank you so much.