There are many reasons why traders fail, but chief among those reasons is they don’t understand the reality of trading.

With so many promises, trading systems, claims and companies saying trading is easy, it’s no wonder why so people get a rude awakening when they start trading.

It’s one thing to for a trader who has money to burn failing, and another thing for people who put their hard earned money on the line hoping to make a better life from trading.

The financial devastation that people go through when they lose their hard earned savings in the markets because of a mismatch between their understanding and the reality of trading can be really painful.

That’s heart breaking.

The Reality of Trading

I don’t know about you, but I went through so many trading courses, systems and dollars in learning the technical aspects of trading. While I learnt many different ways to trade, it was really tough to actually trade profitably on a consistent basis. Each system that I learnt would work for a couple of trades, then fall apart, before hitting occassional winners again.

Very few people who attended each trading course and/or seminars together with me actually became successful traders. From my experience, it was about 1 person for every 25 to 30 traders who actually had a period of sustained profits.

Was it really the failure of the trading courses?

While there were many experienced traders sharing their advice and knowledge about the reality of trading, their whispers can so easily be overwhelmed by all the noise created by companies marketing their products and services.

Not that each trading system didn’t work. It’s just the nature of the markets to cycle through different phases, and certain trading systems just didn’t hold up very well when the markets changed.

Trading Skill Takes Time and Experience to Develop

When experienced traders share that it 70% to 80% of trading success comes from the ability to manage your inner environment with regards to trading, novice traders still have to go through the phase of learning the fundamental technical basics of trading products and systems.

Only when novice traders have learnt sufficient trading knowledge to have the skills of trading success, that the reality that success depends on being able to follow through on your trading plan kicks in.

Being able to combine entry systems, trade management, portfolio risk management and sometimes diversification of trading systems is what makes a complete trader. And all these take time and experience to develop.

No matter how much a trader “knows”, it will only be through actual trading experience that traders will find out their level of ability to execute consistently over time.

If you don’t see any risk,
You don’t really know what you’re getting into.

Plus, in any form of trading or investment, there is always risk involved. If you can’t see it, it means that you don’t really know what you’re doing yet.

That sounds harsh, but if you speak with many traders who have been in the markets a long time, they’ll very likely agree with me.

The Higher The Returns,
The Higher The Risks.

No matter how you slice the cake, there is always a certain amount of risk associated for the returns that you want. In most cases, the higher the returns you want, the higher the risk you’ll have to take.

The hardest part of trading isn’t the actual trading itself. That can be solved by getting the right education, getting tested and robust trading systems, and so on.

The hardest part of trading will be managing your thoughts, emotions, decisions and actions when you’re tested in the markets. That’s where traders, if they survive long enough to get the right education, will have to survive in order to succeed.

The psychological and emotional aspects are the hardest part of trading to overcome, because it’s not something that can be learnt from the text books, trading courses, and what other learning institutions available.

The psychological and emotional aspects have to be experienced, analyzed, understood, tested again and again in the fire of actual trading before the inner mental and emotional habits can be changed to suit the reality of trading.

It’s easy to study. But it’s much much harder to apply what you’ve studied in a classroom environment into real trading when your money is on the line.

Can Traders Succeed?

It takes a lot of preparation for any trader to succeed in the markets. Preparation in terms of creating a trading plan, having a money management plan, learning the financial products to be traded, and so on.

This is a reason why discretionary traders should really test themselves out trading a demo account. This way, if they lose money it’s ok. It wasn’t real money. But if they are able to consistently execute and win in the demo account, it definitely builds confidence in being able to trade with real money.

Ultimately, it’s my experience that eventually what makes or breaks a trader is his or her ability to manage their thoughts, emotions and decisions. An emotional trader who doesn’t understand the reality of trading will find it really really difficult to succeed.

Does that sound harsh?

I suppose it does. But does that make it “untrue“?

That is for you to answer, isn’t it?