At one time we thought of Psychological Trauma as something that only happened to soldiers in combat zones. They would return home having experienced horrific scenes that left them unable to function. We now know that they were suffering from Post Traumatic Stress Disorder (PTSD).
Trauma isn't limited to soldiers though. We can experience any number of things as traumatic, and the consequences of that trauma are just as difficult to deal with. Sometimes, we can be dogged by the effects of the trauma we experienced years ago. For others, more immediate events can cause us to experience trauma. The sudden death of a loved one in an accident, even though you didn't see the accident yourself can be difficult to recover from. It can leave you looking at the path forward uncertain which way to turn.
Unresolved trauma from previous life events can act as a multiplier, making new events all the more difficult to cope with. For example, if you were let go from a job suddenly without explanation a few years ago, being laid off again can be that much harder to deal with - triggering a panoply of other issues for you to deal with.