If you look into the success statistics of traders, you will find that most traders aren’t making enough money, which leaves you discouraged about leaving your job and start trading full time by yourself.
While a high percentage of day-traders fail to make money, there are still some people who are successfully growing their accounts. There must be a secret sauce successful traders have in common.
Before you give up on your dream of being a trader and get yourself back in a 9-to-5 office, you must know why most people fail at trading.
Knowing these factors will help you work on your trading to make sure you become one of those top traders who actually make money.
It’s not easy to start trading and succeed in a short period of time.. It takes a lot of hard work, patience (along with time), and understanding of certain facts to become a successful trader.
While some people can do that, others may fail due to some common reasons.
Some people focus too early on the rewards and profits, eventually losing sight of what it actually takes to earn them.
As a trader, you should focus on the journey, not destination. Think about the task at hand and the process you need to follow to get you to the end result you want.
Getting caught up in the thought of money will distract you from how you get there, and no doubt you’ll be disappointed with the results.
One of the biggest problems for newcomers is that they don’t want to take a risk. It’s difficult for them to accept that losing is a part of the game, which makes them give up early.
Becoming successful is a long-term process in whatever you are working on. Especially, when you’re a trader, you need to embrace risks as a part of your life.
For example, if you see one of Rob Brooker’s videos called Ep. 6: Scott, The Man Who Makes $1,000 a Day with a Trading Robot, you will learn how this guy is successfully making money after dealing with his risks and losses.
Another grave mistake most novice traders do is they start working without proper training. What makes it worse is that they don’t even understand the importance of learning from a professional, leaving them vulnerable to failure.
There’s no such serious profession in this world which can be done properly without professional training. Trading without learning is like going to a battle without any defense.
There are several ways to learn the basics of trading such as professional courses, tips from expert traders, and even using a demo-trading account for practicing.
Starting from checking the charts regularly from money management, trading is quite easy to over-complicate. Unfortunately, this is another key reason why most traders fail in their job.
One of the most common things that they over-complicate is the chart. Most newcomers start using a lot of indicators, which eventually destroys their accounts.
Instead of using lower time frame charts and making it messy with indicators, start working on a stripped-down chart and keep it simple as much as possible.
Another mistake most new traders make is that they rely more on a short time frame chart than the daily chart, which doesn’t show them the real scenario of the market.
In reality, you can only start to see the market’s entire picture on higher time frames. A daily time frame carries more weight by showing you the entire day’s result, helping you to make the right decision.
Money management is a skill that can easily make or break your day as a trader. If you’re not good at managing money, you may already be doomed before you even start.
Trading involves risking the money and you have to be mentally prepared for that while trying not to lose a fortune. Risking too much money per trade and trading with the money you can’t effort are the two major examples of poor money management.
So, before you get into the trading business get proper knowledge of money management and plan accordingly. Risk only what you can afford to lose.
Trading too frequently is a common mistake that nearly every trader does once in their life. However, those who can figure out the problem before it’s too late, are the ones who become successful.
The sad thing is, even if some people figure out what they are doing, they simply can’t stop over-trading. It’s because they become impatient and greedy and eventually start doing trading too often.
Remember, over-trading is like gambling and there’s no way you will get a good result by going down that path. You need to understand that in trading, less is more and work slowly and carefully.
Without a daily routine, there’s hardly any job that will be done successfully. Trading is no different.
Unlike the experienced traders, newcomers don’t follow a real trading strategy and just randomly start trading, thinking that they will somehow make a profit out of it.
However, trading is not a one-day job and you can’t become successful overnight. If you don’t follow a proper routine, you cannot expect to get a consistent trading result.
It’s crucial to understand the basics of price dynamics and how markets tend to move. Otherwise, it’s impossible to make money as a trader.
Most traders don’t have proper knowledge of false breaks and how to read the story on a chart. Instead of looking at the entire sequence of the bar, they just focus on a single price bar, which leads them to make the wrong decision.
Trading is a complicated job. There are no easy way outs and get-rich-fast schemes. Discipline, patience, research, and knowledge is key. Trading is a skill – that you can perfect over time and practice.
We highlighted some of the common mistakes done by the majority of traders, and you can clearly see why they can’t make enough money. Learn from their mistakes and work accordingly to create a successful career in trading.
Finch Technologies, a Cape-based fintech focused on creating better fintech ecosystems, has made a further…
Do you know what YouTube? Most of you just know YouTube as the platform where…