Why traders lose money

By | May 23, 2013
“Most people think that they’re playing against the market, but the market doesn’t care. You’re really playing against yourself”. – Marty Schwartz.
– I’ve said it before, and I’m going to say it again, because it cannot be overemphasized: the most important change in my trading career occurred when I learned to divorce my ego from the trade. Trading is a psychological game. Most people think that they’re playing against the market, but the market doesn’t care. You’re really playing against yourself. You have to stop trying to will things to happen in order to prove that you’re right. Listen only to what the market is telling you now. Forget what you thought it was telling you five minutes ago. The sole objective of trading is not to prove you’re right, but to hear the cash register ring.
This paragraph is in my mind one of the most influential in all the trading literature, encompassing so many lessons about trading that its almost hard to know where to start, some of the themes covered in the seven lines of this paragraph include:
  • Ego getting in the way of good practice.
  • Adaptability.
  • Trading as a psychological game.
  • Overcoming yourself rather than the market.
  • Trying to prove you are right.
  • Relying on hope.
  • Objective assessment of signs and signals from the market.
  • Maintaining an open mind.
  • The objectives of trading is to win not to be right.
Traders would do well to keep a copy of this paragraph visible as a reminder to try and ward off the inevitable occasions when they succumb to their trading demons.

One thought on “Why traders lose money

Leave a Reply