There probably is not a single profitable trader that will claim that trading is easy. Instead, he or she will most probably say that trading is a tough and competitive industry that requires constant work if you want to stay in the game. So why is trading so hard?
Trading is so hard because there are so many aspects to trading that you need to know. Some of those are the quantity of misleading information out there, your own biases, and the necessity of striking a balance between risk and return.
So, let us have a closer look at the different aspects of trading that makes it so hard, and some tips that you can employ to make trading easier!
The Reasons Why Trading Is So Hard
Trading consists of many small elements, and all have their quirks that you need to know to be able to trade profitably in the long run. To someone new to trading, knowing what to focus on can be hard!
So let us have a look at some of the reasons why trading is so hard!
The Internet is full of trading advice and gurus preaching how indicators should be used and what makes money.The truth is that most of this advice is outright garbage and that knowing what is worthwhile indeed is not an easy task!
In order to not fall victim for false trading advice, it is important that you learn to test everything in a backtesting software before going live! That way you can uncover much of the false trading advice before it is too late!
Here we have gathered some of the best podcasts on trading. We especially recommend the first one on the list! It is filled with great tips and information that is hard to find elsewhere.
You Need to Be Un-Biased
Nearly everyone who enters the world of trading is biased. It could be that you anticipate a certain rate of return, or are convinced that the market behaves in a certain way.
Regardless of what expectations you have with trading, they will most likely be a hindrance rather than a motivator. This is because most traders tend to try to impose their views on the market, which will never end well. Regardless of your view of the market and its behavior, the market will never change.
In fact, most of the information you have read so far is most likely wrong, and will only lead to you holding biases about how things should work! The trading field is littered with false and outdated information, and the only way to be 100% sure is to test for yourself to see!
You Need To Have a Trading Strategy
Having a trading strategy that is tested for robustness is probably the most important aspect there is in trading. Without it, you will fail, even if you learn to master all the other aspects of trading to perfection.
A trading strategy simply is a set of rules that dictate when you should enter and exit a trade, and how much you should buy or sell short. The trading strategy should be clearly defined so that you never hesitate if you need to act quickly. Preferably, it should be written down in coding language so that you could backtest the strategy to see whether it has worked historically or not!
You Need To Understand Risk Management and Position Sizing
Even with the best trading strategy, you could completely wipe out your account if you do not care enough for risk management and position sizing.
Position Sizing is the practice of determining the size of your trade or bet, to maximize your returns while still keeping risk at an acceptable level. Learning to positions size correctly is vital. If you risk too much, you risk blowing up your account complete. On the contrary, if you risk too little, your returns will suffer.
Striking a balance between return and risk is one of the hardest tasks that traders face. Generally, you should not risk more than 2% in each trade. However, that rule only applies at the trade level, and you should have other risk management and position sizing rules that apply to the portfolio as a whole. An example of such a rule could be to stop or restrict all trading activity if the account drops more than x %.
You Need to Be Persistent
One of the hardest things with trading is that it really takes so much time to learn how to do it! Depending on whether you are learning to trade by yourself, or taking a course, it could take several years. And then it is important to remember that still, most traders will NEVER make it.
When you learn to trade, you must be ready to take many hits. Much of what you try will result in dead ends, and you need to just keep going! Eventually, you will find what you are looking for!
Wondering whether taking a trading course is a good idea? Then you should read our article on whether it is possible to learn to trade by yourself!
You Need To Evolve Constantly
This is something that many beginning traders have not understood yet. Many believe that finding a strategy means that you are set for the rest of your trading career! However, that is not true at all! The markets evolve and change all the time, making trading strategies outdated and causing them to stop working.
As a trader, you constantly need to come up with new trading strategies to replace those that fall out of sync with the market. There is nothing like an ever-lasting trading strategy!
Tips to Make Trading Easier
Now that we have gone through some of the things that makes trading so hard, it might be appropriate to touch on a few things that will make trading easier for you!
