December 16th, 2016 → 11:03 am @ reacoms
The simple answer to why 90 percent of traders lose is ignorance, irresponsibility and idleness.
While majority of the professional analysts and traders commenting that psychology is the main reason to lose in trading, but we consider the deeper answers are ignorance, irresponsibility and idleness (laziness). It's human laziness that causes traders to look for the line of least resistance. Why work harder when you can work smarter, trading in financial market is smart work, you don’t need any hard work right? Unfortunately, this can make traders susceptible, and they start to believe what they read, what they hear, and what they install on their computers. This is because traders desperately want to believe there is a simple path to make money from trading Commodity, Currency and Share/Stock markets.
Although traders may have read a great many books and attended a lot of seminars about how to be a successful trader, after all these they're still unaware. It may come as a surprise, but not many books or seminars reveal what actually works in trading. This is because many authors and educators are ignorant themselves about what actually works; they're usually failed traders. If you look at the enormous of financial literature and various products related in financial industry, most rely on the greater fool theory. That is, the customers or purchasers are the greater fools but they don't know it. Remember, just because a trading idea is either written down or making a trading system with free indicators, or delivered by a PowerPoint presentation, does not make it true.
However, if you have the correct knowledge, and the patience to validate a trading idea with the support of good technical analysis trading system, you will not be ignorant; you will be in correct path to become a successful trader. While you may not be making money in the early days, but with consistent study and monitoring will makes you succeed in trading with consistent profit from Commodity, Currency and Stock / Share markets.
Psychology in trading is frequently provided as an excuse for the trader’s failure to succeed. Still, while it can be a contributing factor, psychology is not the sole reason, as many professionals propose. To succeed in trading, you need to cover three important areas:
You as a trader need to be aware of the above three components for successful trading.
Fascinatingly, most traders lift their hands at psychology as the key factor in successful trading. There is no surprise behind this, because the superseding message from most of the trading material available is that psychology is the hardest part of trading and the key to become a successful trader.
The common message is along the lines of the only thing that separates the winners from the losers is psychology, nothing else, the winners have no special trading skills, no special trading secrets, no secret formulas to win in trading, and both of them have equal opportunity. But what sets winners apart from losers is their psychology, winners think differently than losers.
Even though psychology is important in trading success, we believe methodology and money management have most important than psychology for successful trading.
Methodology means selecting a trading tool, means use a good and performing technical analysis too that provide most accurate buy and sell entry points with exits in easy manner. Methodology also involves speed of execution, especially in day trading and scalping, for this trader need to get acquainted with the trading platform and technical analysis software. This will help the trader to enter the trade quickly, because entry time has that much importance in trading success, especially in day trading and scalping.
Money management involves how much you are investing in your selected scrips and the proportion for trading. Since the professional traders have their own portfolio of 5 to 10 scrips (shares/ commodity / currency pairs), they will trade only in that particular scrips with equal proportion of investment.
With proper methodology and money management a trader can ease out the psychological emotions like fear and greed while in trading. This will help the trader to become a successful trader and earn regular income from trading in Commodity, Currency, and Share markets like MCX (India), NCDEX (India), COMEX (USA), MCX SX (India), FOREX, NSE (India), etc.