When you pick the right market… but you still lose money

josevas217 (80)in PussFi 🐈 • 13 days ago

Hello PussFi friends, good day to all. Today I was watching a rather interesting video that discussed something that's always talked about in the trading world: the famous statistic that most traders lose money. This is no secret; practically everyone who approaches the financial markets hears the same thing from the beginning: "90% lose." But the video presented a rather curious analysis based on a study that evaluated more than 5,000 traders, and what they found was something that particularly caught my attention.

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One might think that most traders lose simply because they don't know how to analyze the market, because they don't understand how it works, or because they trade practically at random. But according to this study, the reality is a bit different. It turns out that approximately 85% of traders correctly predicted the market direction in many of their trades. In other words, their analysis was correct; they understood where the price was likely to move.

Then the logical question arises: if so many correctly predicted the direction, why do they end up losing money? Well, the problem wasn't in the analysis, but in the management of the trades. Basically, two very common mistakes were repeated that ended up ruining the results for most traders.

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The first mistake is something many have surely seen or even done at some point. When a trade starts to move against you, when the price moves toward losses, the trader begins to think that the market will eventually reverse course. So they decide not to close the trade, letting it run, hoping that at some point it will return to the entry point or even end in profit.

The problem is that the market has no obligation to reverse course just because someone wants it to. And when losses are allowed to run for too long, a single trade can wipe out several previous profits. In other words, the damage ends up being much greater.

But curiously, the second mistake is exactly the opposite. When the trade is going well, when the price starts to move in your favor and there are profits, another very common enemy appears: fear. The fear of losing what has already been gained.

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So the trader closes the trade too quickly, takes a small profit, and exits the market prematurely. They do this because they feel relieved to secure that money, even though the market still has a long way to go.

In the end, something quite curious happens. Losses are allowed to run too long, and profits are cut short too soon. In other words, exactly the opposite of what should be done.

In trading, it's essential to understand something that many people initially struggle to accept: losing is part of the game. No trader wins every trade; that simply doesn't happen. Everything operates within a range of probabilities.

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You can have a system that's right many times, but if each loss is very large and each gain is small, the final result will inevitably be negative. That's why it's often said that trading is more psychological than technical. It's not just about knowing how to analyze charts or understand economic news. It's about learning to manage emotions like hope, fear, or anxiety, which often end up making decisions for us.

Accepting a small loss when appropriate, and letting a good trade run when the market is in our favor, sounds simple in theory, but in practice, that's where many stumble.

Anyway, I thought it was an interesting topic to share here because it shows that many times the problem isn't the market... but how we react to it. Goodbye, take care.