Resources for the Independent Trader Blog

7 Major Factors Why Traders Fail

“The best way to escape from a problem is to solve it.” ~ Alan

Saporta

Dear Reader,

We see the global markets moving up and down; when China sneezes the world catches

a cold, and people losing a lot of money, although there are some very smart traders

making a lot of money. I thought that you should take a breather, not too long, and see

where you failed or could have done better.

Research indicates that over 89% of traders will lose all their capital in the first year and

many more will be forced to 7 factors are the main culprits. I have been there, and I

believe if you fail, recognise your mistakes and move on, or don’t trade at all. Leave it to

professionals, but since you are a professional and wish to kick-start your profitable

trading, or you wish to become a professional trader. It’s only concise, and the idea is to

stop and and look and then lets move to the positives.

1. Not Sticking to a Strategy - Most people think that there's always a better strategy

so they jump from one strategy to another in the quest for the elusive 'holy grail.' Just

pick one strategy, learn everything about what makes that strategy work and master it before moving on.

2. No Support or Mentor - Almost every well-known, successful trading professional

has had the benefit of a mentor (even Warren Buffet credits Ben Graham as his mentor!).

A good mentor speeds up the learning process, makes themselves personally available

to answer your questions and will provide you with strategies that will reduce your chance of failure.

3. Wrong Strategy - Just picking a strategy isn't enough. A winning strategy must

have a high probability, be time-tested and proven to work in all market conditions (up, down and sideways). I would like to include fear here as well.

4. The Fear Factor - People with fear react out of their “normal” strategy, and makes

irrational decisions. Losses will be even more if their current strategy is not probable.

5. Time and Effort - Many new traders quickly scan through the rules of a strategy and

instantly begin trading (Compulsive trading, like gambling). You've got to earn your

right to trade. In other words, take the time to understand the strategy, ask questions

and paper-trade before putting your hard earned money at risk. Even good traders are

victimised into lending their time and money in greedy transactions. Consequently, once

a trader has done this he gradually acquires a vested interest in his own errors and even

though he finds more and more aspects of this kind of trade which run counter to his

sensibilities, he tends to brush them aside rather than swallow his pride, and admit he

made an original mistake in judgement. Most humans are like that.

6. Risking Too Much – This is one of the mostly the biggest sin. Traders is prone to too

much per trade is the most common form of financial disaster. However, the difference

between a rookie trader and a professional trader can be seen in their money

management and position sizing strategy. Both people can trade the same strategy, but the one with the best money management will increase their wealth the fastest.

7. The Greed Factor – It falls in the same as above, but I want to add this as a

“Mindset Problem”. This is where get even very good traders falling into the trap of

making money fast. You’ll also get the Madoff’s of this world, and the Rogue Traders in

large corporations. They leverage huge contracts and then the markets change against them, then there is chaos, crisis, and major after-shocks occurring taking centre stage.

So if you're still struggling to be successful, ask yourself just how many of these mistakes you're still making?

Only, when you return to be a disciplined trader, doesn’t matter if you’re a stocks, ETF’s,

options, futures or Forex trader, you could be more successful. All “good traders” have a

trading plan that is diversified in the various Asset Classes, and with intelligent research, knowledge, support, and actions ensure that risks are minimised and profits are higher.

Don’t forget your coffee below, share with friends, and get back to me.

Thanks for reading

P.S. Next Article: What Do All Super Traders Have in Common? George Soros

Made a Killing Last Week. Why?

Remember, Trade smart, not with Greed

Pierre A Pienaar

Resources for the Independent Trader Blog

http://sulia.com/pierreapienaar/

Pierre A Pienaar retired in 2011 from business.

I would like to share my passion, my interests, knowledge & experiences

in Forex, Options, Gold Investments, Futures, Stocks, Binary Options,

Economics, Stamp Collection, Sports, Gardening, Reading, Photography,

and Politics

Substantial risk of loss

There is a substantial risk of loss of stocks, forex, commodities, futures, options,

and foreign equities are substantial.

You should therefore carefully consider whether such trading is suitable for you

in light of your financial condition. You should read, understand, and consider

the Risk Disclosure Statement that is provided by your broker before you

consider trading.