Skip to main content

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.

Comments

Post a Comment

Popular posts from this blog

Maximizing Your Profits with Scoring

SETTING YOUR MAXIMUM INTRADAY TRADING LOSS First things first: set a max intraday trading loss. There will be days when you just do not have it. Why do you think coaches pull their players when they are not playing well? They are more harmful on the field than off. When you are underperforming, you are hurting your team and your trading business. You need a system to yank yourself over to the bench. A stop loss is your answer. TRADING BASED UPON THE TIME OF DAY A good trader makes note of what time of day it is, when he trades most profitably, and adjusts his trading to fit such times. Your numbers at the end of the month will not reflect your true trading potential. Make the most trades with the most size during the trading periods that statistically are most profitable for you. Money saved during your weaker trading periods is money earned. Consistency The fact is that most trades you make will start working for you right away. But the new traders also hold stocks that are trading ag...
Post a Comment
Read more

CAN A FIRM ALWAYS SPOT THE NEXT GREAT TRADER?

 No. But a prop firm can tell who has a poor chance to become a CPT. To be good at anything will take everything you have. Not having developed the skills to work hard is a turn-off. Trading is a skill learned by doing, not just by reading a lot, theorizing, or the faux art of “paper trading.” THE PROS AND CONS OF RECRUITING EXPERIENCED TRADERS Loyalty is a good thing to a point, but it cannot trump logistics and reality. losing money should really bother you. If I am negative three days in a row, I spend a long evening on my couch with a bottle of red wine and comfort food. As traders, we can all recite the memorable line from Wall Street: “A man looks in the abyss, there is nothing staring back at him. At that moment he discovers his character. That keeps the man out of the abyss.”  Traders don’t talk about how they want to trade, what they want to read about trading, or how they wish they could talk about trading. Traders trade, read about trading, and talk about trading.
Post a Comment
Read more

Reading the Tape

 Dr. Steenbarger, aka the godfather of modern trading psychology, wrote: “My experience is that an understanding of (and ability to read) order flow is one important factor that separates the older, successful generation of day traders from the newbies who only know simple chart patterns and indicator readings.” continue working on the skill of reading the tape and to sell the stock on the offer when the tape showed weakness. “Reading the tape must be learned through personal experience and long observation.” keep in mind that nothing can top experience. Don’t give up. It is not always this easy to Read the Tape. But there are plays where it really is simple. And reading the tape will offer pattern recognition plays that you can exploit. Overcoming a Confirmation Bias We all fight confirmation bias. But it will harm our performance if we do not overcome it. Let the tape talk to you. And use online vehicles like StockTwits and your peers sitting next to you to gain second ...
Post a Comment
Read more