Many new traders turn into bitter traders because they lose a lot of money. It’s a fact that the majority of active traders don’t make it and leave the market. Many investors become disillusioned with buy and hold drawdowns and bear markets that destroy their capital. A trader has to not only overcome slippage and commissions, but also their own emotions and ego.
If a trader doesn’t have enough capital to start, then they are fighting a losing battle. They will be tempted to trade too big to build capital, and if they are risking too much capital, the odds are that they won’t be profitable after a few losses. Traders are seen as gamblers because the vast majority of traders are gamblers looking to make easy money. They are lured by gurus into ‘get rich quit schemes’ that are expensive and leave them broke. What I try to do in my eCourses and books is share what the profitable traders and professionals do to avoid ruin and make money.
Here are the reasons most new traders never become profitable traders:
- They risk so much money per trade that the losses make it mathematically impossible to keep their profits.
- They trade with no plan, method, or system, just opinions and emotions.
- Their entries are based on hope and their exits are based on fear.
- They trade markets with wide bid/ask spreads that make it impossible to win.
- Their trading account is so small that commissions are too high of a percentage of their account.
- They don’t have patience and are unable to wait for the best entries.
- Traders that aren’t able to cut a loss when it is small end up with large losses.
- Traders that try to predict bottoms and tops are the ones that usually miss the whole trend.
- Traders that don’t understand proper position size typically pay for their ignorance.
- Most traders trade with their ego, and they are costly in financial markets.