This post Only 5% of All Traders Have Mastered These Profitable Tricks appeared first on Daily Reckoning.
They say 95% of new traders fail and quit before they become profitable.
It’s an impossible statistic to prove. But this number feels accurate. I think it’s safe to assume less than one out of every 10 novice traders survives his first big losing streak.
Why is the market eating most new traders alive?
The truth is most newbies can’t handle the mental aspects of the trading game. If you have a few spare dollars tucked away, you probably think you’re doing something right. You’ve found some level of success in the business world. You’ve even bought some winning investments. Expanding your profits with short-term trading is just the next logical step.
But when that first wave of losses rolls in, you fold. You weren’t ready to tame your emotions. Fear and greed ripped you apart.
Today, I want to help you transform your thought process and become one of the rare traders that breaks through to consistent profitability.
It all begins with learning some of the key truths about trading. But first, a warning: What I’m about to tell you will feel uncomfortable. But if you can embrace these ideas, you just might have a shot at dancing with the big boys.
Here are three uncomfortable truths about trading, explained:
1. You’re going to be wrong… a lot.
It doesn’t matter if you’ve been trading ten years or ten minutes. If you’re playing the market, you’re going to hit a losing streak. It’s unavoidable.
But many new traders are blinded by unrealistic expectations. They’re obsessed with being right instead of making money. So instead of selling their losers, they let ‘em ride. You can probably guess what happens next.
The first step on the road to trading success is embracing your losers. Acknowledge when you’re wrong, sell when your stops are hit, and move on. There are plenty of professional traders out there who boast win rates of 50%, 35% — or less! They’re staying consistently profitable by cutting losses early and letting the market work its magic.
2. You must ignore the bulls and bears.
The financial media love to present the game of investing as a death match between the bulls and bears. Whenever an analyst pops up on the TV, the hosts will try to pigeon hole him into the bull or bear camp.
But the most successful traders in the world don’t give a damn about bulls or bears. Instead, they’re comfortable adapting to changes in market conditions.
If you’re prepared for anything, you’re less likely to fall victim to any preconceived bias. It’s all too easy to convince yourself that a move higher or lower is a foregone conclusion. Before you know it, you’ll end up trolling for other opinions that match your own. And once you enter this echo chamber, it’s difficult to reverse course.
Adopting a neutral market mindset can be beneficial– especially in this market. If you’re not married to any particular camp, you can quickly react …read more
Source:: Daily Reckoning feed
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