If beginner traders are unable to manage their finances and risks, yet continue trading despite losses, what will happen is financial ruin. Anyone who wishes to trade must first be able to manage their finances. Similarly, for those who want to invest, managing finances will make it easier for us to know the amount we can use for trading and the amount we will use for living expenses.
Given that trading is inherently risky, if a beginner doesn't know how to manage their money but insists on trading, financial ruin could result. In this regard, we certainly need to be able to manage our finances well, and I believe this is a prerequisite for trading to minimize potential losses. In fact, I believe money management is crucial beyond trading or investing, as it can determine our lives.
You got points. I've seen a lot of beginners putting all of their money on few specific trades just to increase their chances of huge profits but this will make them end up in losses which they can't even bear. Trading is really tricky and makes us have huge dreams before we even start implying proper strategies. How much and where to spend the money has always been a huge challenge for beginners. They tend to invest almost anywhere they feel there's a chance of profit.
Managing finances and only investing the amount which we can afford to loose has been taught since ages but how many have followed this to be honest? Quite a few, and those few are not top traders amongst their circles.