“How many novice traders succeed?” – asks potential trader from a group of seasoned experts. “Of those 40 %, who will survive more than a year, only one or two percent will learn to consistently make a profit”, – answers the head of one of the largest brokerage companies. “Approximately five of 100 – in my experience”, – notes a leading trader of a large hedge fund. We at Innerworth discovered, what less 25 % hold out for at least six months. Looks like, many will agree with this: If you plan to engage exclusively in trading, probability against you. Here are some ways, by which newly converted traders can avoid common mistakes and conquer probability.
Arrogance Control:
You need to be optimistic. The pessimist will never accept the likelihood of success. But optimism must be used effectively. Don't think, what you know, how to trade, until you got the necessary skills. Analyze, practice, and learn. Set goals for yourself to learn, and not get bounced. In other words, learn the methods first, and only then you can set the goal of making a profit.
Admit it, that you are gambling and limit your risk:
Brokers and other members of the investment community think, that they humiliate traders, calling them “players”, but experienced traders are easily recognized: “We gamble”, – they say. Yes, there is a risk here and it is better to admit it. Traders are fighting for big profits and they are ready to take responsibility. but, the difference between professionals and amateurs, whether in trading or gambling, manifests itself in risk management. Since you are trying to profit on the probability of winning, it is vital to your survival to expect a series of losing trades. This means considering the risk / reward ratio before entering a trade., make sure, that you have a large enough account, to take risks, and if it is not so, stand aside and wait for the deal, which you can take. Management of risks – here is the trader's secret weapon.
Use reliable trading strategies and know, when to change them:
It's much easier to say, than to do. Obviously, You Can't Wait For Profits, if your strategy is not ok. But you should know for sure, it is weak at all or does not work only due to insufficiently optimal market conditions for this strategy. Everything Books on trading and experts warn, “Don't give up prematurely on a trading strategy”. It is not wise to jump from strategy to strategy, but what is “prematurely”? Based on the theory of probability, even a winning strategy can lead to a series of losses and a serious drawdown, so too long exploitation of the strategy, when she doesn't work, will destroy your account. Perhaps the best, what can you do – define, how much of your capital will you devote to risk for the main strategy. Know market conditions, the strategies needed to work, and make sure, that these states are present. but, there is no substitute for trading experience, when to decide, how long to stick with the strategy, before, than to give it up.
