The Top Reasons Traders Lose Money
Making money through buying and selling stocks or other liquid assets is not particularly difficult. The reason that most people never make any money is that they overlook the root cause of the problem. While most people try to find a secret that is guaranteed to make them money, they ignore the single most important part of any trading system: human psychology.
To put it simply, our own psychology is our greatest enemy when it comes to trading in the markets. We make decisions based on our emotions, which are generally the worst possible decision we can make. This leads to common losing decisions during trading. When we are in making money in a position, we want to sell to lock in profit. When we are in a losing position, we want to wait until the stock comes back. This is a strategy for losing money.
So why do most people do this?
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