If you have been researching trading related topics for some time, it’s very likely that you’ve heard that statistic that 95 percent of traders, or even more, fail in trading and lose money. Trading is a highly competitive business and you have to make complex decisions all the time that decide about whether you can make money or blow up your account. We summarized the biggest common sense trading fails for you.
You are not trading, you are fooling yourself
Although 70% of all traders quit within 2 years, 30% don’t give up on their dreams of living from their trading performance, whereas only 1% of all traders can trade profitably at all. These statistics tell us that there are thousands and thousands of ‘traders’ losing money on a consistent basis, even after years.
Be honest to yourself and think about how long you’ve been in the trading business now, trying to find ways to make money.
- Do you still lose consistently after years of trading?
- Do you know that you should have a trading journal, a trading plan and analyze past trades, stop hopping from system to system, but you just don’t do it?
Don’t lie to yourself because no one cares anyway, and you are the only one who knows that you are just pretending to be onto something, chasing some kind of dream without really being committed.
Do you listen to random people on Social media and bet your money?
Many traders will hang around in Social Media and exchange ideas with other ‘traders’. But how often have you taken a trade because you read that someone said it was a ‘SURE’ thing, or you added to a losing position because a user said he had seen this pattern before and it will turn again?
Social Media can be a great place where you can access all the trading-information you need, but when it comes to meeting people online, you have to be realistic. If you don’t know who you are talking to, what their intentions are and their trading history, why for god’s sake would you risk your money based on a post a user called TraderKing123 made? Do you ask random people on the street for diet, health or investment tips?
Screen-time won’t help you
You will often read that traders have collected so much screen-time over the years that success has to be around the corner. Think of it this way: You have probably watched hundreds of top movies and TV-Series, but you are neither a professional director nor a skilled actor just by staring at your TV.
What really makes the difference in a trader’s performance is the effort he makes to analyze past trades and performance, plan his trades in advance and tries to find ways to build his edge.
Just buy a Trading Algo or Amibroker afl and let him make millions
Do you really expect to reach your goal of personal freedom and independence by buying a trading algo or AFL and let it do all the work? 99% of all traders who buy a AFL don’t even know the formulas the programmers included in the trading algorithm, but they still hope that one program will be their ticket to the world of the rich and famous.
Whereas high frequency trading is a profitable business, these companies spend hundreds of millions of Dollars and employ the smartest people they can get their hands on.
Algo Trading is not the reason you lose money
In the last few years, traders found a new scapegoat to blame when their trading suffers: Algo trading. Their rationale is that Algo are creating irrational markets, ‘weird’ price behavior and make it harder to trade profitably. But what’s the deal with Algo trading?
Throughout history, traders were scared that new technology will ‘kill’ the trading business and rob them of the opportunity to make money trading. It was the same when wealthy investors could buy their own stock ticker machine, the telephone enabled faster execution, the computer was invented and changed everything and when the internet started and privileged traders could execute their trades almost instantaneously. Algo is nothing but the next step and a technological advancement. If you are consistently losing money, we guarantee, it’s not the fault of Algo trading.
Trading means constantly adapting to changing market developments. If you stand still, you’ll be run over.