"It is common for investors to enter the financial markets with a desire to earn money, but forgetting that they can also lose." You have to bear in mind that it is equities, so there is always a risk, and you have to know how to quantify it to avoid great scares.
According to recent statistics, about 85% of investors lose money in the stock market. Although it is true, it would be necessary to analyze this figure, how many investors of that 85% have enough knowledge to face the market? How many do it simply to seek luck or hit the ball? They are too broad statistics, even so, they serve to make a good reflection.
Probably the main factor that makes the difference in these statistics is the approach that is given to the investment:
-Most of that 85% loser will face the market the same way they fill out a lottery ticket or place a bet on a sporting event. The famous ball culture so established in this country. Trying your luck is your investment strategy, without making any type of value selection, or adjusting the risk per operation, much less total risk per portfolio.
-Regarding the winning 15% we can say that they are traders who have prior stock market training, have enough experience, have developed the necessary patience and above all have respect for the market. That means respect for the rest of the players, for the volatility, and even for the irrationality that sometimes floods the market. They know how to manage their risk, their emotions and especially their capital, at different times in the market.
To avoid these overwhelming statistics, a novice trader should first be aware of his shortcomings, and want to fix them. For this he should follow a series of phases that will lead him to a better preparation:
-Training should be the first step. A first step that must be taken to the end, without skipping part of the operational process in order to start making the most of what has been learned.
-Once the previous step is understood and completed, it is necessary to put the system into practice. The best way to do this is through a demo account. The novice can finish polishing his strategy and testing its reliability before going live, for real money.
-Once the system is tested, he will implement emotional management, which can only be tested on a real account. There he will learn to respect the market, and especially his money.
11 reasons why trading often fails
1) Thinking it's easy.
For whatever reason, it is thought to be easy. Not if it's the movies or false myths, but there is such a mentality. And the sooner they are abandoned, the better.
2) Think about getting rich, instead of learning.
The first thing people think about is making money and in the fastest way possible. It makes sense but, like everything in life, it has to be learned. One of the first questions that novice people usually ask is how much to pay to the Treasury. To pay, you must first win. Paying is the least of the problems.
3) Operate with other people's ideas, instead of testing your own systems.
Each person has to make their own system, systems come out of various inputs in different ways and styles of operating. You have to find one that suits our way of being and make it our own.
4) Lack of passion, you have to really like it so as not to give up with difficulties.
Trading is very hard, very hard. Failure to trade is common and many people quit when they see the real difficulty. If there is no true passion, abandonment is usually the most common.
5) Lack of a trading plan.
You have to have a defined operation and know exactly what to do at all times. The plan has to collect operations, monetary management and, above all, how to react to possible situations that may arise.
6) Trade looking for good operations, instead of having a methodology.
It does not make sense to do the operation of the month in an hour and then lose everything you have earned during the week. You have to operate following a method.
7) Follow and imitate famous gurus, instead of learning.
There are no gurus. The gurus will have their systems but they do not have to work for us, we have to adapt them to our way of being.
8) Very large learning curve.
Learning very very slow, it takes time and causes the degree of abandonment to be very high.
9) Trade very hard, rather than with very small amounts.
Trading very strong, with many lots or contracts due to greed, for wanting to win large amounts of money.
10) Unsecured income.
If one thing is not guaranteed in trading it is income. It costs a lot to take care of that, it is like creating a company with all the risks involved, but with less investment. If you are used to a steady and stable salary, it can be difficult to get used to it. For me, personally, it cost me a lot.
11) Much more complicated than having a job.
Trading is surrounded by a lot of mystique that, in the end, turns out to be a false glamor. Getting it is extremely difficult, much more than having a job.
According to recent statistics, about 85% of investors lose money in the stock market. Although it is true, it would be necessary to analyze this figure, how many investors of that 85% have enough knowledge to face the market? How many do it simply to seek luck or hit the ball? They are too broad statistics, even so, they serve to make a good reflection.
Probably the main factor that makes the difference in these statistics is the approach that is given to the investment:
-Most of that 85% loser will face the market the same way they fill out a lottery ticket or place a bet on a sporting event. The famous ball culture so established in this country. Trying your luck is your investment strategy, without making any type of value selection, or adjusting the risk per operation, much less total risk per portfolio.
-Regarding the winning 15% we can say that they are traders who have prior stock market training, have enough experience, have developed the necessary patience and above all have respect for the market. That means respect for the rest of the players, for the volatility, and even for the irrationality that sometimes floods the market. They know how to manage their risk, their emotions and especially their capital, at different times in the market.
To avoid these overwhelming statistics, a novice trader should first be aware of his shortcomings, and want to fix them. For this he should follow a series of phases that will lead him to a better preparation:
-Training should be the first step. A first step that must be taken to the end, without skipping part of the operational process in order to start making the most of what has been learned.
-Once the previous step is understood and completed, it is necessary to put the system into practice. The best way to do this is through a demo account. The novice can finish polishing his strategy and testing its reliability before going live, for real money.
-Once the system is tested, he will implement emotional management, which can only be tested on a real account. There he will learn to respect the market, and especially his money.
11 reasons why trading often fails
1) Thinking it's easy.
For whatever reason, it is thought to be easy. Not if it's the movies or false myths, but there is such a mentality. And the sooner they are abandoned, the better.
2) Think about getting rich, instead of learning.
The first thing people think about is making money and in the fastest way possible. It makes sense but, like everything in life, it has to be learned. One of the first questions that novice people usually ask is how much to pay to the Treasury. To pay, you must first win. Paying is the least of the problems.
3) Operate with other people's ideas, instead of testing your own systems.
Each person has to make their own system, systems come out of various inputs in different ways and styles of operating. You have to find one that suits our way of being and make it our own.
4) Lack of passion, you have to really like it so as not to give up with difficulties.
Trading is very hard, very hard. Failure to trade is common and many people quit when they see the real difficulty. If there is no true passion, abandonment is usually the most common.
5) Lack of a trading plan.
You have to have a defined operation and know exactly what to do at all times. The plan has to collect operations, monetary management and, above all, how to react to possible situations that may arise.
6) Trade looking for good operations, instead of having a methodology.
It does not make sense to do the operation of the month in an hour and then lose everything you have earned during the week. You have to operate following a method.
7) Follow and imitate famous gurus, instead of learning.
There are no gurus. The gurus will have their systems but they do not have to work for us, we have to adapt them to our way of being.
8) Very large learning curve.
Learning very very slow, it takes time and causes the degree of abandonment to be very high.
9) Trade very hard, rather than with very small amounts.
Trading very strong, with many lots or contracts due to greed, for wanting to win large amounts of money.
10) Unsecured income.
If one thing is not guaranteed in trading it is income. It costs a lot to take care of that, it is like creating a company with all the risks involved, but with less investment. If you are used to a steady and stable salary, it can be difficult to get used to it. For me, personally, it cost me a lot.
11) Much more complicated than having a job.
Trading is surrounded by a lot of mystique that, in the end, turns out to be a false glamor. Getting it is extremely difficult, much more than having a job.
Comment:
85% to 90% lose money