Can Everybody Succeed at Trading ? : Six Reasons Why Most Will Not Achieve Success

New traders tend to believe that everyone can become successful in trading. However as time evolves and the many problems inherent to this job become apparent inexperienced traders start to see that achieving this is not easy at all and that a very specialized and difficult-to-develop set of skills is necessary in order to achieve long term profitable trading. Like with any special type of job or skill, not everyone can succeed at trading – as not everyone can be a world-class violin player – even if incredible amounts of effort are put into it. In reality success in trading – from what I have seen and experienced – not only requires a very important degree of effort but also a certain personality and way of  reacting to events that is not common to all people out there. What makes it so difficult for most people to succeed ? What are the personality, skill and training problems that must be overcome ?

On today’s post I will talk to you about the six main reasons why I believe most people who try this will never achieve success in trading. The post does not intend to be discouraging but it intends to show you the main obstacles and problems people face and why certain character traits are necessary to overcome them. Definitely someone missing these traits will have to develop them to succeed at trading, something which will be very difficult to do for most people. In reality we see that trading is not something anyone can do but something which is suited for a specific type of person. Some people will be able to develop their personality, skills and abilities to match those necessary to trade successfully while – for the large majority – changing themselves to achieve this will be practically impossible. These are the six main reasons why most people will not achieve success in trading :

1. The wrong expectations. Definitely the large majority of new traders expect to make an absolute killing in the market and make amounts of money that would make large hedge fund managers blush. It is incredible to hear new traders talk about what they consider “achievable profit targets” and “realistic” levels of account growth. The newest traders will put this value at 50-100% per month while slightly more experienced traders will put it at 10-20%. For most people trading is attractive because it offers this profit potential and when they see that in reality getting ANY profit is hard and that realistic longer term expectations are more in the 1-4% per month region they simply do not want to trade anymore because it becomes “not worth the effort”. Traders who fail to accept reality will continue to search for the holy grail and – usually after years of financial loss – they give up and call the market a scam. This is one of the main reasons why traders fail, there is a very wrong initial expectation and many people do not think trading is worth it when they do get in touch with the reality of the market.

2. Short term thinking. Perhaps this is one of the most important reasons why the large majority of traders will fail to evolve into profitable ones. Our current society has trained us to expect “instant rewards” to want things and get them “now” and definitely this also applies to the large majority of people who want success in trading. Most people are thinking about this month’s profits or even this week’s profit while they have absolutely no idea where their trading will be in 5 or 10 years. The large majority of new traders lack a long term trading plan and this eventually leads most of them to failure. Making a plan in the long term and waiting for this plan to unfold is something that requires patience and confidence in the plan, something that is sadly lacked by most new traders.

3. Lack of risk control. It is interesting to see how most people seek to apply “sound money management rules” to their trading style when their life and personality reflect that they constantly fail to apply this to other aspects of their financial life. I have seen traders who have several credit cards with red balances, an outstanding mortgage debt and unnecessary consumer purchases and then they wonder why they are so bad at managing risk in trading. The truth is that most people are not naturally good at managing money – perhaps due to the current western consumer society paradigm – and this makes their success in trading extremely hard. Generally the people who succeed in trading are those who already have a good sense of how to control risk, no debt (or debt with a clear payment plan), a clear monthly budget, a good sense of what money they can spend and what money they can’t, etc.

4. Lack of knowledge. As with any other skill, knowing what you are doing is a substantial ingredient of success in trading. When you join this general lack of knowledge with a general lack of realistic expectations and a focus on short term results you get a recipe for disaster. Most traders attempt to tackle the market with almost no real knowledge about profitable trading and this eventually leads them to substantial losses. The large majority of new traders have not met or spoke with a profitable one and therefore whatever they assimilate comes from books, websites, etc. The problem is that most of these sources do a lot of talking but they – most of the time – fail to give realistic examples, actual profit and risk targets, real trading results, etc. New traders are left with a lot of knowledge that is not useful to them since it does not give clear guidelines on what to do but merely seems to give “advice” that is very difficult to translate into profitable trading.

5. Lack of time. This must be one of the most important problems of new traders, the general lack of time. The average new forex trader is usually a person with a full-time job and probably married or within a small family. Most people who start to trade the forex market therefore do not have as much time to spend reading, in front of the screen or learning and this in turn leads them to become rapidly frustrated with trading and the general lack of results. They do not have the time to deeply analyze systems, to train themselves emotionally, etc. Anyone trading with a full-time job is at a major disadvantage against those that do not and therefore the large majority of people who attempt to trade -who do so with very little time- sadly have a very high chance of failing.

6. Lack of capital. This is directly coupled with number one on the list and it reflects one of the most important obstacles new traders have in order to achieve success. I have met traders who have funded an account with 500 USD from a credit card to pay it back in a year  (leveraging for leveraging ? sounds bad) and then they expect to double this amount many times and start living from trading. Since new traders believe that immense returns are possible they believe that only a very small amount of money is needed to live from trading. In reality people who live from trading do so from 100-300K USD (depending on where they live) and starting with the hope of quickly earning a living from trading starting from 500-1000 USD is definitely an illusion. Definitely someone who starts to trade with 1000 USD can be successful but there must be a plan and a focus in the long term to succeed, knowing that “living from trading” will not happen for probably 10 to 20 years.

The above reasons definitely show you why most traders actually fail and why most new traders are likely to fail even if they know all the above. The problem here is that a very new set of skills has to be developed to succeed in trading, including a long term focus in the production of money, the acceptance of realistic profit and draw down targets and the design of a sound trading plan. Most people are not willing to trade the forex market after they realize what profit can be achieved realistically, what amount of work must go into trading and how much time they will need to spend in order to succeed. Many more will not be unable to deal or accept long and deep periods of draw down and most will never even have a detailed long term plan with adequate evaluation of monthly returns, yearly returns, possible draw downs, etc.

However by reading this post and becoming aware of the above you have come a small step closer to becoming a profitable trader, the good thing is that it is possible for people to overcome all the above mentioned obstacles if they know them and they are willing to put up the effort time and personality changes to get past them. Sadly most people will never truly become aware of them and the current tendency will continue as the majority of forex retail participants falls into and endless spiral of account wipe-outs and frustration.

If you would like to learn more about the development of a trading strategy and plan and you would like to know you can do this using automated trading strategies with adequate profit and risk targets please consider joining, a website filled with educational videos, trading systems, development and a sound, honest and transparent approach automated trading in general . I hope you enjoyed this article ! :o)

Print Friendly, PDF & Email
You can leave a response, or trackback from your own site.

One Response to “Can Everybody Succeed at Trading ? : Six Reasons Why Most Will Not Achieve Success”

  1. I am new to trading (Since janurary) but have had pretty decent success and I could not really understand why it seemed so hard for most people. I thought that perhaps I was just getting lucky and making really bad decisions, but so far I have been doing ok. By ok I mean that I am finally breaking even after making some really bad emotional trading in the beginning >.< .

    I found your article intriguing, because all these soft skills that I have come to realize matter so much are what I am conveniently good at due to being a math major. I think the most important thing I have learned is that I must accept that I am naturally bad, like everyone else at trading because it involves money management and stats. Great article and good to know I am not crazy :).

Leave a Reply

internal_server_error <![CDATA[WordPress &rsaquo; Error]]> 500