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Become the best Market Trader you can be

Gemma HollowaySeptember 3, 2021

Most traders will have heard the statistics that ‘95% of retail traders lose money’. It has recently been reported that 67% of CMC Markets’ retail customers lose money, while at IG Group the figure is 70% and Plus500 it is 72%. It is likely that most beginners were attracted to CFD trading (as opposed to share dealing) due to the potential returns which can be achieved when trading CFDs, without fully understanding the added risks that it carries. While the actual numbers vary slightly when looking at the multiple studies, the fact is that most retail traders will lose money and it is actually a requirement for markets to function the way they do.

In the past two years there has been a huge increase in the amount of novice traders in the market for these three main reasons:

  • Global markets have experienced wild swings in prices caused by the pandemic, novice traders have been lured in by these attractive prices in the hope of making a quick profit.
  • Boredom during lockdowns and the shift towards working from home has freed up a lot of spare time for people who have always fancied themselves at trading, as well as being left with more spare cash.
  • Rise in beginner-friendly investing apps such as Freetrade, Trading 212 and Robinhood.

In this article we want to highlight the reasons why most retail traders lose money and how you can set yourself apart from the majority.

Why do most retail traders lose money?

To understand why the majority of traders lose money you can simply look a chart of an asset and compare it to its trading volume at certain times.

The key message of these charts is, in order to make money in any market you can’t get sucked in by what the crowd is doing. But despite your best efforts, it is easy to get sucked into what your friends are buying or what the media is talking about. By the time everyone is talking about it, its probably too late. Successful traders find something that works for them, and they stick to it. They DO NOT let others pull them away from their strategy.

How can I set myself apart from the crowd?

Buy an index fund

If you don’t know what you are doing, then a safe option is to buy an index fund and hold onto it. Don’t try to be clever by buying and selling at different times because you will most likely get it wrong. It’s a boring but solid approach.

Do your own research

For those who have the time and capital to try out trading/ investing for themselves, don’t be lured into the crowd. Think independently and do your own research. Teach yourself how to read charts and financial reports of companies. Then you can develop your own strategy and find out what works for you. Word of warning though that you should be prepared to take some losses before you become anywhere near a consistently profitable trader/ investor.

Seek expert advice

This is where Stock Pro Elite are assisting many retail investors. If you don’t have the time or capacity for loss to make your own investment decisions. Then why not leave all the hard work to a professional advisor? Professional traders have countless years of experience and already have their reliable winning strategy intact. This approach will of course come at a small fee but that will seem redundant when you are seeing consistent profits.

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