"Failure, the Mother of Success"
Thomas Edison failed more than a thousand times before we could see the light at night. If he had given up hope at the 999th attempt, what would our world be today? Hey! this is the story my Primary School teacher used to encourage us, "Don't Give Up!" But, we can still use candles since we are not as smart as Edison, right?
To be successful as a trader, you don't need to invent a new indicator. The fact is, none of the indicators in use now can be foolproof even though some are extremely complicated and sophisticated. Indicators used in different time frames tell a different story.
What is so difficult to be in this business of day trading? The decision making is so simple, it's either buy or sell yet more than 80% of the new traders failed to make it. The reason is, trading comes with a hefty price tag, it's a negative, negative sum game, winner and loser both need to pay commission, winner pay taxes, loser can't deduct and now a 7% GST on commission upfront.
Apart from the IRA, the winners are the Exchanges, mostly monopoly. When profits are down, they can simply increase the clearing fees, who can stop them? The CEO and senior management get handsome bonuses and stock options for their "hard work". They have a money printing machine contributed by all the traders. And, it will get worst if they merge to reduce further competition. The runners up are all those broking firms, directors owning big bungalows and enjoying lavish lifestyle.
Traders are squeeze left, right and centre but, there are still 10% of the traders who succeed despite the odds. Those who join the Exchange as a member, get a "preferential commission" treatment, a "privilege", very much lower comm than trading as a retail customer. Again, you need to pay monthly membership fees, etc, it's so easy for the Exchanges to make money, no risk, I am so jealous.
Most traders lose money because the odds are against them. So, what is the secret to the few who are successful? What's the magic formula? I read plenty of books on trading, yet I still struggled for more than 2 years to know the answer despite being very successful as a floor trader for 20 years.
There is NO SECRET OR MAGIC FORMULA. The principles are found in most trading books, the problem is most of us read and forget. We don't apply what we learn, many even pay a few thousand for a 3/4 days intensive trading courses and think they can be good traders. Fat Hope!
"The road ahead is long, the climb is steep", Barack Obama. It take time to be a good and experience trader.
One of the most important attribute of a successful trader is the courage to admit that he is wrong in his analysis and judgement. CUT, CUT, CUT your losses fast when you are wrong, if you can't do it, don't be a trader! There is no room for being stubborn. When holding on to a bad position, a trader will not have a clear mind and tend to make further mistakes.
It's that simple, traders know about it, but it's so difficult to execute. This philosophy applies in a business venture, a relationship, etc. It's painful to cut off the disease arm or leg, but to survive, there is no choice. It's stressful holding on to hope.
I always believe in hard work and doing the right thing within my own limitation. Focus and learn, after some time you will understand the market behaviour, the players involved, the trading techniques required for your own temperament. Failure is part of the game, learn to accept it.