34. Why Most Traders Lose Money and The Solution

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A lesson on the importance of money management in trading and how most traders of the stock, futures, and forex markets ignore money management because they do not consider it important and therefore loose money trading.

Why the Majority of Traders Fail

In our last lesson we finished up our series on Candlestick Chart Patterns with a look at the Inverted Hammer and the Shooting Star Candlestick Chart Patterns. In today's lesson we are going to start a new series on money management, the most important concept in trading and the reason why most traders fail.




Over the last several years working in financial services I have watched hundreds if not thousands of traders trade, and over and over again I see smart people who have been intelligent enough to accumulate large sums of money in their non trading careers open a trading account and loose huge sums of money making what you would think are easily avoidable mistakes that one would think even the dumbest traders would avoid.

Those same traders are the ones that consider themselves too good or smart to make the same mistakes that so many others make, and that will skip over this section to get to what they feel is the "real meat" of trading, strategies for picking entry points. What these traders and so many others fail to realize is that what separates the winners from the losers in trading is not how good someone is at picking their entry points, but how well they factor in what they are going to do after they are in a trade into their trade entries and how well they stick to their trade management plan once they are in the trade.




For the few who do get that money management is far and away the most important aspect of trading, the large majority of these people don't understand the large role that psychology plays in money management or consider themselves above having to work on channeling their emotions correctly when trading.

So in this series of lessons we are going to first start with a look at the psychology of money management and the role that this plays in causing so many traders to loose their shirts and then move on to ways of managing this before finishing up with specific strategies for managing trades once you are in them.

While not the most exciting part of trading, I assure you that if you don't understand and work on the concepts presented in this section you are pretty much doomed to failure as a trader no matter how well you understand the other aspects of trading. Having said this I also assure you that if you do understand and work to expand your knowledge of the concepts presented in this series you will be well on your way to becoming a successful trader.

Category:

Howto & Style

Tags:

• howto
• trade
• moneymanagement
• loosingmoney
• daytrade
• investing
• money
• finance
• forex
• futures
• stock
• market
• informedtrades

[purplepatchforex]

Good stuff, I applaud your efforts, there are so many trying to rip you off, this is genuine 100% free information, and a lot of it, great stuff.

[guest2424]

I think exiting is more important than entering. If you get in a trade, you will not want to close without a profit which can cause: Staying in a trade with the optimistic hope it will turn around. Having a winning trade turn into a loosing trade, because you wait to long to exit. Getting in a trade that starts bad and keeps going worse. If you always know when to exit a trade, your loss will be minimized, but going by set loss numbers VS the current activity, IDK that's where it gets tough.

[Visualrmmvideos]

Thanks for a very good video!

I fully agree to the important aspect of money management. Traders do have some of it in their instrument set up, like stop loss and exit points and so forth. What is neglected is the account protection in live trading. Have a look at our videos. It show how easy it is to get money management protection while trading live.

[missrosetejano]

wow this is one of the first area's of trading i went. lol

[guest2424]

@2011bilaal If you refuse to take a loss, you will deplete your account on "margin calls" hahaha.

[2011bilaal]

lossing is good thing..if you learn to lost ..it made you tough and batter smarter ..and sooner or later you will got in to top... if you cant take  lost dont play

[manluvf]

my client changed his account password...i made profit for him 8 k

and i lost 8.5k

but still working...he is ass i feel im loser now..

[onkar2510]

okadvisors.blogspot. try this for real results!!!!!!!!!!!!

[NiHaoWoJiaoYang]

This is true. My predictions are perfect, but I suck at exiting with my profit. I always want more that kills me. I turn 100 into 1000 in four days then lost most of it on the fifth day because I got greedy and didn't know when to get out with the profit.