Why do retail investors lose in the stock market? Understanding the pitfalls of investing through chart analysis and psychology.

Stock investing is a “battle of information.” There is a significant gap in knowledge, capital, and psychological strength between institutional investors and retail investors. Data shows that about 90% of retail investors experience losses, and the reason is not just the lack of Technical Analysis, but rather in human nature.

8 Common Patterns of Losing Investors

1. Entering without knowledge — Buying without technical analysis or company analysis, simply because you have a “good feeling”. This is the same as buying a lottery ticket.

2. Aiming for 100% return in the short term — Even the god of investing, Buffett, only achieves around 20% a year. Yet, are you aiming for 100% in one year? This is an illusion.

3. Controlled by News — Market news has already been factored in by institutional investors. By the time retail investors become aware, the profits have already been absorbed by the large players.

4. Buying without understanding the company — Holding shares without knowing what the company does? There's no way to judge when to sell.

5. Making decisions based on emotions — Joy when it rises, fear when it falls. Investing without psychological control leads to failure.

6. Not wanting to admit losses — Due to loss aversion, selling off stocks that were supposed to rise. You are undermining your own potential.

7. Frequently changing stocks — Unable to hold onto researched stocks, getting distracted by short-term trading. As a result, losing on both.

8. Buy with full force, no rest — Over 90% of stocks have no profit opportunity even in a bear market. Still, holding on with a full position. Psychological fatigue distorts judgment.

Correct Response When You Lose

No technical support, cut losses — Dispose of emotions and exit based on professional judgment.

Confirmation of the Existence of Support Levels for Position Adjustment — Reconsidering the risk-return ratio and re-entering with a new expected value.

Review your strategy if you have losses more than 3 times in a month — Your method does not suit the market. You should change the technical indicators themselves.

Calmness is the greatest weapon — Do not become arrogant even if you profit. Do not be shaken even if you lose. The ability to wait for the next opportunity is the condition for being a winner.

Selection of 3 Investment Strategies

Dividend Stock Investment — Hold for 10 to 20 years, with annual dividends as the cornerstone. Stock selection is everything. Don't worry about timing.

Normal Wave Trading — Predict the upward range and sell upon reaching it. Buy on dips during downward phases. Aim for short to medium-term rhythms.

Short-term speculation — Quick decisions and instant withdrawals are crucial. A moment's delay can lead to significant losses. If someone who is not suited for it tries, they will self-destruct.

Three Methods for Risk Reduction

Index Fund — Unlike the beautiful fraudulent packaging of individual stocks, it automatically selects high-quality companies. The component stocks are also dynamically updated. Steady returns can be expected with long-term holding.

Algorithmic Trading — Programs eliminate human cognitive biases. Automated trading with combinations of technical indicators. No room for emotional intervention.

CFD Hedging Strategy — Establishing an opposite position in physical stocks to hedge losses. Can start from 50USD, utilizing small capital with leverage. Flexibly accommodates short-term trading.

5 Warning Signs Before a Stock Market Crash

250-day Moving Average Break — The dividing line between bulls and bears. If it breaks below this level, the market will transition into a bear market.

The index cannot update to new highs — Repeating in the same range. A major correction is coming from here.

The entire market is in a frenzy — Are even your close friends talking about stocks? A signal that institutional investors are quietly proceeding with their sell-off. It's a “passing the baton” to retail investors.

Major Constituent Stocks and Index Divergence — If the top 10 stocks move differently from the index, it signals a decline in the index.

Simultaneous Rise of Indices and VIX Index — Investor optimism is excessive. The moment the gap with reality is exposed, a rush to sell will begin.

Finally

The reasons retail investors lose are not just due to a lack of knowledge. Psychological weaknesses and judgment errors act in a complex manner. To avoid losses, it is important to eliminate emotions and act systematically. Even if losses occur, do not panic; the opportunity for a counterattack will surely come with position adjustments. The market is eternal, so there is no need to rush.