Why Do Most Day Traders Fail?

December 13, 2009 · Posted in Currency Trading 

The reality is, day trading is for the minority – not the majority. Recent statistics pooled together from the largest street brokers (non-professional institutions) suggest that just under 97% of all beginner traders fail. And so the odds are not in your favor to begin with. Nevertheless, you may also be aware that day trading can indeed be very remunerative – providing you develop the right characteristics you can become very profitable very rapidly.

So what precisely separates the successful three percent from the rest of the crowd? In one word – experience.

Learning the intricacies of day trading can be an extremely rewarding endeavour. Speaking from personal experience, building up the knowledge needed to be able to navigate the money markets has been the most rewarding challenges I have ever set upon. No doubt, if you truly knew how much information you were required to digest, you would probably turn away; but let me reiterate, with the right mindset, day trading can become an extremely profitable and rewarding vocation.

In order to assist you on your learning curve many guides, instructional videos and personal tutors ready to help you digest this new and fascinating world of the transnational money markets. One particular book that both I and lots of other day traders have found valuable is a book names “Tools and Tactics for the Master DayTrader,” written by Oliver Velez. Depending on the level of risk of your trading strategy, you may wish to trade either intraday, swing or positionally – this guide goes through all of these styles of trading giving specific charting and numerical cases.

When beginning intraday trading, you will come across two styles of trading – fundamental and technical. As a day trader, technical analysis should be your best friend. Technical analysis entails looking at historic price data to derive future price movements. The worlds most prosperous day traders owe their success down to truly understanding technical analysis to the letter – if you want to become successful this will be a topic you will have to to devote much time to mastering. The above mentioned book will help you learn this.

Equally as pivotal as technical analysis is cash management. Obviously a trader will enter the financial markets in order to make a good profit, so a good payroll management scheme processed for intraday trading is clearly necessary. At this point it is wise to reference stop losses, and what a huge part of your intraday trading arsenal they should become. To illustrate if you only risk 4% of money you’ve put aside to trade on each position you take, and you only make a winning trade half of the time, after approximately only 4 positionsyou’ll be in profit.

If at all possible, I would encourage all budding day traders to partner up with other traders. Finding a mentor will both enhance your understanding of money markets, and also quicken your learning process greatly. There are many trading exhibitions around the world – take the chance, attend them and meet like minded traders. Maybe one day you’ll be the one mentoring other newbie traders. All in all, day trading is a skill which will require lots of time and patience to dominate. When you do, the world will be your oyster as you daily navigate the daily ups and downs of the money markets.

The reality is, day trading is for the minority – not the majority. Recent statistics pooled together from the largest street brokers (non-professional institutions) suggest that just under 97% of all beginner traders fail. And so the odds are not in your favor to begin with. Nevertheless, you may also be aware that day trading can indeed be very remunerative – providing you develop the right characteristics you can become very profitable very rapidly.

So what precisely separates the successful three percent from the rest of the crowd? In one word – experience.

Learning the intricacies of day trading can be an extremely rewarding endeavour. Speaking from personal experience, building up the knowledge needed to be able to navigate the money markets has been the most rewarding challenges I have ever set upon. No doubt, if you truly knew how much information you were required to digest, you would probably turn away; but let me reiterate, with the right mindset, day trading can become an extremely profitable and rewarding vocation.

In order to assist you on your learning curve many guides, instructional videos and personal tutors ready to help you digest this new and fascinating world of the transnational money markets. One particular book that both I and lots of other day traders have found valuable is a book names “Tools and Tactics for the Master DayTrader,” written by Oliver Velez. Depending on the level of risk of your trading strategy, you may wish to trade either intraday, swing or positionally – this guide goes through all of these styles of trading giving specific charting and numerical cases. Reading up on day trading can be enjoyable – just kick back back with a cup of hot chocolate, wearing your favorite all black converse sneakers and read away.

When beginning intraday trading, you will come across two styles of trading – fundamental and technical. As a day trader, technical analysis should be your best friend. Technical analysis entails looking at historic price data to derive future price movements. The worlds most prosperous day traders owe their success down to truly understanding technical analysis to the letter – if you want to become successful this will be a topic you will have to to devote much time to mastering. The above mentioned book will help you learn this.

Equally as pivotal as technical analysis is cash management. Obviously a trader will enter the financial markets in order to make a good profit, so a good payroll management scheme processed for intraday trading is clearly necessary. At this point it is wise to reference stop losses, and what a huge part of your intraday trading arsenal they should become. To illustrate if you only risk 4% of money you’ve put aside to trade on each position you take, and you only make a winning trade half of the time, after approximately only 4 positions you’ll be in profit.

If at all possible, I would encourage all budding day traders to partner up with other traders. Finding a mentor will both enhance your understanding of money markets, and also quicken your learning process greatly. There are many trading exhibitions around the world – take the chance, attend them and meet like minded traders. Maybe one day you’ll be the one mentoring other newbie traders.

All in all, day trading is a skill which will require lots of time and patience to dominate. When you do, the world will be your oyster as you daily navigate the daily ups and downs of the money markets.

Jimmy is a professional day trader. He also teaches and helps others improve their trading strategy. He also runs a website dedicated to his all black converse sneakers – his passion outside of trading.

You can checkout his website at http://www.allblackconverse.com/Article Source:http://www.articlesbase.com/day-trading-articles/why-do-most-day-traders-fail-1575218.html

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