Make a Trading Plan
Making a trading plan will help you a lot in your trading! You should include things like how much you are allowed to risk, what you are going to trade, what your trading strategy is, or anything else that is related to your trading business. It is paramount that you follow this plan once you have laid it out! Acting on a whim in stressful situations will only cause you harm! In trading, consistency is king!
Keep a Trading Journal
The trading journal is one of those things that is often overlooked by new traders. How unexciting it might sound, trading journals are of great value to every trader, since they enable you to go back and see what you did well, and not that well. In the long run, you will start to see patterns and be able to discern what is holding you back!
Trading journals are invaluable when it comes to developing as a trader!
Here we have listed the top benefits of keeping a trading journal!
Don’t Give Up!
This might not necessarily make trading easier for you, but this point is worth stressing again and again. The only way you can become a profitable trader is through hard work. If someone say something else, they are simply wrong!
Risk Small in the Beginning
As a beginner, you WIll make mistakes, and probably a lot of them. It is essential to ensure that those mistakes do not consume all of your trading capital.
Start on a simulated account, and once you feel ready, you might go on to trading a smaller sum of money!
Summary
Even if many trading marketers want you to believe that trading is easy, that is not the case. Trading requires you to learn many different skills, of which many are difficult to master by themselves. Combine this with a scarcity of good information, and it is not that hard to understand why trading is so hard!
If you enjoyed this article you might also like our other articles answeringcommonquestions tradershave!
So why is trading so hard? Trading is so hard because there are so many aspects to trading that you need to know. Some of those are the quantity of misleading information out there, your own biases, and the necessity of striking a balance between risk and return.
Volatility - At times, the financial market can be extremely volatile, which makes it extremely hard to operate. Impatience - At times, traders are increasingly impatient when starting their careers. They want to start today and succeed tomorrow. Well, patience its one of the key to succeed as a trader.
The biggest reasons why traders fail usually are that they lack an edge and don't have a trading plan. However, there are several more reasons that could play either a big or small role in determining the failure rate of traders. Some of these include psychological aspects as well as poor money management.
Don't use leverage: This should be the most important golden rule for any investor who is entering fresh into the world of stock trading, never use borrowed money to invest in stocks.
Most new traders lose because they trade way too big. Their first loss or string of losses takes them out of the game. Overtrading is another common mistake that traders make that can lead to losses.
This single biggest reason why most traders fail to make money when trading the stock market is due to a lack of knowledge. We can also put poor education into this arena because while many seek to educate themselves, they look in all the wrong places and, therefore, end up gaining a poor education.
A day trader might make 100 to a few hundred trades in a day, depending on the strategy and how frequently attractive opportunities appear. With so many trades, it's important that day traders keep costs low — our online broker comparison tool can help narrow the options.
You're really probably going to need closer to 4,000 or $5,000 in order to make that $100 a day consistently. And ultimately it's going to be a couple of trades a week where you total $500 a week, so it's going to take a little bit more work.
Only 13% of day traders were consistently profitable over a six-month period, per a University of California study. According to a different survey, only 1% of day traders were able to consistently make money over a period of five years or more.
Many traders don't follow their plan due to their emotions. When their trade starts going in a negative trajectory, people will place their stop-loss lower in hope that their trade will bounce back up. Traders need to know that it takes time to estimate trades before initiating them.
One of the most common trading mistakes among new traders is, without doubt, overtrading. Some traders watch 20 charts, 10 different pairs, and make 100 trades per day. They believe in quantity instead of quality, while in reality, this should be the other way around.
A common mistake traders make is entering the trade without an effective plan. Trading without a plan leads to mistakes, especially if you don't know what you are getting into. Protection against losses means adjusting entry-exit and, most importantly, escaping price or stopping loss.
One of the most common requirements for trading the stock market as a day trader is the $25,000 rule. You need a minimum of $25,000 equity to day trade a margin account because the Financial Industry Regulatory Authority (FINRA) mandates it. The regulatory body calls it the 'Pattern Day Trading Rule'.
