Traders Are Smarter Than Average, So Why Do So Many Fail?

FinanceTrading / Investing

  • Author Brian Mcaboy
  • Published March 22, 2006
  • Word count 931

Most traders have an above average IQ, enjoy above average lifestyles, and have more money than most.

Being a trader shows that you’ve achieved a respectable level of success in your life. You can’t even think about becoming a trader without having the capital to fund an account. That doesn’t happen by chance. You’ve overcome many of the challenges that the average person just never seems to beat.

If you’re struggling in your trading though, don’t feel bad. It’s not your fault. Nobody told you what to expect when you got here.

A very enticing picture is presented to everyone when they first get into trading. The basic concept of trading contracts is pretty easy to understand, certainly easier than analyzing than the financial reports of a Fortune 500 corporation. Even in the general news, there are fantastic stories, like Hillary Clinton easily turning $1,000 into $100,000 in a very short period of time in the cattle markets. Every week there are publications talking about trades that resulted in a 400% gain. Just watching the markets after you’ve gotten your feet wet, you see money being made every day.

Nobody told you that the trading industry has the same complexities and challenges as any other, if not more. Nobody told you about the incredible number of factors that make the markets so beautifully unpredictable: humans, weather, technology, politics, news, disease, the list goes on.

They told you that there’s risk in the markets, but probably didn’t tell you that 90% of all traders lose money in their first six months. Many would even return to trading only to go through the same cycle and leave again. Some repeated the process several times before finding success.

For literally thousands of years, commodities have been traded. Ever since the introduction of fiat money, currencies have been traded. For the last hundred years, thousands have sought the crystal ball that will predict the markets with a high degree of accuracy.

Now, there have been a handful of people that have done well in developing trading strategies and trading systems that have shown to make money and demonstrate success a reasonable percentage of the time. Several have been proven to stand the test of time over decades.

In the last twenty years between computers and the Internet, technological advances in data collection and analysis, indicators and mathematical formulas have been created and developed that are available to all traders.

We have a population of traders that is smarter than average and has achieved above average success in endeavors of all kinds. We have strategies, trading systems and tools available to everyone, that give traders every possible advantage and opportunity to enjoy consistent profits from trading,

Logically, the statistic established so long ago should be significantly different by now, yet so many traders struggle and many outright fail and have to leave. As a matter of fact, the 90% statistic of traders losing their money in the first six months still stands, but why?

Let’s look at what hasn’t changed.

The markets have no master. They answer to no one and will take turns and twists that are impossible to foresee. Even when there are no catastrophic events occurring, even the best of trading systems will be right only slightly better than half the time at telling you what direction the markets will go.

Anyone with money can trade. All it takes is filling out some disclosure documents and enough money to fund an account.

No training or pre-requisites are required. Never have been. Unlike driving a car or flying a plane, both of which can represent a significant risk, there is no mandatory training and testing before you can begin trading. You can open an account, get off in a wreck, and lose your money all in one day. The rate at which an account can be cleaned out is incredible.

There are still human beings making the trading decisions. Creatures with brains and feelings.

We get confused when faced with complexities and uncertainties that we haven’t faced before. We get frustrated and upset when things don’t go as we hope. We want to make money and provide nicely for our families. We want to acquire wealth and have fun doing it. We feel bad when we make mistakes, especially when we repeat the same mistakes more than once. We have feelings of fear, greed, anxiety, anticipation, pride, shame. We’re still a skin-bag full of emotions that lead to bad trading decisions.

The central point of the trading activity hasn’t changed a bit.

So what can be done about it?

Judy Crawford, the Manager at Peak Trading Group, seems to have discovered a solution to this common problem. She focuses on helping her clients develop the emotional control and the disciplines that separate the losers from the winners. So many novice and amateur traders spend almost all their time only on trading. If people would invest the time in themselves, with the intent of becoming a successful trader, to develop that skills and temperament and become the person they need to, a higher percentage would survive long enough to trade long-term.

The technological advances will continue to come and provide traders with additional tools and advantages. While nothing can be done about the weather, politics, the news and people in general, at least some progress is being made to help traders deal with the fact that they have feelings and they need help in turning that aspect of trading from a liability into another advantage.

Brian McAboy creates survival guides for traders in the commodities, forex and stock markets. To shorten the path to consistently profitable trading, and to get a free sneak peak at this course, visit the site at http://www.traderssuitofarmor.com/ptg/ Judy can be contacted at judycrawford@peaktradinggroup.com. Her most recommended resource is the Trader's Suit of Armor.

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