WHY TRADERS FAIL.

Why Traders Fail

Conversely, we also see particular reasons traders fail. We would like to

share these observations with you in the hope you can learn from these errors

and avoid some of these pitfalls. An ancient proverb states, “The smart

man learns from his mistakes—the wise man learns from the mistakes

of others.”

* Lack of knowledge; traders enter the business constantly without a

solid understanding of what the business of speculation involves.

* Lack of capital; small accounts typically lose money. Those few with

smaller accounts who do succeed eventually hang on until they understand

how leverage can be friend or foe.

* No trading methodology; they use a seat-of-the-pants approach.

* No trading plan.

* Failure to apply a solid money management system.

* Not seeking help from experts or mentors; not wanting to invest in an

education of trading.

* Lack of understanding of the inherent risks present in trading.

* Failure to recognize the mental preparation necessary for successful

trading.

* No trading rules applied.

* Altering a sound trading plan; early entries, early exits, moving stops,

not entering trade setups.

* Random trading, which is trading anything outside of their trading plan

and is usually emotion-based.

* Failure to develop the discipline necessary to trade successfully.

* Not learning from previous mistakes.

* Lack of commitment to the process of trading.

* Failure to use stop-loss orders, which is the number one way to turn a

small loss into a large loss.

Extract from

Trade What You See

by

 LARRY PESAVENTO

LESLIE JOUFLAS