This was a question asked by D.G on investorsclub.co.za.
To answer D.G., I’m going to tell you three tips that it takes, to be a failure of a trader, so you know what NOT to do!
Failure Tip #1 Lack of a trading strategy
The first tip to fail as a trader is to not have a solid and strict winning strategy!
Most novice traders, get into the market and guess where the market is going. They don’t care about what they’re willing to risk and only think about what they’re going to do with the hefty profit they’re going to bank!
Well think again!
You need to face the fact that nobody is indispensable to the stock market, and with billions of rands flooding in, no one can predict with accuracy where it’s going to go.
The trick is to develop or adopt a winning strategy
that has yielded consistent profits in the past so that you have some guidelines to your trading.
Failure Tip #2: Lack of money management skills
Ok, so let’s say you have that winning strategy with strict levels such as, entry, stop loss and exit, this still doesn’t mean you’ll succeed as a trader.
If you have no idea how much you want to risk, then whether you have the most amazing winning trading strategy or not, you can still blow your entire account.
I used to be like this, I never knew how much I should put into a trade and I certainly had no idea of the amounts I could lose in a single trade.
I blew tons of money unnecessarily because no one showed me how to limit my risks!
If you’d like to find out my top three rules to boost your risk management skills then click here!
Failure Tip 3#: Lack of trading psychology
If you’re not in the right mind-frame to handle any losers or even handle any small winners, then this reason alone is bound to set you to fail as a trader.
If you don’t have a clear understanding on what trading is about then you’re in it for the short-haul!
Let me give you a simple exercise to see if you have a winning trading mind-set.
Answer these questions with a yes or no.
Do you get emotional when you make a loss?
Do you trust your gut, heart and any other intelligible part of your body when making trading decisions?
Do you question your trades?
If you’ve answered ‘yes’ to any of these questions, then stop trading immediately!
I can’t stress this enough!
You need to find a way to strengthen your trading mind where you almost become robotic by nature…
If you want to improve your trading psychology and overcome any of these issues, I suggest you read my E-book ‘Inside the Head of a Master Trader’.
Click here for more!
Always remember, "Wisdom Yields Wealth"