Here’s a statistic that should scare you: 90% of retail traders lose money in the stock market.
Not 50%. Not 60%. Ninety percent.
Think about that. If you put 100 people in a room who start trading today, only 10 will still be profitable a year from now. The rest? They’ll have smaller accounts, blown accounts, or they’ll have quit entirely.
Now here’s the really uncomfortable part: most of those 90 people think they won’t be part of that statistic. They believe they’re different. Smarter. More disciplined.
You might be thinking the same thing right now.
So let me ask you this: if 90% fail, what makes you think you’ll be in the 10%? Luck? Hard work? A good strategy you found on YouTube?
The truth is harder to swallow. Most traders don’t fail because they’re stupid or unlucky. They fail because they make the same mistakes over and over-and the biggest one has nothing to do with picking the wrong stocks.
It’s about risk management. Or rather, the complete lack of it.
The Real Reason Traders Lose Money (It’s Not What You Think)
Go ahead, ask any losing trader why their account is down. Here’s what they’ll say:
“The market is manipulated.” My stock would’ve worked if I held longer.” I got unlucky with a few trades.” The market makers hunt my stop-losses.”
Notice something? It’s never their fault.
But here’s what actually happened: they risked too much, too often, on too many trades. They had no idea how to protect their capital. They confused gambling with trading.
Let me show you what I mean with a real example:
Trader A has ₹1,00,000 in his account. He finds a “sure shot” stock tip. He’s confident-really confident-so he puts ₹40,000 into one trade. That’s 40% of his capital on a single trade.
The stock drops 10% the next day. He just lost ₹4,000.
“It’s okay,” he thinks. “I’ll make it back.” So he puts ₹50,000 into the next trade to recover faster. That one drops 8%. Another ₹4,000 gone.
In just two trades, he’s down ₹8,000-8% of his starting capital. Now he’s desperate. He needs to make back that money fast, so he takes bigger risks. You can guess how this story ends.
Trader B has the same ₹1,00,000. But she never risks more than ₹1,000 (1%) on any single trade. Her first trade loses ₹1,000. Her second trade loses ₹1,000. Even her third trade loses ₹1,000.
She’s taken three losses in a row, but she’s only down 3%. Her account? Still ₹97,000. She’s completely fine, emotionally calm, and ready for the next trade.
See the difference? It’s not about being right or wrong. It’s about how much damage being wrong can do to your account.
The 7 Risk Management Mistakes That Kill Accounts
Let’s get specific. Here are the exact mistakes that put you in the 90% category:
Mistake #1: Risking Too Much Per Trade
This is the big one. The account killer.
New traders regularly risk 5%, 10%, even 20% of their capital on a single trade. They think: “I’m confident in this one, so I’ll go big.”
Here’s the math that destroys them:
If you risk 10% per trade and lose five trades in a row (which will happen, trust me), you’re down 40%. To make back that 40%, you now need a 67% return. Good luck with that.
But if you risk 1% per trade and lose five trades in a row, you’re down 5%. To recover, you need just 5.3% return. Totally manageable.
The rule: Never risk more than 1-2% of your capital on any single trade. Period.
I don’t care how confident you are. I don’t care if your cousin’s friend’s brother made ₹50,000 on this stock yesterday. Stick to 1-2%.
Mistake #2: Not Using Stop-Losses (Or Moving Them)
“Stop-losses are for weak traders. I believe in my analysis.”
This is what broke traders say.
Here’s what happens: you buy a stock at ₹500. Your plan says sell at ₹480 if it drops. It hits ₹480. But instead of selling, you think “it’ll bounce back.” It drops to ₹460. “Now it’s definitely a good buy,” you convince yourself.
Before you know it, you’re holding a stock at ₹420, and what was supposed to be a 4% loss is now a 16% loss.
The truth: Every winning trader uses stop-losses. Every single one. The difference between professionals and amateurs isn’t that pros don’t lose-it’s that when they lose, they lose small.
Set your stop-loss before you enter the trade. And when it hits, exit. No excuses, no “just one more day.”
