Statistics shows that about 90% of the beginner traders lose money. The remaining 10% are performing good and even profitable trades. How do they make it? This is such an old question. You know that there’s no magic formula for success, but it is very possible to detect five main flaws that could prevent the young traders’ failure.
No matter whether you are a professional trader or just thinking about opening your first trading account, the ability to stop failing is proportional to how well you understand the critical drawbacks of traders.
The lack of methodology
You know that profitability begins with a plan, and good plans require establishing some targets. If you want to become a successful trader, you must have a pre-scheduled trading technique, which shows a clear view of the market. Your intuition or suppositions cannot work over a long time. So if you have not an intended trading method, this means you won’t know what your trading signals should be: to buy or to sell. Moreover, you will not even be able to identify the right trend.
How to overcome this? Try to set out a technique written on paper. Write which tools you use, and, more importantly, how you’re going to implement them. It doesn’t matter whether you are using the Elliott Wave Principle, graphics “tic-tac-toe”, stochastic, the RSI or a combination of the foregoing. The important thing is that you are actually trying to determine what should be your signal to buy or to sell, how you will manage the stop loss and how to you will close the trade.
The lack of discipline
“With self-discipline most anything is possible” (T.Roosevelt). Once you have clearly developed trading strategy, then you have to be disciplined enough to follow it. Right? That’s why the lack of discipline is considered the second critical drawback of the trader. The best advice I can give you in this matter would be: If you defined the best technique for you, then stick to it religiously.
Many traders have unrealistic expectations of what can happen. Traders do feel like they should take profit in every trade, they expect it to happen even they know it’s impossible. When a trader gets into a profitable trade, he expects the market to continue moving in the direction he anticipated, meanwhile it’s more possible it to move in the opposite direction.
The only way you can trade profitably is by not allow yourself to be disappointed by events that occur on the market. Note that the market could move against your position and you could begin to get upset or disappointed.
The lack of patience
“The big money is made by the sittin’ and the
waitin’ — not the thinking. Wait until all the factors are in your favor
before making the trade.” – Jesse Livermore
Professional traders say that making patience a great virtue. To show patience when entering a trade and having patience while a trade develops, are main parts to successful trading. Although the best investors and traders understand the importance of patience, it is one of the most difficult skills to learn.
For example, while you’re identifying the entry point for a profitable trade, you might wait in anticipation for the price to reach your entry point but note that things might go not as you planned. So in order to not miss the trade, you have to respect the rules and be patient.
Don’t worry about missing an opportunity today, because there will be another one tomorrow, next week and next month and so on. Of course, trading successfully is not easy at all. But this hard work can be rewarding by the end, bringing you a lot of satisfaction and a successful career.
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