There are lots of reasons why people lose money in the Stock Market. This usually comes from not understanding the stock market and how things work.
I will be discussing six Factors that lead to losing money on the Stock Market.
1. Fear of Failure - this cripples most traders and investors and leads to them becoming frozen and not taking chances. They have usually heard a lot of horror stories about people losing a lot of money on the markets and hence they are scared to take good opportunities. Worse still, they exit their trades or investments prematurely when they notice a small loss leading to losing and non-profitable trades or investments.
2. Need to be perfect - The search for the Holy Grail of trading and investing which is a trading method or software which gives a 100% success rate is futile. A perfect trading or investing strategy or software does not exist. The search for perfection only leads to frustration and loss of money. Money and risk management is the key to success.
3. Not having a trading plan - Not having a trading or investment plan is planning to fail and lose money.
4. Getting back at the markets - Trying to recover losses and get back at the markets out of anger and frustration only leads to further losses. The ability to accept losses and focus on the next trade and investment, sticking to your plan and money management, leads to success.
5. Believing you are invincible - No one is smarter or bigger than the stock market. Feelings of invincibility and that you can do no wrong in the markets only leads to losses. You have to be humble and willing to accept quickly when you are wrong.
6. Trading scared money - Trading or investing with scared money only leads to rushed or poor decision making which leads to losses.
Being aware of the reasons why you lose moneyand understandingthe stock market can help in assessing one's self. This leads to better decision making and success in the stock market.