Mistake #3: Over-Trading (The Addiction Nobody Talks About)
You’re not a day trader. You’re an action junkie.
You open 10 trades a day. Some days 15. You can’t just sit and watch the market—you need to be IN the market. Every red candle feels like a missed opportunity. Every green candle makes you FOMO.
Here’s what you don’t realize: every trade has a cost. Brokerage, STT, GST, exchange charges. On a ₹10,000 trade, you might pay ₹50-100 in charges. Do that 20 times, and you’ve spent ₹1,000-2,000 before you even consider if your trades were profitable.
Plus, more trades = more opportunities to be wrong.
The reality check: Professional traders often take 2-5 trades per week, not per day. They wait for high-probability setups. You should too.
Mistake #4: Revenge Trading (Emotional Account Suicide)
You lose a trade. It stings. You’re frustrated, maybe a little angry. So what do you do?
You jump into the next trade immediately to “make it back.” You don’t even analyze properly—you just need to win. To feel better. To prove you’re not a loser.
This is revenge trading, and it’s an account killer.
Why? Because you’re trading your emotions, not your strategy. You’re not following your plan; you’re chasing a feeling. And the market doesn’t care about your feelings.
What to do instead: Have a rule. After any loss, step away for at least 30 minutes. Go for a walk, grab coffee, do anything except take another trade. Let the emotion settle, then come back with a clear head.
Mistake #5: Position Sizing Based on “Confidence”
“I’m really confident about this stock, so I’ll buy 200 shares instead of my usual 100.”
This sounds logical, but it’s a trap.
Your confidence means nothing to the market. The stock doesn’t know you believe in it. The stock doesn’t care that you spent three hours analyzing it.
What happens when your “high confidence” trade loses? You lose twice as much as normal. And your confidence? Shattered.
The rule: Position size should be based on your risk per trade (1-2% of capital), NOT your confidence level. Every trade gets the same risk allocation, regardless of how sure you feel.
Mistake #6: Not Having a Trading Plan
Most losing traders trade like this:
- See a stock moving up → Buy
- Stock drops → Panic
- Decide randomly whether to hold or sell
- Repeat
There’s no plan. No rules. No predetermined exit points. Just pure reaction to whatever the market does.
Compare that to a winning trader:
- Waits for specific setup (e.g., breakout above resistance with volume)
- Enters at predetermined price
- Sets stop-loss at logical level (below support)
- Sets target based on risk-reward ratio (minimum 1:2)
- Follows the plan regardless of emotions
The difference: One is gambling. The other is trading.
Mistake #7: Ignoring Risk-Reward Ratio
Here’s a question: Would you risk ₹1,000 to make ₹500?
Obviously not, right? That’s a terrible deal.
Yet traders do this all the time without realizing it. They buy a stock at ₹100, set a stop-loss at ₹95 (₹5 risk per share), and set a target at ₹103 (₹3 profit per share).
That’s risking ₹5 to make ₹3. Over the long term, even with a 50% win rate, you’ll lose money.
The minimum standard: Your potential reward should be at least 2x your risk. Risk ₹1,000? Your target should be ₹2,000 minimum.
Better traders aim for 1:3 or even 1:4 risk-reward ratios. This means you can be wrong 60% of the time and still make money.
The Real Numbers: Why 1% Risk Changes Everything
Let’s do the math that separates the 10% from the 90%.
Scenario 1: Risking 10% per trade
- Starting capital: ₹1,00,000
- Win rate: 50% (pretty good!)
- Risk-reward: 1:1 (₹10,000 risk for ₹10,000 reward)
After 10 trades (5 wins, 5 losses): You’re at ₹1,00,000. Break even.
But here’s the problem: One bad streak of 4 losses in a row, and you’re down ₹34,000. To recover that, you need a 52% return. And psychologically? You’re devastated.
Scenario 2: Risking 1% per trade
- Starting capital: ₹1,00,000
- Win rate: 50% (same)
- Risk-reward: 1:2 (₹1,000 risk for ₹2,000 reward)
After 10 trades (5 wins, 5 losses): You’re at ₹1,05,000. Up 5%.
