Why Traders Fail ?Read These 20 points

1. Lack of motivationA talent is irrelevant if a person is not motivated to use it. Motivation may be external (for example, social approval) or internal (satisfaction from a job well-done, for instance). External sources tend to be transient, while internal sources tend to produce more consistent performance.

2. Lack of impulse controlHabitual impulsiveness gets in the way of optimal performance. Some people do not bring their full intellectual resources to bear on a problem but go with the first solution that pops into their heads.

3. Lack of perseverance and perseverationSome people give up too easily, while others are unable to stop even when the quest will clearly be fruitless.

4. Using the wrong abilities. People may not be using the right abilities for the tasks in which they are engaged.

5. Inability to translate thought into action. Some people seem buried in thought. They have good ideas but rarely seem able to do anything about them.

6. Lack of product orientation. Some people seem more concerned about the process than the result of activity.

7. Inability to complete tasks. For some people nothing ever draws to a close. Perhaps it’s fear of what they would do next or fear of becoming hopelessly enmeshed in detail.

8. Failure to initiate. Still others are unwilling or unable to initiate a project. It may be indecision or fear of commitment. (more…)

Ways to Increase Willpower For Traders

  • Plan in advance and operate on the basis of habit
    • You need to have a trading plan that covers all permutations that the market can possibly throw at you. You need less willpower to follow a clearly defined plan than to try adhering to broad principles in reaction to the market.
    • Keep practicing applying your trading plan, so that you can make following the rules a habit. It is like driving, the more you do the less effort it requires progressively.
  • Motivate yourself, remind yourself of the importance of what you are doing
    • You need to remind yourself of the importance of achieving good trading results, of the importance of not throwing your hard-earned money away.
    • Use visualization techniques to picture situations where you follow your trading plan successfully. Thinking that you have lots of willpower actually makes it so.
    • Think of some trader you admire that have lots of self-control and unfazed by market movements (e.g. Ed Seykota)
  • Exercise your willpower
    • Willpower is like a muscle, the more you exert your willpower in whatever tasks, the greater your capacity for self-control.
    • You can get yourself to follow rules such as sitting up straight, opening doors with your left hand, etc.
  • Have sufficient food
    • Exercising willpower uses up glucose. Being hungry means you don’t have the energy to exert willpower.
  • Have sufficient rest
    • You can replenish your ‘willpower’ stores through sleep. Get sufficient sleep every day.

3 Types of Confidence

First, is what I call ‘false confidence’ That’s the person who talks big and poses like a big shot. This type of person often takes big risks in an effort to either impress others or to assuage their own discomfort, and the results are often erratic and often end terribly.

 Next, there is temporary confidence, which is conditional on recent performance. This is the person whose self-esteem is tied to their account equity or P&L.  When on a good run, they feel confident and take larger risks (often the prelude to giving it all back). And when performance is lousy they start grasping at anything, maybe exiting winners prematurely or taking on excessive risk to get their money back.

 Finally, we have true confidence. This is confidence that does not depend on recent results. It is based on a deep sense of inner trust. This is the person who has a history of doing the right thing, regardless of the outcome. Doing the right thing in the sense that they act in their own best interest and trust and understand that doing so over time has a positive impact on results.  The trust runs deep enough to provide resilience in the face of disappointment.  This is true self-confidence, the kind you want in trading and in life. 

Apprasing Your Trading Relationship To Pride- 10 points

1.Does your self-esteem rise and fall with your latest trading ?
2.Have you ever taken a trade just to prove your ability as a trader ?
3.Do you brag about your winning trades to others ?
4.Do you try to hide your losing trades from others ?
5.Do you ever make up false stories about your trading to impress others ?
6.Do you worry about what other people  think of your as trader ?
7.Make an honest self-assessment of your trading.
8.Complement yourself and give yourself credit when you do something right.
9.When you make a mistake or do something that doesn’t serve your trading ,plan how you will correct this tomorrow or in the future.Say to yourself ,”That’s not like me.I can do better.”
10.Notice your improvement and commit to doing better each day ,week ,month ,and year


On June 13, 1986 Charles T. Munger delivered the commencement address at Harvard University.

In it, Munger borrows from an earlier commencement address by the late night host Johnny Carson.  Carson shared with the  graduating class that although he could not not tell them how to be happy, he could share with them from personal experience how to be miserable.

Carson’s prescription for a life of misery?

  1. ingestion of  chemicals to alter mood or perception
  2. envy
  3. resentment

Munger adds to Carson’s prescription with four more ways to guarantee a life of misery:

  1. be unreliable: do not faithfully do what you have promised yourself or others
  2. learn everything you possibly can from your own personal experience, minimizing what you can learn from the good and bad experience of others, living and dead
  3. go down and stay down when you get your first, second, and third severe reverse in the battle of life (i.e., if at first you do not succeed then do not try again)
  4. ignore evidence contrary to your opinion by remaining certain in your views


Don’t Let Negative Emotions Control You

Successful traders do not allow negative emotions to affect their decision-making. Trading is a stressful process, and you will experience many setbacks. Expect them, however, and don’t see losses as indications that you will never succeed. Instead, be prepared to identify your negative reactions and act on them in positive ways.

