Is the market a Money Lossing Machine?

The 90/90/90 rule is an informal saying in the world of trading, and it goes like this: "90% of new traders lose 90% of their capital within the first 90 days." This statement is not based on formal statistical data but captures the high-risk nature of trading, especially for newcomers. Here's why it often rings true:

1. Lack of Knowledge and Experience: Many newcomers to trading lack the necessary knowledge and experience to navigate the intricacies of the market. They might not understand how to analyze market trends, interpret news events, or use trading tools effectively. This lack of expertise can lead to poor trading decisions and losses.

2. Overconfidence: Some new traders enter the market with unrealistic expectations and believe they can make quick profits. This overconfidence can lead to risky behavior, such as taking on too much leverage or making large trades without proper analysis.

3. Poor Risk Management: Effective trading requires solid risk management, which includes setting stop losses, managing leverage, diversifying investments, and only risking a small portion of capital on any single trade. New traders often overlook these strategies, putting their capital at risk.

4. Emotional Trading: Trading can be a roller-coaster of emotions. Fear and greed can significantly influence decision-making. New traders might panic and sell at a loss when prices drop or become greedy and buy when prices are skyrocketing.

5. Lack of a Trading Plan: Successful trading requires a well-thought-out plan that includes clear strategies for entering and exiting trades, managing risks, and maintaining discipline. Without a plan, new traders are essentially gambling, which rarely ends well in the long term.

It's crucial to note that while many new traders might lose money, this doesn't mean that success is impossible. Many successful traders have also experienced losses early in their careers. The key to long-term trading success often lies in gaining proper education, developing a solid trading plan, managing risks effectively, and maintaining emotional discipline.