Even with a bad streak of 4 losses in a row, you’re only down ₹4,000 (4%). Easy to recover. Easy to stay calm. Easy to keep following your plan.
See the magic? Lower risk per trade + better risk-reward ratio = consistent profits.
What the 10% Do Differently
The traders who survive and thrive aren’t smarter than you. They don’t have secret indicators or insider information.
They just follow rules that protect their capital:
1. They risk 1-2% maximum per trade. No exceptions. Ever.
2. They use stop-losses religiously. They exit when they’re wrong, quickly and without ego.
3. They keep a trading journal. They track every trade—entry, exit, reason, emotion, result. Then they review it weekly to spot patterns.
4. They understand that losses are part of the game. They don’t revenge trade. They don’t get emotional. A loss is just data.
5. They focus on process, not results. They know that if they follow their plan consistently, profits will come.
6. They never trade with money they can’t afford to lose. Rent money, loan money, emergency fund? Never touches the trading account.
7. They have realistic expectations. They’re not trying to double their account in a month. They’re aiming for 2-5% monthly returns consistently.
The Uncomfortable Truth You Need to Hear
You want to know why you’ll probably be in the 90%?
Because you’ll read this article, nod along, maybe even save it—and then do exactly what you were doing before.
You’ll risk 5% on your next trade because “this one is different.” You’ll skip the stop-loss because “you have a good feeling.” You’ll overtrade because you “see opportunities everywhere.” You’ll revenge trade because “you need to make back that loss.”
And six months from now, you’ll be wondering why your account is smaller than when you started.
Here’s the alternative: Take risk management seriously. Right now. Not after you blow up your first account. Not after you lose ₹50,000. Now.
Because the market doesn’t care about your potential. It doesn’t care that you’re smart or hardworking. It only cares about one thing: Can you protect your capital?
If you can’t, you’re gone. If you can, you get to stay in the game long enough to actually become good at this.
Your Action Plan (Starting Today)
Stop reading articles about “best stocks to buy” or “secret indicators that work.” Start here:
Step 1: Calculate your risk per trade. Take your account size, multiply by 0.01 (1%). That’s your maximum risk per trade. Write it down.
Step 2: Before your next trade, determine your entry, stop-loss, and target. Calculate your position size so that if your stop-loss hits, you lose exactly 1% of your account. Not 2%, not 5%—exactly 1%.
Step 3: Place the stop-loss order immediately after entering the trade. Not “mentally.” An actual stop-loss order in your trading platform.
Step 4: Keep a simple journal. For every trade, note: Date, stock, entry price, exit price, profit/loss, and most importantly—did you follow your plan?
Step 5: Review your trades weekly. Not daily (too emotional). Weekly. Look for patterns. Are you breaking your rules? When? Why?
Do this for 50 trades. Just 50. Track everything. Follow your rules. Risk 1% maximum.
After 50 trades, you’ll either be profitable or breaking even. But more importantly, you’ll still have capital left to improve. You won’t be part of the 90% who blew up their accounts and quit.
The Choice is Yours
The stock market is one of the few places where you can genuinely build wealth with relatively small starting capital. But it’s also one of the few places where you can lose everything if you don’t respect risk.
90% of traders lose money. But it’s not because the market is rigged or because trading doesn’t work.
It’s because they treat their trading account like a casino. They risk too much, too fast, on too many trades.
The 10% who succeed? They’re boring. They risk small. They follow rules. They track results. They protect capital like it’s their job—because it is.
You can be part of the 10%. But only if you stop trying to get rich quick and start trying to not go broke.
The market will be here tomorrow, next month, next year. The question is: Will you?
Master Risk Management with Expert Guidance
At Vaishvik Trader, we don’t just teach you how to pick stocks—we teach you how to survive and thrive in the markets. Our programs emphasize risk management, position sizing, and trading psychology because we know these are what separate winners from losers.
Whether you’re a complete beginner or struggling to become consistently profitable, our live market training will help you develop the discipline and skills you need.
Visit our institute in Jaipur or explore our online courses to learn trading the right way—with risk management at the core.
