Trading is one of the hardest professions in the world. The failure to become a profitable trader over a period of time can be caused by a variety of reasons. Sometimes it can be because they are trading a failing system with no edge, and sometimes it is because of the trader’s inability to execute.
In this article, we are going to look at common issues in traders’ personal lives that are potentially influencing trading performance. Note that all of these influences I will mention in this article are not impossible obstacles that you cannot overcome. But they do create even more obstacles on an already very difficult path to trading success.
With the 1000’s of students I have worked with, I have found that these non-trading related influences can make the path to profitability a lot more difficult.
Choosing A Style of Trading That Is Not Convenient For Your Lifestyle
If you are working a job that keeps you preoccupied from 9am-5pm, day trading is probably not the style of trading that is best for you. You need to find a style of trading that is suited for the amount of time you are able to commit to it. The solution is not to quit your day job to start day trading. Instead, try swing trading or longer term investing that doesn’t require so much of your attention. You need to pick a style of trading and stick to it. I’ve seen way too many traders try to do everything at once without specializing. Learn more about defining your style of trading in this video:
This, in my opinion, is the biggest cause of most traders’ failures. There are so many new traders that think that they can turn $1000 into $100,000 in a year. This is not remotely realistic. Trading commissions will eat you alive, and you will need to risk huge proportions of your account size in order to overcome them.
Trading is a game where you need sufficient capital to have any chance at making a living from it. You cannot expect to make a full-time trader with a $5000 trading account.
It is possible to grow a small trading account into a larger one, and then become a full -time trader once you have the skill and a large enough account size to generate returns you can survive on. But do not attempt or expect to make a living from a small trading account.
Trading With A Big Portion Of Their Net Worth
Many traders out there, especially new ones, are trading capital that they cannot afford to lose. This will have huge negative impacts on your trading performance, particularly on the psychological side. You need to be trading capital that will not change your life if you lose it.
You cannot control trading opportunities. If you need to find a winning trade in order to pay your rent, you are going to force trades on subpar setups that will likely fail. It will lead to undisciplined trading. You will take profits too soon because you are desperate for the money. You will panic everytime the market goes slightly against you because you cannot afford to lose the money.
You need to either have a lot of money saved up on the side before trading full-time or have other income sources on the side to trading. Especially when you are a new trader and have no proof that you can actually make a living from trading over a long period of time.
Toxic People In Your Life
Becoming a consistently profitable trader is a difficult feat, but not impossible. Many people believe that it is impossible. I am sure you have had family or friends tell you that trying to become a full-time trader is a waste of time and that you are going to fail.
You need to distance yourself from close-minded people. They won’t admit this, but they don’t want you to succeed because it will make them question and reconcile their own beliefs about their own career choice. When you choose to go down any entrepreneurial path in life like trading, you need to stay away from close-minded people. Surround yourself with positive people who want you to succeed.
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