Uncommon Reasons why Traders Fail

At TUI Trading Firm we have traders who can make money using any number of strategies.  Gap fills, gap and go, double bottoms, scalping, momentum, intend, counter trend, swing trading. There are so many ways to extract value from the market, yet still most traders struggle and fail.Most people have talked about the common reasons, but here are some less discussed reasons traders fail, and some suggestions on how to help you achieve trading success.

1.Over trading

If you have an effective strategy and system, use it and don’t do anything but it. Traders often over trade causing them to give back morning profits and rack up commissions.  Don’t make trades fit into your set-up that aren’t really candidates.  Head games will cause pressure to make back bad trades often causing entire days to unravel. Recommendation: Set a reasonable profit goal each day and once you hit that, shut down and do not trade.

2. Using the wrong metrics

A lot of traders want every trade to be a winner. I’ve seen traders be 70-85% correct in the trades they pick, and still lose money. I’ve seen traders who are 40-50% correct make a decent living. One bad trade can often take down a day, week, and even month. Recommendation: Analyze your trades and see what is causing your biggest drawdown. See what action will prevent those. Utilize stops or avoid the situations that are most likely to lead to the big loser. See what situations can be reversed for a recovery.

3. Trade for the right reasons

Trading is exciting, but it isn’t gambling. Done correct, it should be boring and involve a lot of waiting and analysis. May traders try to guess an earnings report or market and corporate events. Recommendations: Develop an effective system that will work and use that and only that. You might get a gamble correct, but long term, it won’t pay.

Hopefully these give some food for thought that can improve your overall P&L

Happy Trading!