Why do people lose money in stock market ?


Stock market is a platform where economic transaction takes place between buyers and sellers of stocks. It is also known as equity market. It attracts traders as it enables them to make huge money in shorter duration. This is only one side of the coin. This market is also a medium of losing large amount of money. There are many reasons that lead to losses instead of gains. Some of the most prominent reasons are as follows:

  • Lack of basic Knowledge:

The major reason for losing is being ignorant of the loopholes of quality trading in the Stock Market. Keeping in mind the Risk factor proper training should be taken otherwise the consequences can be jeopardy.

  • Investing non affordable money:

There are investors who are charmed by their initial success in this trading market. This initial motivation makes them invest money which they cannot afford. This is the money that fulfils their basic essential needs for example money needed for day to day bills, tuition fees of kids, property mortgage etc. Lack of the desired knowledge in this field and illusion of easy and quick money leads the traders to lose money in stock market.

  • Lack of logical reasoning:

Some people let their emotions overpower their reasoning faculty. They seek advice from any capricious source rather than taking trustworthy professional guidance. Some investors are even trapped by spam mails which guarantee success in this market or some “can’t lose” tips and many more fraud sources.

  • Not making trade simple:

There are a lot of investors that intricate the trading. They try to use any methodology they like and change it according to their will ignoring the basic money management strategies. These investors are vulnerable to loss in the market.

  • Blind faith in technical indicators:

Investors have misconceptions regarding technical indicators. These cannot predict future and guarantee success in Stock Market. They only provide general information. Hence having blind faith in these technical indicators can lead to huge loss.

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