After thinking about trading for some time, I think I realize why traders fail (You must be thinking: Wow, this guy is good, I want to know the reaon). Many reasons. I decide to start the thread under "Psychology," and you should know where I want to go. Let me undermine my credibility by saying that I am not a profitable trader (I know you are disappointed). I am still learning. But I have decided that I am going to make a living out of day trading. Retail day trading started in the 1990s, I think, the 2001 market crash killed most of the day traders. Some survived, they are the toughest ones. I decided to go into the business of day trading a few years ago, with the low commission and the internet technology, why not? The playing field seems level for most participants (except those insider trading people). I picked up a book yesterday at the bookstore, written by Oliver Velez and Greg Capra (hope I spelled his name correctly). Velez wrote in the first few pages about his first day trading in a prop firm, with 70 other traders. He lost $16,000 within half an hour, equal to 8-month wages of his prior job. He was stunned, he put his head in his hands and, he wrote, "I wept." I seldom get emotional, but after reading those words, tears came into my eyes, not only for Velez, but also for all the traders who are struggling out there. My eyes produced more tears when Velez wrote that he didn't say anything to his wife when he got home that day, and that he was only able to talk to his wife about that day, the first day, many months later. Now I have deeper respect for those who have made it and become profitable. I read another book, about 10 traders who made it. One guy studied Italian as an undergraduate (You must be wondering what the hell is wrong with him), law as a graduate, poor grades, didn't get a lawyer's job, worked on odd jobs, claiming that he didn't want to become a lawyer. I had a feeling he just couldn't do it. Anyway, he had a hard time.
I think that most traders are unsuccessful because they quit before they find success! Much like many other things in life....
You must have read it on this forum many times: The market will tank... the XYZ should go up... Buy ABC tomorrow! ... a correction is coming! And then people get upset when the market does not go "their way". They will usually say the market is acting illogically. And then come up with 99 reasons why the market has acted in this "illogical manner".
The Four Biggest Mistakes in Futures Trading by Jay Kaeppel #1 Lack of a Trading Plan #2 Using too much Leverage #3 Failure to Control Risk #4 Lack of Discipline Appears to be very simple, but whenever these rules get broken, the trader will eventually fail (though they might get lucky one or two times before the hammer drops). I
Is there something wrong in trying to find out why things go in one specific way? Personally, I like to understand what is going on. Must be my mistake
I have an idea, how are you supposed to know what you don't even know you should know to put it simply, trading requires critical thinking and frankly people don't have it
I think traders fail because they trade when they should not trade and when they should trade they either take profits too quickly or simply get it all wrong and land a gigantic loss. Think that sums it up. Anek