For most successful traders, early failure is more the rule than the exception. Most successful traders wipe out a few trading accounts before they get it right. Although, continuous failure is a sign that you are doing something wrong and you need to attend more to your education.
Most new traders lose more money trying to do it with self-study than what a good education would have cost them. Once they lose a lot of money they are even less willing to pay for good education and coaching.
Learning to take advantage of potential major winning trades is not only important to the emotions of the trader but is also important to succeed.
Uneducated traders forget that letting winners run is as important as cutting losses short. If you don’t stay with your winners, you are not going to be able to pay for the losers. In fact, most traders do just the opposite. They allow the losers to run and they usually cut the winners short.
Most new traders believe that if they trade more they will make more money. Over-trading will take any trader to the edge of disaster.
Betting all your money on a single trade will take you to the brink of ruin. Traders must know, never to commit to much of their trading capital to a single trade idea.
I cannot stress enough the importance of defining an exit point on every trade. This would be an initial protective stop loss or a trailing stop loss. This is very important because stop losses force this exit commitment on the trader.
Most new traders realise this too late. They believe that the market will always come back. Yes, most of the time it does come back, until that one time it keeps going wrong until they clean out their trading capital.
Traders need to understand that waiting for those trades in which all the key elements line up in one direction, is the only way to trade successfully. By doing this you greatly enhance the probability of success.
Making lots of trades when the conditions are marginally in favour of your trade idea has more to do with entertainment, the need for action and their ego’s, than trading success.
Traders must make sure that they are well educated before participating in the markets. One thing is for sure, learning to trade will cost you money. A good education and coaching will cost far less than losing your trading capital while building the needed experience.