Saturday, October 11, 2008

Why Traders Fail

  1. They are damn STUBBORN , even knowing they are wrong in their judgement or trading technique. Despite being a very successful Floor Trader, it took me more than 2 years to accept changes and adapt myself to Electronic Trading, Unbelievable!
  2. They repeat the same trading mistakes again and again and again and yet still again. They are unable to control their emotion because some of these mistakes made money and sometimes they are able to get out of it from a very bad situation. It gives them a false impression that it's alright to make such mistakes. They don't realise that this is the major reason why they are not making it as a Trader by having such bad trading habit.
  3. The 3 most terrible mistakes are a) refusing to cut losses immediately until it burns a big hole in the pocket b) the next worst action is to start averaging on that 1st mistake hoping that it will recover back up for them to get out at break even or make some money c) not able to ride the profit when the trade is in their favor.
  4. They will blame anything, anybody even the market but themselves for having a bad trade, manifesting their immaturity acting like a cry baby. A matured trader would get out of the bad trade immediately without hesitation to cut out the risk even though the fault lies somewhere else, such as a break in Internet connection, trading system failure, etc.
  5. They lack DISCIPLINE, trading involves hard work, no short cut. Need to maintain Mental and Physical fitness by having enough rest and exercise so as to stay sharp and alert or else most likely to make unnecessary mistakes followed by more mistakes.
  6. They fail to focus on what they are doing, like a lost sheep not knowing which direction to go. They don't know which contract and trading style suit them most.
  7. They lack fighting spirit and the right attitude to confront each trading day.
  8. They lack CONFIDENCE in themselves because they keep repeating the same mistakes.
  9. They must accept the fact that not all trades make money and minimise the losses in those bad trades. Treat it as a part of business cost. It would be fantastic if there is a 60% accuracy when entering a trade, but will still a need to accept the losses in the other 40%, which is definitely hard to swallow.
  10. They lack money and risk management skill.
  11. They trade a size that is too big for their comfort in the beginning before learning the proper technique and good habits.
  12. They finally develop a monster in themselves call FEAR and that is the final straw in their trading career.

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