Found this interesting article why traders lose monies in the stockmarket. https://www.tradeciety.com/24-statistics-why-most-traders-lose-money/
Now, I do not agree 100% with all that they have noted on why traders lose. One big reason I believe is the "herd" mentality. If others believe as I do, then, it must be the correct decision. Go to this website, www.stocktwits.com. I have signed up for it because it gives you insight to what majority of retail traders are thinking. Most times, a stock they have a trade or investment on, goes down in value. What do 90% of them do? I will buy more! If this was a bargain at $80, it must be an even bargain at $60. So, it goes down to $35 and they say, can you believe how much of a bargain this is? It was a gift at $60 and even more so at $35 so, I will buy more! If you are one of these traders, do yourself a favor and don't do it!
Consider the fact that only a small number of traders and investors make monies in the stockmarket in a consistent basis. By implication, most investors and traders get it wrong! So, if the majority is wrong, contrary opinion is probably, the correct opinion to have! In the above example, chances are good that stock is trending down so, shorting that stock would have been the smart decision and not buying more of it! If you shorted that stock, you probably, made a lot of monies! Longs just lost more and more of their monies!
I noticed the same. Over and over and over. To be fair, I used to be like that years ago then I wisened up. You read some people kept buying even as the stock breaks a $1. Hoping that it will turn around make them a fortune. Then the stock delisted. Even after news of impending delisting, some Stocktwiters still posing questions if people think it will go up to $X when it was in the pennies. Sad. Sad.
There was an article yesterday on Apple stock and the investors who held onto their shares since, 2006 I believe and they said the returns were like $1,000 invested would have returned $9,000 plus. The point being diversification which was one of the items mentioned is not really a good thing. Even Warren Buffett made a remark against diversification making your results be mediocre. Mutual funds also, lose monies! A lot of them do so, the diversification argument probably, does not hold too much water!
Track your trading results with as much intensity as you track a stock. Study it. Tweak your approach based on what you see. Be the 1%. Only a delusional trader will continue to do things that lose money when the results are staring him in the face.
That is why every trader should have a trading log. How can one monitor one's mistakes to correct them as well as good trades to focus on to improve trading performance? If you do not have a trading log, you do not really know how you are doing and what mistakes you are making!
The current U.S.) bull market is an exception to an old and well-heeled rule (re: diversification), as this bull has taken up a lesser amount of equities (but to enormous heights). *Unfortunately*, this will correct over the next generation, and "Diversification" will become the new thing.
traders can never improve as long as they never discover what they are missing. it's like doctoring in the 1800's all the logs and analyzing will get you nowhere because germs had not been discovered. now put this into the context of trading successfully, where few know about the germs and they are not really feeling the need to help mankind.