What is 90/90/90 Rule in Trading

In this article we will discuss what is 90/90/90/ rule in Trading.

In trading, there is a popular maxim 90/90/90 rule claiming that 90% of traders lose 90% of their money in the first 90 days.

In this topic, we will learn about the main mistakes due to which more than 90% of people suffer losses in the stock market.
It is absolutely true that most of the people suffer losses in the stock market, but it is equally true that money can also be earned from the stock market, which is about 10% of the people who are making good profits continuously.
A question definitely comes that what do these 10% people do, so that they earn good profits continuously and what do these 90% people do so that they only get lost in the stock market.
You know about, of the stock market trading and investment trading setup, trading strategy, trading tools contribute only 20%, the remaining 80% is useful for your Psychology, Discipline, Emotions, Money Management, Risk Management Objective.

Not only in the stock market but everywhere, our psychology has a great contribution, no matter what it is, but what is this psychology, in fact, due to which some people climb the ladder of progress in their life.
This means that if you allow your mind to be affected by some other external things, then the result will be the same because if more than 90% of the people are harming outside, then you will also be harmed because of your psychology too. I am influenced by them.

Who are these 90% people?

In stock market only 10% traders are successful because of their psychology, they understand the science of stock market. Those 90% people are don’t make any set of rule for taking a trade ,they are in hurry always ,they want to just double their money in just a time . If you hate to wait then you can’t make a good trader in market and in any business.

These 90% people don’t know their trade entry ,exit point and don’t put stoploss order they placed necked order .So why they loose money in stock market.

The 90/90/90 rule we can define as

1. 90% of Traders Lose Money: Approximately 90% of retail traders end up losing money in the stock/forex market.

2. 90% of Trades Are Losing Trades: Out of all the trades executed, roughly 90% result in losses.

3. 90% of Losses Are Caused by Traders Themselves: The majority of losses can be attributed to traders’ own decisions, behavior, and emotions. Factors like lack of education, poor risk management, and emotional reactions contribute to this outcome.

Here are a few points to consider:

1. Lack of Knowledge and Experience: Many traders enter the market without sufficient knowledge, experience, or a well-defined strategy. Trading without a solid understanding of market dynamics, risk management, and technical analysis can lead to losses.
2. Market Volatility and Complexity: Markets can be highly unpredictable and subject to sudden changes due to various factors such as economic news, geopolitical events, and market sentiment. Navigating this volatility requires skill and experience.
3. Psychological Factors: Emotions like fear and greed can significantly influence trading decisions. Emotional trading often leads to impulsive actions that are not based on sound analysis, increasing the likelihood of losses.
4. High Competition: The financial markets are highly competitive, with institutional investors, algorithmic trading firms, and experienced professionals actively participating. Retail traders often face challenges competing against these sophisticated players.
5. Trading Costs: Transaction costs, such as commissions and spreads, can eat into profits, especially for frequent traders. Additionally, leverage amplifies both gains and losses, increasing the risk for inexperienced traders.
6. Survivorship Bias: The statistic may suffer from survivorship bias, meaning it only considers active traders who are still in the market. Many unsuccessful traders may have already left the market, skewing the perception of success rates.
7. Options Trading : Beginner traders have small capial and they want to double or 5X or 10x by this capital and do option trading. They not know stoploss and entry point and target they just want to double the money in a single trade or in single day.

While trading can indeed be challenging, it’s not impossible to succeed with the right approach. Successful traders often emphasize the importance of education, discipline, risk management, and continuous improvement. Additionally, some traders find success through long-term investing strategies rather than short-term trading.