Why 95% of Traders fail in trading?
Why 95% of Traders fail in trading? Even the most successful in other fields end up losing money when it comes to trading. Do you know why?
Let’s discuss the reasons and how to avoid this in detail in the 2nd episode of our new series – “how to become a successful trader”
- Would you dare catching an alive snake without training?
- Would you dare to fly a jet without mastering how to fly and land it?
- Would you assist a doctor in surgery without you getting an MBBS?
- Would you climb a mountain without training?
- Would you join a bomb disposal squad without mastering how to diffuse a bomb?
But when it comes to trading, we put even our last rupee in trade without learning HOW TO TRADE.
This is the reason 95% traders don’t earn money, because they don’t LEARN before they try to earn.
Trading without training is
- like catching an alive snake without proper training
- like taking off in a jet not knowing how to land
- like performing a surgery without any experience
- like climbing a mountain without a safety rope
- like diffusing a bomb without proper safety gear!
How many of us in our trading career done all this without confidence? I definitely have.
Every day I see traders being
- bitten by the snake
- crash landing or ejecting from the jet
- leaving the patient to die on the operation table
- falling of the mountain cliff
- cutting the wrong wire of the bomb!!!
It took us 1 year to speak our first word, 2 years to take our first step, 16 years of formal education to earn our first salary. BUT, we don’t want to spend even 6 months to LEARN trading.
What is the end result?
80% traders blow their trading accounts and move out of the market in less than 6 months.
Lack of Common sense is the most uncommon thing found in traders. Never trade if you don’t know answer of these questions.
- Why I am entering this trade? (the system/method/training needed to take a trade)
- What I would earn out of this trade and by when? (the outcome or expectation)
- What I am going to do if my trade does not work as expected? (the safety rope/gear)
Next time, before triggering a trade, ask yourself these questions:
- do you really know what are you trading and why are you trading
- what are two possible outcomes from your trade – where will you exit in case of favourable or non-favourable move
You must know answers of all these questions and if you know answers, than and only then you are eligible to trade. Else, go back and LEARN FIRST
We learn to stand before we walk, and walk before we run.
On the contrary, when it comes to trading, many are “running” before they have mastered even “walking”!!!
We all are in a hurry to become rich! And that is the precise reason why we are getting delayed in becoming rich!
We take trades without enough planning and when we see red in our positions, we will start praying, hoping price will come back to our entry price at least so that we can exit without any big loss. But in most cases, it will end up in big deep red and when it does, we ask “what happened?” “why did it happen?”
But instead, if we ask this question (“what could happen”) bit early, that is, before taking the trade, you could avoid big losses.
Finally, How to avoid being part 95% of failed traders?
First learn one or two tried-and-tested methods and master and stick to them! Still after all this we can never predict the exact up or down move, as no strategy can have 100% win rate. We can target 60-70% win rate, which is more than enough to generate good profits. So on top of our trading strategy we have to have appropriate money management plan in place, which will ensure we won’t be afraid when a trade goes wrong and have SL in place to avoid any big losses in our trade book.
For more details and explanations, watch the video: