Why trading is the hardest profession you’ll ever fail at.
I am a husband, father, community leader and a trader. Out of all of the things I am being a trader is by far the hardest thing I have ever done, I love everything else I do, there is lee way, forgiveness and immediate feedback in regards to all aspects of my life, except trading.
My love of markets and knowledge has led me down a painful course of action over the last 20 years to the tune of $100,000 in losses, in cash. Luckily I did not take out loans I just had a lot of smaller stakes over the years and lost them, all but one.
After 20 years in this business and leading a community of traders for over 3 years now I can say that I have a lot to give to the community, I have a lot to learn still as well. But one thing that I can say for certain is that 90% of traders walk into this profession unprepared, undisciplined and not ready for the arena in which they step.
Profession: A paid occupation, especially one that involves prolonged training and a formal qualification
That is what Google told me a profession is and it sounds about right. If you are wanting to jump into the arena of trading you have to realize that you are jumping into a battleground where you get paid, and the rules in this battleground are fairly well defined and you must learn them. That is your education, this is a profession.
Your prolonged training is losing and being frustrated, your formal qualification is your fortitude and your ability to get back up time and time again.
There are different kinds of traders, I would consider everyone in the market a trader of sorts. If you want to say there is a difference between an investor and a trader that is ok but I will counter with we all buy and sell assets and expect a profit. In that regard we are all the same and no matter what term you use we are the same, I use the term trader.
As a trader there are some hard rules and many many soft rules, one of the cardinal rules to trading is you don’t lose money. Most new traders don’t fully understand this rule, they think its as simple as “chart go up, buy” and while that is kind of true its not at all accurate.
The reason that trading is so difficult is because everyone thinks they can do it, all you do is deposit some money learn a few things and you are off to the races never to be seen at your 9–5 again! Well unfortunately what you fail to realize is that there are tens of thousands of people that were there before you and will take advantage of your innocence.
Doctors are the single most losing profession in trading. Aren’t doctors smart? Well yes they are smart, at medicine. Aren’t they more patient? Not necessarily. They deal with peoples lives but their own money has just as much meaning to them as it does to the rest of us, they just have a lot more of it to lose.
The rest of us have less money and are JUST AS SMART. Making money isn’t about smarts.
These days it seems that everyone trades, but few have taken the time to learn the rules, and then putting those rules into practice is another level and requires lots of discipline.
Trading is discipline. Period. Its not about charts, its not about news, its not about markets, its about discipline.
Lets take a scenario. You have a large position and the market is moving against you but your rules haven’t been broken. You have a rule that says if it goes to X you’ll exit, but you are sitting there and watching… so should you wait or pull the trigger now before it hits X?
Most people can’t wait, they see the future and they react, well what happens is that the price goes real real close to X and reverses back in your direction.
What if the market is bad and starts to run up, do you jump in and try to capture that gain or do you wait for your good signal?
Discipline! Its all discipline. Can you stop trading when you’ve lost 20% of your account? If that is your rule you better! Your rules can be adjusted in hindsight but in the moment whatever you have on paper stands.
Why you will lose
- You don’t know enough to try
- You try but don’t know what you are doing
- You know what you are doing but investing at the wrong time
- You invest at the right time but don’t know the exit rules
- You know the exit rules but can’t keep your profits
- You can keep your profits but lose them when the market turns
- You can see the market turn but can’t stop
- You can stop but don’t know when to start again
- You can start again but are too cocky.
I could keep going but I’ll end it there.
This is a profession, you’d fail at being a Dentist, Doctor, Mechanic, Technician too if you don’t learn how to do the thing you want to do. So learn what to do, how to do it and the unwritten rules then you’ll be successful.