It is said that 95% of novice stock traders lose money and quit trading stocks. It sounds terribly true if you have met your friends and listened to their trading history. Even the experienced traders find it difficult consistently make profits. What makes them take losses?

The fundamental idea of the stock market trading is to make money based on the performance of the company in whose shares one is investing into. But this has changed a lot to increase liquidity so anyone can buy or sell any share any time. This result in lot of short term or intraday traders for whom company performance which is a long term metric does not make any difference.

Similarly when one starts to trade then only one begins to experience really what it means to get stressed, face fear, jump on greed or pray in hope. One often gets emotional with the stock which clouds his/her judgement. This is the reason that results in most of the bad trades.

Stock trading does not follow any law of conservation of money. It is not really a zero sum game. Every trader has to eventually lose out money to the brokers and exchanges in the form of costs.

Also  there are infinite ways to lose money in stocks while there are only few strategies one strictly follow and discipline himself/herself to adhere to some serious rules/principles. Simplest mistakes can result in losses and more losses than profits can ruin trading capital and result in bad taste for the trader to ever start trading again.

The stock trader can never afford to be cool and let things go on their own. As long as one is invested or in the stock market, one should not divide his focus/attention away from the stock market even for a short time. That is the kind of dedication that stock trading demands from its traders. It is also reasonable because the potential for profits due to compounding when a trader makes consistent profits is pleasingly immense.

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If you are into stock trading, you should know that you have started a highly responsible activity that demands your attention and dedication all the time. Or atleast till the time you stop trading or take a long break. You cannot take short breaks with focus shifts now and then between other things and stocks.

As one state of mind is very important (as one can gain more bysticking a single trading strategy) one should disturb oneself with other strategies, news, TV, movies, or other distracting and attention demanding activities. One must dedicate a period say 6 months or 3 years completely to stick to a state of mind with lot of dedication to trading to consistently make profits from stocks.

Good luck with your trading or investing in stock markets!

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