We’re not talking about losses that have been considered during the trading planning stage. We’re talking about unplanned, huge losses that can even lead to a blown account.
If you missed the title, here’s this week’s question:
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- Don’t have risk management, no stop loss. When people see a big loss, they are scared to close the order then wait with hope but market just goes on its way. Then let it go, let it go,…
. This is one of my biggest lesson from the beginner in Forex. - Extending stop loss and hope the price will go back on his target.
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Overtrading, revenge trading, and gambling are key reasons, not closing losing trades early is another.
Most critically, a lack of emotional control.
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I would say, that two main reasons are:
- Laziness
- Treating trading not seriously
I believe these are root causes, which are behind all other points mentioned above.
These are direct reasons why huge losses occur, but these are not root causes.
We live in times, when there is more free knowledge about trading than we can ever digest. Most of sources are mentioning traps like not setting stop losses, money management, maybe a little bit of trading psychology. Even the garbage youtube channels are treating basics seriously (before selling their products).
There is no excuse to not be prepared for the risk at least on basic level before putting money on the table. 
So if someone invites huge loss (and want to treat trading seriously) - it’s pure laziness
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It’s a broad topic but at times you can become out of touch with reality afterall they are just a few lines on a chart really
Trading in wrong market conditions and moving stop loss to bigger loss.
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Taking an excessive risk on a trade will eventually lead to serious loss.
Why would a trader take an excessive risk?
- Because the account capital is very small and the impact of a total loss on their lives is small.
- And even if they have a consistently profitable strategy, the small account means they get very very small rewards in monetary terms per trade. Again, not enough to change their lives.
- At the heart of it, they don’t understand that trading success is measured in %, not $.
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if I tell you 90% of the students in College X have missed the test and need to repeat the class
what would you say or think ?
Most people with reason would say == The teaching is bad
In my opinion, based only on what I have read on websites and forums, these types of losses result mainly from a gambling approach combined with a lack of knowledge, awareness and understanding of the risks.
Strange though it may sound, this arises mainly from the fact that trading is too easy and too accessible!
There are hardly any basic requirements to opening an account and most people use standard indicators etc that are immediately available on the platform. People also have no patience and want to see immediate results - that is the way of the world in many things. Open an account, fund it, trade it. And guess what the result is? Yep, a small win! Yipee - now for a big trade and lots of them…and guess what the result is now? Well the answer to that one is in the title of this thread!
Trouble is, in today’s world no one wants to take the time and effort to understand about markets and indicators. We don’t need to know how something works, only that it does work and can trust that it works.
Trouble here is, these things do not actually work. At least, not always. In fact often they only work sometimes. And this creates the frustration and psychological reactions like revenge trading. We want it to work so much, just like the Utubes promise, we want a life-changing chance. And we cannot wait, we want it now…
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Its often said that 90% of traders lose money. Given that it seems the majority of new traders start trading without the benefit of a profitable strategy, that sounds like a realistic number.
As far as college students are concerned, I’m sure that if they did the same thing, i.e. took their final exam on Day 1 without the benefit of any teaching at all, 90% would fail too.
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The percentage profit per trade is just absolutely not the point.
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Fail to change themselves.
Difficult, but must for forex traders.
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90% of all traders new and old are getting the not wrong teaching materials but extremely outdated
It’s not the strategy what usually blows their account in the way PO meant it’s usually the traders lack of experience or dissaplin.We talking about big losers , reading tommor posts over the years I guess it’s never occurred to him but that not at all a critism .
sure lack of experience and discipline plus outdated trading teaching materials is a good recipe for blown out accounts
May be few reasons obviously adding to losers , sentiment “seems” to contractdict News ect ,
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I suppose these types of losses are due to lack of self-control. It just manifests in different ways.
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Huge losses can only be due to extreme emotions taking over when trting to buy your way out of a loss. You can plan for everything (stop losses etc) apart from losing it/getting angry/frustrated/scared. Then it becomes gambling and you lose everything.
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