Why Am I Losing Money in Stocks? 7 Common Reasons and Fixes

Why am I losing money in stocks? If your account is red while the stock looks green, you didn't necessarily do anything wrong. Stock math isn't obvious until someone lays it out, so let's find where the money went.

Common causes of stock losses are paying more on average than today's price, reading the wrong time period, spreads and fees, too much money in one stock, margin or options, frequent trading, and plain market drops. Some of these you can fix. A market drop can't be fixed, but you can limit its damage.

Educational only. Not financial advice. Here's how we research our guides.

Compare the total you put in, including fees, with what your shares are worth now. Then go through the reasons below with your brokerage's trade history open. If you also hold crypto, see why you might be losing money in crypto and our crypto for beginners guide.

A common reason is that your average cost is still above today's price.

Made-up example:

• You buy 5 shares at $100 each, which costs $500.
• The price falls to $60, and you buy 5 more for $300.
• You spent $800 on 10 shares, so your average cost is $80.

If the price rises to $70, you're up about 17% from your last buy. But your 10 shares are worth $700, so overall you're down $100.

The fix: track your average cost, not just your last purchase price.

You might be. A stock can be up today and still be down since the day you bought it. Your account can also fall while one stock rises, if your other holdings dropped by more.

The fix: check today's change and your total gain or loss separately, for each holding.

It usually dropped because of the spread, which is the gap between the buying and selling price. The SEC's investor site explains in its guide to order types that buy orders generally fill near the ask price and sell orders near the bid price.

Made-up example, with a bid of $10.00 and an ask of $10.05:

• You buy 100 shares at $10.05, which costs $1,005.
• The prices don't move, and you sell at $10.00, which brings in $1,000.
• You're down $5, though nothing changed.

Fees add to this. FINRA's page on fees and commissions notes that funds charge annual operating expenses and that small fee differences can take a big chunk of returns over time.

The fix: before you confirm, check the bid, the ask and any fees.

Sometimes the whole market is down, and your stock is falling with it. Compare your holding with a broad market index for the same day. If it's just your stock, look for official company news, and be careful with explanations from social media. There's no guarantee a falling stock comes back.

The fix: decide in advance what would make you rethink a holding, and write it down while you're calm.

It might be, if one company's bad day decides your whole month. A 20% drop costs $20 on a $100 position and $2,000 on a $10,000 position. Spreading money among different investments is a common way to reduce that risk.

The fix: decide the most you'll put in any one holding before you buy. Keep bills and emergency savings out of it.

Borrowed money and contracts add ways to lose even when your view of the stock was right. Investor.gov's margin account page says margin raises your buying power but also exposes you to potentially larger losses.

Options have their own traps. An option can lose value as its expiration date gets closer, or when the market expects smaller price swings, even if the stock moves your way.

The fix: while you're learning, avoid anything you can't explain in one sentence.

If losses repeat, look for a pattern. Common ones are buying after a stock has already jumped, selling after a scare, and trading so often that spreads and fees pile up.

The fix: list last month's trades, and why you made each one. Before your next buy, write one sentence on why you're buying.

You probably didn't, because a split by itself doesn't change your total value. If you own 100 shares at $100 and the company does a two-for-one split, you have 200 shares at $50. That's $10,000 either way. If your app shows a big loss right after a split, check with your broker, because its cost figure may not have updated yet.

Stop adding money, because this may not be a normal investing loss. Being told to pay a "tax" or "fee" before you can withdraw is a major warning sign, as we explain in 7 crypto scams that target beginners. The same trick shows up on fake stock trading sites.

If you think you were scammed, report it to the FBI at ic3.gov. Be careful of anyone offering to recover your money for a fee, which is a common follow-up scam.

1. Work out your average cost per share, including fees.
2. Separate today's change from your total gain or loss.
3. Check spreads, fees and fund expenses.
4. See how much of your money sits in one holding.
5. Check for margin or options.
6. Count last month's trades, and why you made them.

This checklist can't tell you whether to buy, sell or keep any stock. That depends on your own goals and situation.

Related: How Much Money Do I Need to Start Trading Stocks?

Can I lose money in stocks even if I never sell?
Yes. Your account value can fall whether you sell or not, and a company can fail, leaving its shares worthless. A loss generally isn't locked in until you sell, but the price may never return.

Should I sell a stock if I'm losing money?
We don't make buy, sell or hold calls. It helps to review why you bought, when you need the money and whether you can afford further drops. A licensed professional can look at your situation.

Can I lose more money than I put into stocks?
If you simply buy shares with your own cash, the most you can lose is what you put in. With margin, short selling and some options strategies, you can lose more. Can You Lose Money in Crypto? covers the same idea for crypto.

Why am I losing money on my 401k?
A 401(k) is usually invested in funds, so its value moves with the markets they hold, and fees take a share. Your plan's statement and fee disclosure show what you own and pay.

Can I deduct stock losses on my taxes?
Possibly, if you sold in a taxable account. The IRS capital gains and losses page says that if losses exceed gains, you can generally claim up to $3,000 a year ($1,500 if married filing separately) and carry the rest forward. Check with a tax professional about your situation.

Educational only. Not financial advice. Investing involves risk, and you can lose money.

• Types of Orders, Investor.gov (U.S. Securities and Exchange Commission)
• Fees and Commissions, FINRA
• Margin Account, Investor.gov
• Topic No. 409, Capital Gains and Losses, Internal Revenue Service

✍️ Written by Randy M., founder of CryptoTrapStar. Randy explains crypto and money basics in plain English for beginners, with a focus on buying safely, protecting your wallet and spotting scams. About Randy & CryptoTrapStar →

Last reviewed: November 5, 2026. Found an error? Email hello@cryptotrapstar.com.