For common stock, the holding must exceed 60 days throughout the 120-day period, which begins 60 days before the ex-dividend date. Preferred stock must have a holding period of at least 90 days during the 180-day period that begins 90 days before the stock's ex-dividend date.
If you place your fourth day trade in the five-day window, your account will be marked for pattern day trading for ninety calendar days. This means you won't be able to place any day trades for ninety days unless you bring your account equity above $25,000.
One of the primary reasons why many traders ultimately quit the financial markets is the common mistake of blowing their trading account. There are three main reasons you blew your account. You risked far too much on certain trades. You did NOT adhere to strict money management principles.
One of the most destructive habits a trader can have is ignoring the rules of their own trading plan about when to enter and exit a trade. Breaking this bad habit means critically examining how you view the success or failure of any single trade.
It sounds easy, but the data shows the opposite is true: The vast majority of traders end up losing money over time. A report from the investment platform eToro suggests that 80% of its users lost money over a 12-month period.
It is estimated that more than 80% of traders fail and quit. One key to success is to identify strategies that win more money than they lose. Many traders fail because strategies fail to adapt to changing market conditions.
Intraday trading provides you with more leverage, which gives you decent returns in a day. If your question is how to earn 1000 Rs per day from the sharemarket, intraday trading might be the best option for you. Feeling a sense of contentment will take you a long way as an intraday trader.
Day Traders in America make an average salary of $116,895 per year or $56 per hour. The top 10 percent makes over $198,000 per year, while the bottom 10 percent under $68,000 per year.
Yes, you can become very rich from day trading if you are lucky and everything goes just right, but it is extremely difficult. Most people fail in day trading because the odds are already against them as retail traders.
As a result, day traders typically work more than an average of eight hours. If you work as an independent day trader, this is also common. Depending on your position, you may not have an opportunity to take much time off from work, except for the weekends and holidays when the markets are closed.
Traders make money through their speculations about the price fluctuations of financial instruments. They then make trades to back their speculations. The trading analysis methods are fundamental, technical, sentiment and flow based trading methods.
While there is no guarantee that you will make money or be able to predict your average rate of return over any period, there are strategies that you can master to help you lock in gains while minimizing losses. It takes discipline, capital, patience, training, and risk management to be a successful day trader.
Trading is often viewed as a high barrier-to-entry profession, but as long as you have both ambition and patience, you can trade for a living (even with little to no money). Trading can become a full-time career opportunity, a part-time opportunity, or just a way to generate supplemental income.
Jack Kellogg began trading stocks right out of high school in 2017. Five years into his craft, he has already been exposed to various types of market conditions, including the stock market crash of 2020, the raging bull rallies of 2021, and the bear market of 2022.
They have no edge in the market.They are undercapitalized.They risk too much on each trade.They don't have the discipline to follow their trading plan.
On Monday, Oct. 19, 1987, the Dow Jones Industrial Average plunged almost 22%. Black Monday, as the day is now known, marks the biggest single-day decline in stock market history.
Stay disloyal in trading. Never be psychologically involved in a trade and ignore any trading ideas, which push you to unsystematic behaviour. If the market accepts your idea as unviable, close the loss-making position and do not focus on the failure.
When asked what type of work was most difficult to master (out of 32 different trades), the two groups of respondents (the average age of which was 43 years old) were in agreement again — electrical work was the hardest to master, followed by carpentry, HVAC, and cabinets/countertops.
Short-sell trading: Here, traders simply believe that the market is bearish and act accordingly. You borrow shares from a broker and sell them in the open market. You wait until the price falls enough for you to buy the stocks back at a lower rate. The difference acquired by this process is the profit.
Leverage in trading allows the trader to open bigger positions with smaller deposits. However, the leverage can also act against you if the price moves against the trade. The use of excessive leverage can result in much worse outcomes than that of gambling.
The gains from trade are based on comparative advantage, not absolute advantage. Trade makes everyone better off because it allows people to specialize in those activities in which they have a comparative advantage. The principle of comparative advantage applies to countries as well as people.
Successful traders keep adjusting to market changes and try out new strategies to improve their game. It takes experience and practice to become a successful trader.
