Why am I losing on the stock exchange?

This is a question most traders ask themselves after yet another unsuccessful trade that resulted in losses.

There can be many reasons for losing, and some of them are completely independent of the trader's qualifications and personal qualities.

Today we'll try to talk about what leads to losing trades and how to get out of such situations.

But before we begin discussing this topic, I would like to say that trading and not losing on the stock exchange is simply not realistic, unless you have a good source of insider information.

The main thing is not to trade without losses, but to close a losing trade in time and not drain all the capital at your disposal.

Now let's move on to answering the question "Why am I losing on the stock exchange?".

Market laws do not work, and the market is controlled by market makers

Not long ago, I watched a great movie based on a true story, "Dumb Money," which perfectly captures the current situation in the stock market:

Due to the fact that today huge amounts of money are concentrated in the hands of a small number of people, it has become possible to control the market.

This means that a person or group of people can easily influence the price of a chosen asset, inflating it excessively or bringing it down to a minimum.

This is a disadvantage for long-term investors who hope to buy inexpensive shares of a promising company and then profit from price increases in a few years.

But market makers play for a fall, creating a large number of sell orders, which often leads not only to a fall in price, but also to the bankruptcy of the company.

In this situation, there is only one way out: abandon long-term transactions and copy the actions of market makers or look for assets that are not subject to such influence.  

Lack of a complete picture of the market

Price movement does not always follow logic because we do not see the full reason for what is happening.

For example, news comes out about a rise in global demand for gold, but its price on the exchange begins to fall, and this is all because someone is currently shorting in large volumes, and the news about large purchases is already outdated.

Most investors open trades based on just one signal without using additional filters.

Emotional decision making

You quickly checked the quotes and saw that the Bitcoin rate had skyrocketed, went to the forum, and everyone there was shouting that you need to buy.

Naturally, you enter into a buy deal without even checking what caused such growth and without looking at what technical analysis indicators show.

But it turns out that you opened a trade right at the resistance line and the trend has already begun to weaken, as a result, you will again ask yourself the question: Why am I losing on the stock exchange?

Here are a few more reasons why people lose on the stock exchange

Insufficient understanding of the market. Many people begin trading without a sufficient understanding of how the market works and the risks involved. They don't know how to analyze companies, assess risks, or manage their capital.

Impatience. Most newbies want to get rich quick in the stock market. They're not prepared to wait patiently for their investments to appreciate.

Rumors and market pumping. The financial world is full of rumors and attempts to influence trends. Unsubstantiated claims that Bitcoin will be worth a million dollars in a year should not be taken seriously, even if this information appears on a reputable news site.