Sep 14 2010
Why Traders Fail
The market is full of wannabe traders. Actually there are a lot of great stock market strategies and stock tips out there.Yet most people fail to make money trading stocks. What is the reason? Most of the time it is because they made one of these mistakes.
1. Dont Put Time Into It
Trading is a skill and it takes time and effort to get good at it. You dont start out winning tournaments with any other skill. The people who have gotten good at other skill did so because they put the time and effort into it. Trading works the same way.
The more you learn and the more you keep at it the better off you will get.
2. Let Emotions Control You
People also fail because they let their emotions consume them and lose all reasoning. We all want to buy with both hands when times are good and panic when we dont know what is going on. But in reality, we really just need to keep a cool mind and look at things logically at that point.
3. Follow the Crowd
One of the great depression facts was that people really thought the market was going to keep going up forever. Everyone was buying stocks in the 20s. Only the people who stood back from the crowd where able to make rash decisions which saved or made them money throughout the depression.
4. Letting Losses Run Wild
Another big problem is not managing losses. If you let your losses run wild you are going to go under eventually. No matter how often you are right you are going to be wrong eventually. When you are wrong and make a bad trade will it blow up your account? Or will it only slightly affect it? Great traders manage their losses so that it doesnt have that big of an affect on their account. Unsuccessful traders let their losses run wild and just hope that everything will turn out ok in the end.
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