Why Traders Lose Money on Trading

One truth remains unchanged when it comes to trading – more traders tend to lose trades, than traders who actually win trades. Recent research and studies show that about 90% of traders lose their money when trading. Only about 10% of traders can win profits when trading. So, why is there a huge percentage of losers instead of gainers in trading? In this article, we’ll share with you valuable information as to why you are losing your money when trading on any trading platform such as Pocket Option


Psychology of Losing Trades

The truth of the matter is, nobody wants to lose trades, and everybody wants to gain profits as much as possible. This is the reason why traders train and equip themselves with the skills, knowledge, and experience necessary to win trades. A trader tends to win trades and also tends to lose trades. Unfortunately, the number of losing trades are sometimes more significant than the winning trades. Furthermore, losing trades can be influenced by several factors. Only by addressing and dealing with these factors can a trader improve his or her win rate on trades. These factors and concerns will be discussed in the following paragraphs.

Why 90% of Traders Lose

Here are some of the known reasons why 90% of traders lose money when trading.


Among the most common reasons why 90% of traders lose trades is due to inconsistency. Every trader uses his or her particular style and strategy of trading. While being familiar and committed to a particular strategy is good in trading, a trader should know that not all markets are the same. Some strategies only apply to certain conditions and markets. Consequently, using too many strategies on a single chart can complicate trading decisions. Also, the lack of experience and practice using a strategy tend to confuse when trading on actual trades.

So how to fix this problem?

To deal with inconsistencies in trading, first, you need to understand that not all strategies can work for you. In addition, know that all strategies are meant to win trades but it depends on where and when it is used. Using any strategy at the wrong place at the wrong time will just end up in losing trades.

Therefore, only choose a strategy that you are very familiar with. Know the criteria as well as conditions why that particular strategy is the best choice for a particular chart or asset. You can categorize your strategy according to trend, volatility, industry, market structures, regulations, price, trading hours, and so much more. Before implementing any strategy, be sure to identify which market the asset belongs to.

Consistency in trading can also be achieved by practicing a strategy. Many platforms offer demo accounts that let traders trade in real-time without spending real money. Among those platforms is Pocket Option. With the demo account, you can test the validity and effectiveness of your strategy before using it on actual trades.

Poor Money Management
Money Management
Money Management

Another reason why 90% of traders lose their money is due to poor money management. Money management in trading refers to the strategy to increase or decrease position size to reduce risks and also increase potential profits. Many traders are simply unaware of how much investment they should position in a trade, and how much they should take to make the most profit out of it.

So how to fix this problem?

Poor money management can be addressed by understanding the risks involved, and also the ‘realistic’ potential profits involved in a particular trade. Understanding the risks involved means you know how much you will lose in a particular trade. Therefore, risk only the amount that you are willing to lose and will not cause significant damage to your portfolio or capital. Trading should never be about risks like gambling – it should be about managing the risks.

You can also manage your money accordingly by being realistic when it comes to your potential profits. Many traders tend to lose right from the start simply because they are aiming for a price that is too high. Instead of taking profit for a good win in the market, the trader still waits and holds a position because of the idea that there are more profits to be gained. Unfortunately, it will be too late to take profit when the price starts moving the other way. So, make sure to establish realistic goals and target price levels when trading – it may not give you substantial profits, but it allows you to gain actual profits.

You can also check out a few money management strategies that we’ve discussed in some of our articles to improve your trading skills.


Last but not least when it comes to factors that cause 90% of traders to lose their money is emotions. As much as we like to deny it, our emotional state can cause a major impact on our decisions and even on our trading. Depending on the emotion that is being felt, a trading decision can lead to catastrophic results.

Among the common emotions and their impact on trading include happiness which makes a trader think that there is no need to worry when trading. Happiness brings about a positive perspective to a trader, and the inability to perceive potential risks. Anger is also a major cause of losses and trading since it makes the trader ignore the risks involved – in the end, the trader ends up blowing up his or her account. Another emotion is fear which hinders a trader to take risks, thus keeping him or her away from grabbing potential opportunities. Also, there is greed where a trader becomes focused only on making a good amount of money and ignores all other factors involved in trading.

So how to fix this problem?

To keep your emotions from taking over your trading decisions, you need to perform a series of steps. These steps include identifying your emotions, taking a pause before trading, and unlearning the emotion.

The first step simply involves evaluating how you feel before starting a trade. With the mentioned emotions and their effects on trading from the previous paragraph, you can identify the trading blunders and mistakes that are about to happen. As you identify these emotions, you already have an idea of what effects you need to stay away from.

As soon as you identify which emotion you are feeling before trading, you should pause or take a break to assess the situation. Taking breaks or pauses when trading relieves stress and tension and can calm the emotions. You can then go back to trading when you’re feeling neutral.

Lastly, evaluate how you can avoid the emotion before trading. Was your anger a result of a confrontation with your boss, do you feel fear because your portfolio funds were running low, and many other reasons for emotions. Determine the root cause of the emotions and deal with them so you won’t have to bring those emotions to trading.

Our final thoughts

Everybody wants to win every trade as much as they could. Unfortunately, even the best traders face losing trades due to the factors mentioned in this article. However, if you want to keep away from the practices, habits, and emotions that bring about losing trades, you need to train your mind, body, and heart. Only by doing these things are you able to reduce the chances of losing a trade.

Through the valuable information mentioned in this article, you will be able to find out what’s keeping you from actually winning trades. Only by identifying the issue will you be able to come up with a solution to fix it.

For more articles and advice on how to become a better trader, do check out more of our articles on site. If you find this article helpful, do share it so others would also know.
Enjoy and Good luck!

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Risk Warning: The trading products offered by the companies listed on this website carry a high level of risk and can result in the loss of all your funds. You should never trade money that you cannot afford to lose.