Why Retail Traders Lose Money in Stock Market

Over the years, I have seen several people (including myself) lose fortunes while trading stocks, and I’ve found that invariably, it would be for the same reasons. Such reasons appear mostly psychological and occur often in the trading scene.


It is a known fact 80% of traders lose money and 20% makes profits on the expense of 80% traders going well verse with–Pareto principle

So what exactly is the reasons behind that the misery of traders losing money.

Trade without plan: Most of traders enter the market based on there intuition. They just want to trade as soon as market opens without having any knowledge of volumes, support and Resistances. They just trade coz they want to trade.

Over Leverage: Traders often try to carry too big a position with too little capital, and trade too frequently for the size of the account.

Over Trade: if suppose a trader make 10K in a day he will not stop and electrified with the winning streak bet more and end up losing all the money earned.

No Stop Loss: No trading plan means no specific risk is defined and hence Stop Loss is a BIG NO.I AM ALWAYS RIGHT ATTITUDE.

Directional Bias: Traders make up their mind that I want to be either long/short and fail to take position on what market is signaling and hence make losses.

No Discipline: Not following a disciplined trading program leads to accepting large losses and small profits. Many traders do not define offensive and defensive plans when an initial position is taken.

No Holding power: Traders take large positions at one shot and are unable to bear the shakedown which market gives in extreme cases and are forced to square off the positions.

GREED: It allows traders to lose profitable positions to move into loss while they hope for large and unrealistic targets.

No Patience: Losing Traders do not have patience for price level to come and take positions; they just want to enter as soon as they start trading.

No Money Management: Due to no trading plan, Traders have no money management plan and are wiped out of market.

No Shorting: It has been observed that most of losing traders fail to take shorts when market is falling, they thinking shorting as a taboo and always go along with long trades only.

Traders believe what please them to believe and are blindfolded by their own vision they fail to recognize warning what market is throwing at them
Bucking the trend: Market is falling let’s take a contra trader kind of attitude wipe out a trader from market.

Traders plan to buy at lows and sell at highs and get stuck with a losing position 90% of the time.

Beginner’s Luck: A novice trader will always make money in first few trades and get overconfident and does mistake which make him surrender all profits and in many cases start making losses on all trades.

Averaging a Losing trade is biggest blunder a trader can do.

Most of traders are under capitalized and trade position to large as compared to there actual trading capital.

Unable to accept small losses and turn those losses in big one which wipe out there entire trading capital.

Trading on Tips and market rumor.

Trading with emotion and heart instead of mind.

Get out of a profitable position at an early stage and holding a losing position till it gets squared off.


Failing to digest the fact that market is supreme and we are just a drop in a large swarm of people.

Getting whipsawed by volatility.

I hope reader will try to overcome the common losing mistake by going through this article and make there way with 20% of profit making traders.

I would request readers to add few points which i might have missed or happened with them in there trading career.


  1. Bramesh said:

    Please trade in cash market for atleast 6 months and if you can make money in consistent basis than think about trading in stock futures.

    December 22, 2015
  2. rishikesh vaidya said:

    Dear Brameshji

    Nice article. One more mistake normally committed (at least by myself, may be because I am novice) is take trade on stock future before the actual spot price of a stock ( in cash market) has not reached buy/sell level on the chart. In my case this happens due to change in premium/discount during the day. I arrive at buy/sell levels for particular stock future based on difference between spot and future price of that stock on 9.30 am candle( closing price basis). But premium/discount do not always remain the same during the day and hence problem is created when premium/discount keep changing during the day.
    If anybody else also faces the same problem , it will be helpful to know their views on this mistake
    Thanks and Regards

    December 22, 2015
  3. Don’t be enticed by ‘Pay subscription & Make Quick Profits’ ads. Just blindly follow Bramesh analysis. 9 out of 10 it is right and some regular money is there thanks to Brameshji

    December 22, 2015
  4. Amol said:

    Excellent article. Right and correct judgement. Many times self confidence is so high which doesn’t stand in front of market conditions which makes people to into losses.

    December 22, 2015
  5. Bramesh said:

    Thanks All for sharing the valuable views. Will helps the readers to gain for perspective and improve trading going forward.


    December 22, 2015
  6. Vinit said:

    As a retail trader, I have been guilty of all the reasons mentioned above to lose money. One another reason that I would like to add to the hitherto list is to take a LATE trade. Novice traders take entry even after 3 PM, with a hope to recover their day loss or desire (KICK) to make a quick buck. Sadly, more often than not… end up with losing more.

    December 22, 2015
  7. Vijay said:

    Greed and Fear goes hand and hand right? so fear is another side of the coin I think..

    December 21, 2015
  8. Sabarish said:

    Taking news based position blindly

    December 21, 2015
  9. Vamsi said:

    One more point to add. Retail traders are the last persons to get the news.

    December 21, 2015
  10. Nene Ram said:

    Bramesh good points :

    Mostly of the time stop loss doesn’t work bcas it gets triggered and than market changes the direction.(They work only when extreme volatility like 500 point nifty break in 1 day).

    Focus should be on Analysis , how much time spent in analysis daily , understanding of nuisance of indicator and correlating indicator data on various time-frame’s like daily , weekly, monthly.

    Once you identify trade ,
    Decide your entry points on lower time frame charts like hourly, which many people don’t have access to.

    And one point Greed : Its good bcas it keeps you running , but “Profit wahi jo ghar aya” , so balance profit and greed.


    December 21, 2015
  11. Aditya said:

    Correct sir..most of traders gone thru same thing including me but thank u very much for your guidance and knowledge…..its always better to accept mistakes and trade strictly as per system only….one should always wait for right level for entry and more concern about SL rather than only dreaming for big target…never ever skip stop loss….learn to accept loss too in market.

    December 21, 2015

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