I am doing stock market trading since 2012 and I have seen Up & down many times throughout my journey. Great profit margin in short time makes day trading very lucrative for novice trader and they end up making significant loss. So here are top 8 reasons why intraday trader lose money. These reasons are based on my experiences and leanings.
1. Trading on Tips
Novice trader always fall for marketing tactics by trading tips provider companies and end up losing money. These companies (most of them are based in Indore) are fraud so you need to be very careful before subscribing to their calls. I dont recommend you to join any.
2. No Proper stop-loss
It’s very hard emotionally to cut the losing trade. But if you don’t follow proper SL, it will burn your whole capital. So always follow proper risk reward ratio. I recommend you to follow 1:3 SL:Target ratio in order to be profitable in long-term. If you are taking small profit with big SL, then in just one wrong trade you will end up in loss.
3. Averaging the losing trade
Never do that. Averaging losing trade is like fueling the fire. I have seen many trader losing money after averaging.
4. Trading everyday
You don’t have to trade everyday. Build your trading system, wait for proper entry single and then only enter in market. Day trading is not a job and you don’t have to do it everyday.
5. Trading on Leverage
As most of the trader start with very small capital, they trade using leverage. Nowadays almost every broker offers 10X leverage on intraday trading. Even if script changes by 3% , your capital will be reduced by 30% in just single trade. So if you are trading with leverage, be very cautious.
6. Trade in Revenge
We love to take revenge but it always backfires in stock market. Loss is part of the trading and you have to accept it. Never trade to cover loss from earlier trade.
7. Never learn from Mistake
You will perish from market if you don’t learn from your mistake. It’s perfectly alright to make mistake but you have to take lesson from it. I always write my mistake on my diary and re read it everyday so as to avoid it in future.
8. Human Error
This is not in your hand. Market is very stressful and you need to make very quick decision while trading. You will take wrong entry or exit sometime and it happens, you can’t control it. But you have to learn it to minimize it.
Hope you have liked this article on why intraday trader lose money. Please feel free to comment to share your experience.