If you are competitive, or angry, playing chess is a good outlet, better than going out to shoot people with a rifle. The latter thing is not what I suggest.
There are better things to do, such as making millions of dollars.
The topic of the thread is about why traders lose. Successful traders identify the reasons as: fail to cut loss short, fail to let profits run. I have another one, but I won't tell you HERE. I'll dwell on the two rules: cut losers short and let winners run. I think talking about these two rules is sufficient to make the thread worth reading.
You saw your neighbor just bought a Lexus, you asked him how he could afford the car. His answer is: I have a big bank account. You want a Lexus too, so you start increasing your bank account, hoping that one day you can also buy a Lexus. The problem is you don't know how to build up your bank account.
Similarly, you saw your neighbor making millions of dollars trading stocks, you asked him how he did it. His answer is: cut loss short and let profits run. You want to be rich, so you start doing the same thing, but you just don't know how. By the way, good books in the market can only tell you this much, as much as your neighbor did. If you unlucky, you might have read the bad books, whose authors had no clue of trading.
There are ideas posted on ET that are reflective of the origin of the failure of many traders (Discipline, fear/greed, control of emotions, control of yourself, mindset, personality). However, reflection of the origin is not the origin per se. I attempt to identify the origin ("Cocky," I heard someone say it. "Arrogant," I heard you). It's Saturday today, I have some time, it's been raining, the ground is wet and I will delay putting up the fence boards (I planted the fence posts before Xmas, the cement must be solid enough by now).
Trading is a behavior or a combination of behaviors, like any other behaviors demonstraded by living organisms, it can be modified (Good news to traders!). If you are doing something wrong (how do you know? you are not making money!), you can change it!
Let's say there are two correct behaviors in trading: cut losers short and let winners run. Different people say them differently: your first loss is your smallest one, sitting tight makes money (I cannot give you the exact words of Jesse Livermore, because I just bought the book, together with Enhancing Trader Performance by Brett Steenbarger, from Amazon.com and haven't read it. By now I am the proud owner of six trading books: 1. Trading for Dummies, 2. Day Trading Online by Toni Turner, 3. Trading in the Zone by Mark Douglas, 4. How to Make Money in Stocks by William O'Neil, in addition to the above-mentioned two books (5 and 6). O'Neil's book is useless to day trading, it's a waste of money. I guess I was deceived by the title of the book and the fact that so many people mentioned the so-called CANSLIM method. But if you run a 10-billion-dollar fund, that book may be useful.
From the very beginning, I intend to make my thoughts random, so you have to bear with me.
We human beings, like many other animals on the planet, are governed by two masters: pleasure and pain (sounds familiar?). In modern terms, our behaviors are determined by two outcomes: pleasant and unpleasant. If you accept trading as a behavior or a combination of behaviors, you should accept that trading is determined by pleasant outcome and unpleasant outcome. Fasten your seatbelt.
