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Why people lose money $$ in the Stock Market ??

Everyone wants to make a lot of money and the Stock Market is the Only legitimate medium to make a lot of money in very short period of time.

However this is just one face of the Coin that looks fancy, lucrative and the Other face of the Coin is the hard truth, means people Lose money $$ more than they Earn & sometimes they lose it all.

Now-a-days, People are trying to trade in the Options but they do not know or they do not understand they If Options Trading has power to DOBULE (2x) THE MONEY $$ in JUST ONE DAY then Options Trading also have power to ZERO the money in JUST ONE DAY. People forget that Options Trading is the game of Expert Traders who have extensive knowledge of the market and technical indicators.

I am listing some of the very common reasons why people lose money in the stock market :

  1. Instant money $$ : People want to make instant money which never happens. There is nothing like instant, even the Options Trading is highly Risky because it has potential to give 2x-10x returns in just One Day & also it has potential to ZERO all of your money within One Day. People do not care how it comes but they just want to make a lot of money without having much experience or technical knowledge.

  2. Emotional Trading : Everyone who is NOT an expert trader is an Emotional Trader. His emotions drives his trades and the Golden Rule of the stock market is, an Emotional Trader WILL ALWAYS LOSE THE MONEY, no matter what. Many a times, these emotions comes out when the trader is seeing Losses and then he blames himself, his fate, god etc. and do not realize that these losses will only increase if he don't act or if he doesn't accept. Even expert traders see losses sometimes but they don't get emotional, they take losses and then wait for another opportunity to cover the losses and to make the profits.

  3. Penny Stocks : Everyone want to buy a lot of stocks but for the cheapest price. No one would like to buy APPLE (AAPL) for $120 because it looks costly. However the stocks of a company that no-one has ever heard of or that has very little history or is not recognized in the market is most favourable to buy because the stock price is just $1 or maybe $0.25 per stock. People forget that Penny Stocks are operated by the Operators (Market Manipulators) who are PREDATORS, means they make money only when you lose & you'll always lose.

  4. Improper Technical Knowledge : Most of the traders who want to trade in the stock market posses NO or A LITTLE knowledge of the technical indicators and many of them are not even aware of what the CANDLESTICKS are. This is how they fall into the TRAPS of the people, market manipulators who guide them to trade in certain stocks in order to make sure that these innocent people lose their money.

  5. Trading in OPTIONS : Only the expert traders are advised to trade in Options because Options Trading is highly technical thing and price can move sharply upto 50% within just ONE (1) SECOND. Because Options Trading is the Most Lucrative trading in the Stock Market, everybody wants to double (2x) his money within 1 day which can happen only if you are an EXPERT OPTION TRADER else for sure you are going to lose all of your money.

  6. RAT RACE : People, because they do not have proper market knowledge or proper technical knowledge, and most of the time people even don't have "TIME" which is why they always join the RAT RACE, means they wil BUY or SELL what all others are doing, irrespective whether is a good trade or a bad trade and eventually at the end there are 99% chances of seeing Losses.

  7. FOMO (Fear of Missing Out) : New or inexperienced traders FEARS A LOT. When they see a sudden movement in the market, they fear of missing out the trade and then they Buy/Sell immediatley without knowing whats gonna happen next. Sometimes they make a little money and sometimes they lose a lot of money.

  8. Trading Intraday or Aggressively : Because people want to make a lot of money in short period of time, they trade very frequently and sometimes every 5 minutes. People forget that INTRADAY markets are heavily VOLATILE and the longer are the timeframes, the volatility reduces. People forget that Stock Market is the game of Patience & Knowledge. Expert traders DO NOT TRADE FREQUENTLY. They trade ONCE in a week or ONCE in a month and when they trade, they make sure, they make a lot of money $$ which could be 1.5x or 2x or 5x.

Making money from the Stock Market is NOT COMPLICATED but the Complicacy comes through other factors which are Emotions, Market Knowledge, Technical Knowledge, Patience, Acceptance etc.

Lakshman Singh

Fund Manager (Hedge Fund)


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