Reasons Why Traders Fail

Every traders goal is to set himself apart from the crowd and avoid losing money. As the famous 90 Rule 90% of trader losr 90% of capital in 90 days. To be a consistent in trading, avoid making the following mistakes.

1. Looking for a Perfect System. Traders who skip around from one method, system, indicator or service to the next in order to find a perfect system will never be a winner. Trading is mastering a system which you have trust on. Its a repetitive process, Keep following the same system again and again once you develop a knack.

2. Not sticking to a plan. A methodology, or trading system, is essential. The markets can be confusing, especially for someone without a specific plan of action that can be used again and again. Without a plan, you will react to the market instead of anticipating the market. Creating a trading plan is a highly individual process and usually stems from years of experience.

3. Improper mindset. Humans are emotional creatures by nature, but being emotional in the uncertain environment of trading can be very very dangerous. Emotions will inevitably come into play while you are trading. Its how you deal with those emotions that will define you as a winner or a loser.

4. Improper trade size. Capital preservation is paramount. Poor account sizing risking too much per trade is a sure way to fail. Trading is not a sprint; its more like a marathon, and a very long marathon at that. You will lose trades here and there. Its how you deal with losing that matters.

5. Poor risk-to-reward ratio. There are two reasons traders end up with a poor risk-to-reward ratio:
a. They dont have a trading plan and instead simply react to the market.
b. They simply cant hold their winners… but they hold their losers.

Having a plan gives you the confidence to see your analysis through to the end.