The real reason why 90% of traders lose money

How many times have you heard the phrase “90% of traders lose”
We usually read it in small print in broker notes or risk warnings, but that percentage is not there by chance. It comes from real data on the accounts of retail clients who trade leveraged products. The interesting part is not so much the number itself, but understanding why so many people end up in that statistic.

If we remove the usual excuses like “the broker hunted my stop” or “the market is rigged”, the reason why 90% lose always comes down to the same three things. Most people start without real education, they do not have a defined edge and they use leverage without really understanding it.

Many discover trading through a video, an ad or a friend. They open an account with little money, download the platform and start clicking buy and sell copying ideas from social media or groups. Without a solid foundation they end up taking trades without really knowing what they are buying or selling, how much they are risking on each trade, or why they place a stop in one place instead of another. They move the stop because they do not accept losing and try their luck, they increase size when they are in drawdown to recover faster.

Remember, it is not the market that is against you, you are playing a game without really knowing the rules.

Then there is the topic of edge. In theory everyone says they have an advantage, in practice very few could explain it clearly. An edge means that, over a long series of trades, your way of trading has a positive expectancy after costs and commissions. If you ask many traders what their exact entry conditions are, what average stop they use, what risk reward they look for and what percentage of trades needs to hit target for the plan to make sense, often there is no clear answer. They jump from one strategy to another and from one market to another. One month only price action, one month with “magic” indicators, one month order flow, always chasing whatever “works better” just because they saw it on TikTok. Without a structured method that is measured over time there is no edge, there is only an alternation of good moments and periods where the account slowly gets thinner.

The last piece of the puzzle is leverage. In official documents you see it mentioned everywhere as one of the main reasons why retail clients lose money quickly. Leverage lets you control a position much larger than the capital in your account, and that is exactly what makes it attractive. With little margin you can move amounts you could not otherwise afford. The problem is that leverage amplifies everything, both profits and losses. If you have a small account and use size that is too large, you are forced to place extremely tight stops, you get shaken out by normal market noise, you get nervous, start overtrading and in a few trades you can burn a huge part of your capital. You do not lose because leverage is “bad in itself”, you lose because you are using it when you still do not have a solid method and a coherent risk management.

When you put these three elements together, the 90% figure stops being a mystery. A person enters trading without real education, never builds an approach with a measurable edge and uses leverage as a shortcut to speed up results. Framed like this, it is almost inevitable to end up in that statistic.

The purpose of this article is not to tell you not to trade or that it is reserved for a chosen few. It is to remind you that, if you want to give it a serious try, the minimum is to work exactly on these three points. Real education, not just fast clips on social media. A structured and tested method that lets you understand whether you really have an edge or not. Risk management where leverage is under control and not always at the maximum allowed by the platform. There is no guarantee of success, but it is the only honest way not to end up automatically in that 90% without even having tried with some real intention.