If a trader begins trading with $500 and in Month 1 they make $30, they might be quite encouraged and think they’re on the right track. So they carry on in exactly the same way and in Month 2 they make $32. In Month 3 they carry on trading their strategy and they make $34.
So now they have been trading for 3 months with all the work and effort and emotional stress that this involves. And so far they have made less than 100 bucks. Plus they’re thinking next month I’m just going to make another 30-odd lousy bucks.
Its at this point that their “regular world” thinking overcomes their “trader brain”. They ask themselves what job is worthwhile if you have to work at it for 3 months and give yourself headaches and an ulcer just to make less than a hundred bucks. And they decide it isn’t worth it so they increase their risk levels. And this blows the account in 3 weeks.
They saw profits as dollars not percentages because that’s what you do in the “regular world” and didn’t realise what would have been the outcome if they just carried on making 6% a month…
In my opinion ALGO TRADING (Can not win against IT) is the main reason and misleading news resources (Desinformación). I have been learning trading from books any resources are available since the pandemic started and since NO followable clue to get closer to the direction of the market in daily aspects…Why? because if dollar goes up it was sad stocks should go down but if the 10year bond goes down the stocks goes up instead of go down No sense at all …eh? Only one rule is for sure if it is a buy, market goes down and opposite is true too. But the funny is if I have another account and doing the sell version on the same product (what I bought on a different account) will be in negative both because the market that day not moving significantly to any direction… Stop loss is an order so if applied algo trader will go for it So? should it be applied ? Haven’t experienced once stop loss was hit buy algo trader direction returned to where it was supposed to go…
Actually, at the risk of being a little technical, traders don’t usually have huge losses. They usually have very small accounts, they are often said to be under-capitalised.
But this is the one time when new traders do think in terms of percentages and not pips or dollars - they recognise a 100% loss when they experience it.
What traders need to realize is the mindset you bring to trading is very different from your everyday mindset.
Most traders are stuck in an everyday mindset.
What a trader needs to learn and apply is a probability mindset. Its what trading is all about - probability!
You know, it’s an interesting idea. As retail traders, we are pretty aware that there is a lot of garbage content out there (bad teachers). However, there is a fair amount of good content out there, and a similar amount of blame can be placed on us “bad students”. What I am finding is that the more I look, the more I learn. I am doing my best to piece together information from many different sources
Well, frankly, yes. We don’t have the same level of experience, knowledge, and on-the-job training as institutional traders do–that’s just how it is. But the traders who “made it” all say the same thing: they had to push themselves. Translating that into this analogy, they have made “good students” out of themselves-- where once they were “bad students”.
All I’m saying is that it’s easy to blame things that are out of our control and difficult to blame ourselves. In fact, I believe it is most prudent and productive to blame ourselves.
True, emotional trading can lead to impulsive decisions and serious losses. Having the right trading psychology can help in balancing the emotions while trading.
Thanks