Successful traders turn fear into gain. They realize that losses are a part of their business, and they expect them. But while they know that some trades will cost them money, they let those same trades become a gain in knowledge. Remember that each time you have a loss, this gives you some guidelines on how to alter your strategy. Perhaps your stop loss needs to be set higher, perhaps you need to alter how you identify trends, or perhaps you need to use new indicators. (more…)

3 Thoughts On Freud And Trading

1) We internalize our sense of self from our significant relationship experiences.Relationships serve as a kind of psychological mirror, by which we can experience ourselves through others. If our relationships are positive and healthy, we’re more apt to internalize a positive sense of self. It’s only a small step from this insight to the realization that we have a relationship with *all* of our life activities. We experience ourselves through our trading: over time trading without an edge and without proper risk control virtually ensures that our trading will take a personal toll.

2) We defend ourselves against sources of anxiety. These defense mechanisms may keep us from becoming anxious, but they often are maladaptive and create problems in social and work situations. If we’re feeling inadequate or vulnerable, we might defend against these feelings by jumping into trades or by avoiding markets altogether. What we do to manage our feelings often is the opposite of what we need to do to properly manage our money and positions.

3) We tend to replay conflicts in past relationships in our current relationships. These unresolved problems reappear in different situations until we find resolution. Many trading problems occur when we act out our needs for recognition and self-worth in our trades. The trader who breaks rules when trading and takes undue risk often is needing the markets to provide desired emotional experiences, not just profits. To the degree that we act out our personal issues in markets, we can’t be fully focused on those markets.

A summary of Freud’s view would be the dictum that those who fail to learn from history are condemned to repeat it. It is our repetitive patterns across situations of uncertainty and gain/loss that can take us away from doing what we know to be best.

SIX Ways to Improve Your Self-Discipline Today

1. Acknowledge Your Weaknesses – Whether cookies are the downfall to your diet, or you can’t resist checking your social media accounts every two minutes, acknowledge your pitfalls. Too often people either try to pretend their weaknesses don’t exist or they try to minimize the negative impact their bad habits have on their lives. For example, many smokers think, “I could quit if I wanted to,” because they don’t want to admit they’re hooked.

2. Establish a Clear Plan – No one wakes up one day suddenly blessed with self-discipline. Instead, you need a strategy. Whether you want to increase good habits like exercising more often, or you want to eliminate bad habits like watching too much TV, develop a plan that outlines the action steps you’re going to take to reach your goals.

3. Remove the Temptations When Necessary – Although we’d all like to believe we have enough willpower to resist even the most alluring enticement, it only takes one moment of weakness to convince ourselves to cave to temptation. Making it difficult to access those temptations can be pivotal to increasing self-discipline. If your weakness is Facebook, turn off the internet while you’re working. If you can’t resist overspending when you go to the mall, leave the credit card at home and only take a small amount of cash.

4. Practice Tolerating Emotional Discomfort – It’s normal to want to avoid pain and discomfort, but trying to eliminate all discomfort will only reinforce to yourself that you can’t handle distress. We can usually stand a lot more discomfort than we think we can. Practice allowing yourself to experience uncomfortable emotions like boredom, frustration, sadness, or loneliness and increase your tolerance to the negative emotions that you may experience as you increase your self-discipline. (more…)

14 Emotions of Traders-Really Dangerous

  1. Anger- Revenge trading
  2. Fear- Inability to take an entry or hold a winner in a trend.
  3. Disgust- Can lead to loss of a traders confidence.
  4. Happiness- Surprisingly can lead to trading too big and taking on too many positions.
  5. Sadness- Can lead to having difficulty taking the next trade entry or cutting a loss.
  6. Surprise- Can many times lead to making decisions based on emotions and abandoning a trading plan.
  7. Neutral- Trading is a lot of work and only passion and energy can move you toward doing the required homework that leads to eventual success.
  8. Anxiety- Can lead to exhaustion due to excessive stress.
  9. Love- If you truly love trading the markets then only time separates you from success. If you love the wrong things or people it can be destructive.
  10. Depression- Leads to abandoning your trading.
  11. Contempt- Having contempt for the markets or other traders will result in bias and bad decision making.
  12. Pride- Leads to trading too big, not cutting losses fast enough, and wanting to be right and prove something more than being a rational trader.
  13. Shame- Makes it difficult to talk to others about your trading and look at your account capital due to your bad decisions.
  14. Envy- Leads to external focus instead of the internal focus needed to trade successfully.
  15. Trading is only successful long term when it is done with the mind,  emotions are only valuable if they create the energy in you to get you where you truly want to be. Emotions are positive if they protect our psychological boundaries, not so great if they just support an out of control ego. Emotions are great tools at times but terrible masters.
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