“The composite profile of a losing trader would be someone who is highly stressed and has little protection from stress, has a negative outlook on life and expects the worst, has a lot of conflict in his/her personality, and blames others when things go wrong. Such a person would not have a set of rules to guide their behavior and would be more likely a crowd follower. In addition, losing traders tend to be disorganized and impatient.”
The profitable trader is able to manage stress, has a positive outlook on life and expects the best from themselves and their trading. They take responsibility for their wins and losses. They know who they are and are in touch with their goals. They have specific rules to guide their trading and are organized and patient.
“The simple truth is that most people are risk-aversive in the realm of profits – they prefer a sure, smaller gain to a wise gamble for a larger gain – and risk-seeking in the realm of losses – they prefer an unwise gamble to a sure loss. As a result, most people tend to do the opposite of what is required for success. They cut their profits short and let their losses run.”
Most traders are unprofitable because they take profits quickly but let losers run. Many traders can have a nice winning streak or be profitable in a bull market only to give back their profits with one big loss or lose all their bull market profits during the next bear market.
“Most people approach trading to make a lot of money, and that is one of the primary reasons they lose.”
The best way to go broke fast is try to get rich quick. Trying to speed up the process of big profits usually just leads to huge losses.
“If you are really committed, then not only are you certain that you are doing the right thing, but somehow events just seem to occur to help you.”
If you really want to be a profitable trader only time separates you from your goal. If you do the work, learn, grow, and persevere you will eventually get to where you are going if that is what you truly want.
“The realization that you are responsible for the results you get is the key to successful investing. Winners know they are responsible for their results; losers think they are not.”
Blaming high frequency traders, dumb money, option pinning, market makers, insider traders, or simply “them” for your trading losses is not going to do anything to help your trading. The only real metric to measure whether your trades are good trades is whether you followed your trading rules with discipline. We only control whether we follow or planned entries and exits then the market determines whether we make money or lose money.