Can Traders make Money in trading ?

By | September 28, 2017 5:05 pm

Its been a roller coaster rise from past few trading session and many traders asked me “Can money be made in trading ?” Let me try to answer the same.


Some general reason why traders loose money

Taking excessive risk in relation to their trading account

When you take excessive risk in relation to your trading account, you are creating a higher level of mental engagement and stress, which impacts upon your decision making.

Would you perform a surgery, or fly a plane loaded with passengers without any previous training? Of course not. That would be insane.

But when it comes to trading the markets, that’s exactly what a lot of people do. They jump right in, without any kind of guidance or plan because they feel confident they can beat the market.


So before you start trading, you need to make sure you have a plan with proper risk and money management .



Mistake # 2: Eating Like a Sparrow, but Defecating like an Elephant

Back in the 1960s, a pair of Canadian psychologists made an unusual discovery.

They determined that after placing a bet at the racetrack, people feel much more confident about their chances of winning than they did prior to making the bet.

That’s just the way our brains are wired. Once we make a choice, we tend to find ways to justify our earlier decisions.

Not fully accepting losses as a part of trading. At a deep level you have to internalise that taking a loss is a natural part of trading, and get to the level where the thought of a loss itself is not an issue for you.

This instinctive response can be dangerous in the market.

If a trade starts to move against you…you may find many reasons to “hold on,” hoping it will turn around.

And vice versa. If you get into a trade and it soars higher, you may take profits too early. Or even worse, you may hold out so long that your winner turns into a loser.

End result: you either wind up eating like a sparrow, where you nervously close out small gains. Or you defecate like an elephant – holding onto losers until they swamp any gains you made.


Mistake #3: Focusing on Making a Loads of Money

Trading when you need to make money. Desperation is one of the most destructive states that you can trade in.Many traders lose their trading accounts due to trading in this mindset. When a trader is desperate to make money any time a trade ticks into profit becomes a chance to bank something, and so profits are cut short. Every time a trade moves offside and towards their stop, the trader cannot mentally afford to
take that loss, so they often hang on, hoping and wishing for the market to come back and save them.

The 1980′s movie Wall Street coined the term “greed is good.” But things are different in real life.

Before placing a trade, you should always ask yourself “how much will I lose if this trade goes wrong?

But many traders have no clue how much capital they’re risking on any single trade.

That’s a mistake.

All the most successful traders focus on limiting risk and protecting capital, rather than just making money. By limiting their downside, they successfully grow their account over time.

You can easily copy their strategy.

As I mentioned before, start by always using a stop-loss. That will protect you from losing too much.

But equally important: you should also limit the amount you risk on every single trade. I recommend risking no more than 5% of your account on any trade.

As you can see, letting emotions get in the way of your trading is not a good idea.

If you’re making any of the mistakes mentioned above, it’s only a matter of time before your account will blow up. Most traders learn this the hard way.

But if you avoid these three key pitfalls, you will not only save money, but also become a better trader: one step closer to complete financial independence.

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