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Trading Realities
Why do most traders lose.
There are many reasons:
1. Lack of a trading plan.
2. Insufficient trading capital.
3. Little or no trading education.
4. Poor money management.
5. Lack of self understanding.
These are just a few of the reasons but what I believe to be
the biggest non psychological reason is the belief in
technical analysis. Some traders with many years experience
who have put in a lot of time and paid their dues can effectively use technical studies.
To develop that level of expertise is a long road to hoe and can be very costly. However, most traders
will lose money
using technical studies because they are a by-product of the
market's information and are therefore inherently late with
their calculations and also late in entering their trades.
Being late in your trade decisions will not make it in the
daytrading business, the markets move too fast for that.
The best way to overcome these limitations is to understand
the mechanics of the negotiation process that is at the heart
of free-market exchange-traded instruments. The give and take
of the dual-auction is how that negotiation process is manifested
every day, at every exchange around the world. Learn the
language the market speaks and its rules before entering
them.
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A trader armed with
sound market understanding and a trading plan to match his own mental makeup,
has the tools to maneuver in and out of the market in a systematic and
consistently profitable manner.
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