I was listening to the radio this evening and a young woman was explaining how they were coming back from an outdoor festival and how fun it was due to the 'new experiences'. That got me thinking, young people get up to all sorts of antics in life in order to gain experience. When one gets older, for many this desire for new experiences wears off. Then I reflected on my earlier trading life and cannot forget the many scores of equity trades I did, lost patience, lost money then after a short while had passed I would see these stocks had made great gains, but I had missed out, missed out because I had moved onto the next 'new thing' stock. New young traders will possibly be making the same mistakes, impatient, not focused, easily distracted, jumping from one trading adventure to the next. Many a times you may have heard this, "succesful trading is boring". It's like going to work, it can be a grind, but usually progress is made by persevering though the grind, year by year building experience and the bank account. Jumping from here to there, continually going back to the bottom of the ladder to start a new idea is not always smart, there's an enormous amount of competition when you are at the bottom of the ladder. So why do traders fail? Often young, impatient, not grounded, distracted, too disorganised, too many fingers in too many pies, jumping here and there. That's youth. It gets better as you get older, more experience and not chasing every rainbow. That's life
If you were to concentrate on just one stock or one instrument, just one, and continually trade that, you will learn heaps and chances of wins will grow exponentially.
When I was on the Amex floor, the owner of the specialist book in front of me, told me there was a high correlation between age and P/l. He found a well trained 25 year old made more money then the 35 to 45 year old that trained him. Having the expieanced trader train and manage risk for the younger traders produced the best results for them. He felt the younger traders were more aggressive and were more apt to take more risk when there was edge. I think the important think to remember is that these young traders were trained in the asset class first. Watched what the older traders did for two years or more, then expanded on that. Bob
Misinformation, false knowledge, false expectations, false sense of entitlement, overtrading, wrong understanding of the process, daydreaming, too much greed, too little greed, vague success criterias
It is not always failure when you are learning something new - learning to trade comes with making lots of mistakes that are costly and painful. A certain type of person is able to shrug off the pain and make another go of it. Those that get to the point where they start taking risk mgmt seriously can go the distance the next time around.
There are too many different reasons why many fail at trading and some folks have multiple reasons instead of a single reason. I use to think that the reasons were trading related until I worked in an office environment of traders. There were 3 guys there that failed at trading due to "personal" reasons...nothing related to trading. One guy was one of the most profitable traders after 5 years and then his wife cheats on him and they soon afterwards go thru a divorce...a nasty divorce. The guy unravel...some days he would walk into the wrong office...just confused. His account evaporated in less than a year of consistent losses. It was simple, he lost his mental edge. Another guy got addicted to cocaine. He went from profitable to failure as his drug use became more frequent until he was addicted. There was the 3rd guy that developed constant or chronic health problems. He saw all kinds of doctors for his severe migraine headaches, severe lower back problems...nobody could diagnose what was wrong with him and all the health/fitness treatments didn't work. I remember him coming to work on most days not being able to even talk to anyone. He eventually was diagnosed with mental illness and a personality disorder. All three of those guys failed at trading but their failure had nothing to do with trading itself. Thus, had they had any other job...they most likely would have still failed because of their personal problems. Everybody is different, in different situations...there's just too many reasons.
There are at least a dozen reasons, so just a few: under capitalization, not having a profitable system, not being patient enough, not trading the right instrument, not committed enough, trader is a gambler, not treating it as a business, over riding own trading rules, revenge trading, psychology, psychology, psychology... What did I forget? Oh yes, PSYCHOLOGY!
Lack of time. This is a game that take years to master and so it should because as someone said above 'it's hard'.