Why it takes so much time to turn profitable

A

alex.samant

For everyone starting out and feeling like a million dollars will it you right away, and stick with you: Don't even think about it!

In fact 9/10 traders fail in the beginning because they don't know what they're in for.

I want to illustrate what it takes to be profitable, and that is namely, discipline and education. But how? So many people use these 2 words today and it really has become somewhat of a cliche to come out and say "Be disciplined and learn".

First of all, discipline and education go hand in hand. The worse the education the longer it takes, the less a chance to get somewhere.

As you progress into knowledge you have to devise a plan, a strategy and trade it with discipline until you can really get a wide range of trades and can then only asses if the strategy is good or not.

As you realize it's not good, you learn some more, move higher, and devise a new one, and then trade it again with discipline until you can asses this new one.

And so on. You eventually get there in about 3 years, but if this is not the cycle you follow, the day you get up and say "I can't understand anything anymore" will surely come and you will lose.

Now, for this cycle to produce results you need 2 tools, besides good education and strong discipline (ie patience and stomach):

a - a trading diary in order to be able to asses the dos and don'ts and...

b - a basic money management rule of not risking more than a small small fraction of your account. That is to ensure that you are not an enemy of your money while you learn.

From a psychological point of view, paper trading and demo is out of the question. They don't mean a single thing.

Happy trading y'all.
 
"From a psychological point of view, paper trading and demo is out of the question. They don't mean a single thing."

Paper trading can build confidence and trust in yourself and decisions. If the adage "trade money you can afford to lose" equates with the worthlesness of paper trading might remove some of the emotion from the real thing.

I would put on a real money position and trade the same stock in different scenarios on a simulator. This adds a touch of reality to paper trading.

Paper trading and losing at the same time has real psychological consequences. What's the alternative? Oh, I'll do better with real money? Not hardly.
 
The problem is new traders are in such a hurry to get rich that they skip over, "Chapter 1... Trading, The Basics... KISS". You know, racing ahead to get on to "the good stuff".

Takes a long time for them to get back to "Chapter 1."
 
gnome: thanks for the rational post. Some of the newbies don't even get to Chapter 1. They never understand what that "good stuff is".

Bearbelly, nove, daal: you can't handle losses without complaining ? :) And besides, this is a Chapter 1 subject. Good luck.

nutmeg: ask anybody who has been through the cycle and they will tell you that results on paper have never matched real trading results. It's exactly that "emotion" you are talking about, that is changing the whole perspective.
 
Thanks for saving all my seconds.

But, I will tell you why most fail. They fail because they don't think there is a Holy Grail... they, think it comes down to psychology, and discipline etc.. while their methods and techniques are worth junk... It's all in WHAT you do to extract profits from the markets, how sound your philosophy about the markets, instead of your psychology...
 
I've sometimes mused at the prospect of doing a seminar on trading and charging $50,000 to attend. (Of course that would filter-out all but those trading size.)

It wouldn't be a week-long affair. Not even a weekend.... nor even a full day.

We wouldn't need to "break for lunch", we'd be FINISHED by lunch.

After the seminar, attendees would be shaking their heads, asking "THAT'S it?"

Then they'd feel like a dumbass for having paid $50,000 for a seminar which covered the stuff they skipped over in "Chapter 1".

When I picture that, it gives me a good chuckle. :D
 
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