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Why Traders Fail

 Reasons for failure include: not listening to the market, failing to hit stocks that trade against you, a need to be right, the unrealistic learning curve, thinking as an investor instead of a trader, and simply not loving trading.


Trading is only for those with an ability to sustain their energy of working day in and day out at their craft—the discipline of trading. Trading is only for elite performers committed to a long journey of ups and downs, where you learn just how good you can be as a trader.

THEY DON’T LISTEN TO THE MARKET

Too many new traders think they know how to start.

“Be the Best Listener.” If you are fortunate enough to join a solid trading firm, first things first: listen. And here’s another reminder: when you begin your trading career, despite all the books you’ve read, charts you’ve examined, balance sheets you’ve picked apart, or profits you’ve experienced in your PA, you do not know what you are doing. Listen and learn. Evan Lazarus, chief information officer at T3 Capital, teaches that this first stage is “unconscious incompetence.”

You do not know what you are supposed to know and you do not know this. The market is our boss and punishes those who disobey. Let consistently profitable, experienced traders share the rules communicated to them from our boss, the Market.


How to Be the Best Listener

Lesson number one: be the best listener on your desk.

“Clinton used the same tactic to score good grades. As a college student at Georgetown, Bill was famous for being able to read the professors. He would wow his classmates by predicting just what questions would be on the exams. That’s because he listened in class, really heard what the professor most cared about. This is something I’ve been telling my kids: Pay attention to what the teacher personally is trying to teach.”

The Market has rules. Experienced prop traders have spent many hours, days, months, and years learning these rules, at times very painfully. I’ve spoken endlessly to new traders about what happens when one disobeys these rules, i.e., Mother Market reaches into your pocket and takes what is hers. And she doesn’t give it back.

If you want to recognize your potential, then be the best listener on your desk or in your trading community; listen to experienced traders. Listen to what the market has taught us.

The new trader must focus on skill development and forming good habits when he first begins. Losing money is not a big deal when you start. However, it is not acceptable to make certain fundamental mistakes.

Before every trade, we must determine our exit plan for if a stock trades against us.

There’s always time to experiment later, but at the start, it’s most important to just learn how to trade.

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