Another Reason Traders Fail- Lack of Training
It is a known fact that most traders fail. I had a discussion with a colleague yesterday and we came to the conclusion that most traders fail, falls into the simple fact that they had no true training. ( Sadly there are too many snake oil sellers promising success when they themselves do not even trade).
Traders fail because they have no idea that they need to develop a trading plan. They have no idea how much to risk on a trade. They have no idea on what to trade. They have no idea when to exit either with a loss or a profit.
Even for the rare fee that really have a trading plan it becomes another issue to fully believe in it and follow it EXACTLY. Even with mechanical or systematic traders there is an extreme high rate of failure due to the fact that many try to out perform their mechanical systems…or try to avoid losses.
Consider how many hours a pilot or even a surgeon are trained. Not hours but years. Successful trading is really no different. You learn a skill or trading technique however it truly does take years until it becomes second nature. If it was as simple as developing or buying a mechanical trading system or indicator we all would be rich. Success in trading is built on a strategy that matches your personality, time frame, risk tolerance and more importantly the proper trading psychology of negating fear and greed. Successful traders are consistent. Successful traders do not try to avoid losses. They are simply involved in the process of trading and let the results and probabilities occur.
Even the most successful traders have long draw downs and losing periods. The difference is they have persistence, they do not jump around and they are disciplined.
I chuckle when I speak to traders and they think they can learn what it took me almost 20 years in a couple of sessions or weekend. My biggest milestone was to learn how to lose. Lose means trades not working. I learnt if I tried to prevent losses they only got worse. Actually I learned how to lose from my daughter when she was 12 years old trying to learn how to play tennis. Every time she made a mistake or missed a ball, she cried. This created a cycle of anxiety and pain for her. Her tennis coach would repeatedly say to her…it is ok to lose a game. It is ok to make a mistake. It is ok to miss a serve. Once my daughter accepted this statements and internalized them, her tennis game dramatically improved….This was a turning moment for me as well.
If I can assist you in any way with your trading or organizations trading, from system building, risk management, trading psychology or in any other facet, please contact me.