How to Identify a Failed Trader

By | July 21, 2018
  •  Looking for a Holy Grail.

Traders who skip around from one method, system, indicator or service to the next in order to find a perfect solution with instant gratification usually end up disappointed. Till System makes money use it and once it give 1 loss just leave it and go to you tube and search another system. FLip Flop will never make money, Money will be made when we are consistent and stick to a single system by thoroughly back testing knowing our Risk of Ruin.

Just because there’s no holy grail doesn’t mean you can’t be profitable trading . Many traders are already trading full-time and even more are content to be consistently profitable. The key is to control your risk. Since you can’t eliminate it, the least you can do is to control it with proper risk management.

  • Assuming Expertise In Some Field Will Translate To Trading

This is the classic “doctor at the poker table” scenario.  Poker pros love it when a doctor sits down with them at the table, because doctors as a percentage are notoriously bad poker players.

Despite being able to complete tremendous amounts of study, survive intense on the job training, and at times having the power to snatch life back from the brink of death, none of those skills transfer to the poker table.

I don’t care how great you are in sales, chess, astrophysics, yoga, firefighting, electronics, engineering, bull riding, construction, or cinematography, none of those things will help you when you decide to learn to trade.

Trading is a professional Business and you need to Invest time money and do lot of hard Work to learn the tricks of the trade Just like you do to become a Doctor Engineer etc.

 

  • Improper mindset

Many New Traders have Having A ‘Know It All” Attitude. They know everything.  I mean EVERYTHING.

These types will find out how much they don’t know, and quickly, once they get in the markets. For them trading will be their worst nightmare, one they probably won’t survive.  Humans are emotional creatures by nature, but being emotional in the uncertain environment of trading can be calamitous. Almost every book on the subject of trading psychology hammers home the idea of more discipline and less emotion. Emotions will inevitably come into play while you are trading. It’s how you deal with those emotions that will define you as a winner or a loser.

No One can know everything, You just need to have an edge in your strategy. You will make money by Trading Right not by Knowing all

 

Not Knowing When You’ve Have Had Enough

This one is simple. If you’re trading simply for the sake of trading, you’re overtrading. Trade because you see genuine opportunities in the market. Trading is not like a 9-to-5 job where you are rewarded for constant productivity. You don’t get paid to push buttons all day long; you get paid by making good, winning trades. It’s that simple. Movement in the markets doesn’t mean you must trade. Trade when things line up for you. Be patient, wait for setups to occur, and when they do, take action. If you want to succeed at trading, you need to act like a winning trader, and winning traders are patient and wait for setups.

Failed Traders will always keep taking trades NOT because the setups are valid and warrant it, but because they never know when to say “that’s enough.”

He will be the guy that gets up for the day, but has to take “one more trade,” and gives it all back.  Being up 50K won’t be enough, because he could be up 100K, so he will push his positions and lose it all.

 

  • Not Understanding The Concept Of Risk/Reward

There are two reasons traders end up with a poor risk-to-reward ratio:

a. They don’t have a trading plan and instead simply react to the market.
b. They simply can’t hold their winner  but they hold their losers.

They will take on three, four, five units of risk for one of reward.  When you practice this inverse risk/reward relationship you can be right on 80% of your trades and still blow your account out. It’s human nature to hold onto losses in the hopes that they will rebound. You will have losing trades; get used to that fact. Focusing on how you manage loss—rather than trying to ignore it—will put you ahead of the crowd.

 

  • Not having a successful mentor.

Any successful trader once had a mentor, coach or service help him to formulate a plan and strategy and learn how to be successful. I am no exception to this rule.

Trading Lesson Learnt From my Trading Guru

Valuable Trading Lesson Learnt From my Trading Guru Part-II

Valuable Trading Lesson Learnt From my Trading Guru Part-III

In Conclusion

If you possess one of these traits and are thinking of learning to trade, it’s best to seriously consider if this is something you are willing and able to change about yourself, or you risk having a very rough time in the markets.

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