Most traders can make some quick money in the markets -it is easy to have a few winning trades, but to keep it after you make it and then to continue to make more, with the right trades at the right time time in the right market, and in the right way-that is not easy. Most new traders start out with delusions of easy money and not understand the work that goes into success. Nine out of ten of these new traders never make it past the first year or the first change in market environment. Stress, emotions, and account ruin are generally the destroyers of the bright eyed excited new traders. More new traders would survive the first year of trading if they simple focused on survival first and profitability second but they are mostly lured to the get rich quick schemes or they are going to trade for a living very quickly with little understanding of the perils that face them in the markets trading against all other participants.
- New traders that target making more than 20% returns a year when they start out have a rude awakening coming. The majority of full time dedicated market professionals with staffs do not return that rate consistently.
- Amateurs trade off their own emotions while the pros trade their trading plans.
- A new trader that thinks they are going to make a living off a five figure account will learn that in all likelihood that is completely impossible unless they are going to live in their parents basement and eat crackers and cheese.
- For some reason amateurs try to argue against anyone that will listen that either their system is the Holy Grail (Even though they have no real time trading record) or attack anyone that trades a way that they do not believe in. The most arrogant traders in social media are the ones that have not learned some valuable lessons yet.
- Amateur traders confuse back testing and curve fitted data for trading in real time. Trading and back testing are two very different things, like training for a game and being in a game.
- Amateurs rarely understand the role that position sizing and risk exposure plays into the chance of the risk of ruin.
- New traders look for others to give them trades while professionals look for robust methods for trading then look for what fits into that method.
- Amateurs ride the waves of their own emotions through trades while the best traders ride the price action and control their emotions.
- New traders use historical data to prove what they already believe, pro traders ask the data what they should believe by what has made money in the past.
- New traders trade as much for their ego as for money, pro traders just want to make money primarily.