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3 reasons why most people dont make it in trading
by fxpimp on Sat Apr 12, 2008 12:05 pm
Why do so many people fail at trading?
in my opinion,90% of trading is psychological; the other 10% is technical knowledge. So your success is based on how you approach becoming a trader.
Here are the three primary reasons why those who pursue trading fail:
Lack of commitment.
Lack of knowledge.
Their egos get in the way.
Traders who don't address these issues will not survive. Statistics show this to be true.
Commitment:
Commitment is critical. Most become frustrated because they do not realize instant success. In fact this holds true in any new pursuit. The average person quits early in the game solely because of lack of commitment and unrealistic expectation of immediate success.
Knowledge:
Lack of knowledge, which is a major cause of failure, is a result of an individual's attitude. How anyone thinks they can trade the currency market without professional training amazes me. Yet it happens all the time. People who accept that golf lessons are necessary before they head out onto the course will start trading with little or no knowledge. Because you are reading this I assume you do not share that view. This is a major step in the right direction.
Most traders fail to appreciate the level of skill needed to trade successfully. They have no foundation in how to understand price activity. They do not have a set of rules or guidelines. It is amazing how many individuals develop a trading strategy by gleaning free information off the internet. In actuality, all these individuals are doing is gambling. Another common mistake is gathering too much information. It is statistically proven that if you narrow your focus, you have a higher probability of success. It is critical at this juncture not to confuse information with knowledge.
Ego: Ego is one of the greatest enemies to a trader's success. Your ego needs to win all the time and wants to win now. It can't stand being wrong. And so it rationalizes events and denies reality. You must be able to perceive the market as it is, not how you want to believe it is. But it is difficult to clearly see price action if your ego is in the way. Ego makes us take small profits but large losses. It argues that even a small profit is a win. But a loss hurts and instead of accepting a small loss we try and get it back. Ego is why we hold onto bad trades that end up being even bigger losing trades.
Without action, knowledge is useless. Massive action is the key to real success. Many begin with great enthusiasm but become easily disillusioned. Perseverance is required to get beyond this stage and to start reaping the rewards.
As Aristotle said, "We are what we repeatedly do. Excellence, therefore, is not an act but a habit".
in my opinion,90% of trading is psychological; the other 10% is technical knowledge. So your success is based on how you approach becoming a trader.
Here are the three primary reasons why those who pursue trading fail:
Lack of commitment.
Lack of knowledge.
Their egos get in the way.
Traders who don't address these issues will not survive. Statistics show this to be true.
Commitment:
Commitment is critical. Most become frustrated because they do not realize instant success. In fact this holds true in any new pursuit. The average person quits early in the game solely because of lack of commitment and unrealistic expectation of immediate success.
Knowledge:
Lack of knowledge, which is a major cause of failure, is a result of an individual's attitude. How anyone thinks they can trade the currency market without professional training amazes me. Yet it happens all the time. People who accept that golf lessons are necessary before they head out onto the course will start trading with little or no knowledge. Because you are reading this I assume you do not share that view. This is a major step in the right direction.
Most traders fail to appreciate the level of skill needed to trade successfully. They have no foundation in how to understand price activity. They do not have a set of rules or guidelines. It is amazing how many individuals develop a trading strategy by gleaning free information off the internet. In actuality, all these individuals are doing is gambling. Another common mistake is gathering too much information. It is statistically proven that if you narrow your focus, you have a higher probability of success. It is critical at this juncture not to confuse information with knowledge.
Ego: Ego is one of the greatest enemies to a trader's success. Your ego needs to win all the time and wants to win now. It can't stand being wrong. And so it rationalizes events and denies reality. You must be able to perceive the market as it is, not how you want to believe it is. But it is difficult to clearly see price action if your ego is in the way. Ego makes us take small profits but large losses. It argues that even a small profit is a win. But a loss hurts and instead of accepting a small loss we try and get it back. Ego is why we hold onto bad trades that end up being even bigger losing trades.
Without action, knowledge is useless. Massive action is the key to real success. Many begin with great enthusiasm but become easily disillusioned. Perseverance is required to get beyond this stage and to start reaping the rewards.
As Aristotle said, "We are what we repeatedly do. Excellence, therefore, is not an act but a habit".