Therefore, with a $10,000 account and a 3% maximum risk per trade, you should leverage only up to 30 mini lots even though you may have the ability to trade more.
' it simply means that 80% of your portfolio's gains come from 20% of your investments. Here's how this rule plays out in the world of finance and the US stock market.
One popular method is the 2% Rule, which means you never put more than 2% of your account equity at risk (Table 1). For example, if you are trading a $50,000 account, and you choose a risk management stop loss of 2%, you could risk up to $1,000 on any given trade.
The numbers five, three and one stand for: Five currency pairs to learn and trade. Three strategies to become an expert on and use with your trades. One time to trade, the same time every day.
This sort of five percent rule is a yardstick to help investors with diversification and risk management. Using this strategy, no more than 1/20th of an investor's portfolio would be tied to any single security.
The 123-chart pattern is a three-wave formation, where every move reaches a pivot point. This is where the name of the pattern comes from, the 1-2-3 pivot points. 123 pattern works in both directions. In the first case, a bullish trend turns into a bearish one.
The strategy is very simple: count how many days, hours, or bars a run-up or a sell-off has transpired.Then on the third, fifth, or seventh bar, look for a bounce in the opposite direction. Too easy? Perhaps, but it's uncanny how often it happens.
To make money in stocks, you must protect the money you have. Live to invest another day by following this simple rule: Always sell a stock it if falls 7%-8% below what you paid for it.
A trade-through is an order that is carried out at a suboptimal price, even though a better price was available on the same exchange or another exchange. Regulations to protect against trade-throughs were first passed in the 1970s and were later improved upon in Rule 611 of Regulation NMS that passed in 2007.
Day Traders in America make an average salary of $116,895 per year or $56 per hour. The top 10 percent makes over $198,000 per year, while the bottom 10 percent under $68,000 per year.
One of the primary reasons why traders lose money is because they fail to manage their risk effectively. It's crucial to set stop-loss orders and appropriately size positions to control your losses when trading stocks. Without proper risk management, even a single bad trade can wipe out a good chunk of your profits.
When asked what type of work was most difficult to master (out of 32 different trades), the two groups of respondents (the average age of which was 43 years old) were in agreement again — electrical work was the hardest to master, followed by carpentry, HVAC, and cabinets/countertops.
In terms of money, that means not giving up very much profit potential. For example, a part-time trader may find that they can make $500 per day on average, trading during only the best two to three hours of the day.
The success rate for day traders is estimated to be around only 10%. So, if around 90% of day traders are losing money in general, how could anyone expect to make a living this way?
Many traders don't follow their plan due to their emotions. When their trade starts going in a negative trajectory, people will place their stop-loss lower in hope that their trade will bounce back up. Traders need to know that it takes time to estimate trades before initiating them.
Scientist Discovered Why Most Traders Lose Money – 24 Surprising Statistics. “95% of all traders fail” is the most commonly used trading related statistic around the internet. But no research paper exists that proves this number right. Research even suggests that the actual figure is much, much higher.
There can be many reasons why you are not profitable. It could be discipline issues, psychological factors hurting your trading, or simply having no edge in the markets. Without a trading plan, you will never know what is the cause. But when you have a trading plan you follow religiously, there will only be 2 outcomes.
Most retail traders lose money, but not for the reasons you might think. The markets aren't rigged; there's no secret chat where “all the good trades” get shared. The truth is, most traders lose money for one simple reason: They don't have a plan.
Dealing with the fear of missing out – or FOMO – is a highly valuable skill for traders. Not only can FOMO have a negative emotional impact, but it can also cloud judgment and overshadow logic, which is problematic when making trading decisions.
Welding is one of the occupations that are easy to learn in the skilled trades. You can learn how to weld within less than six months of practical exposure. Suppose you enjoy something that pays strong and has proper hours. Welding is a job you can drop your teeth into while also getting prospects for advancement.
Electricians. If you're looking for a skilled trade that's not physically taxing on your body, you might consider becoming an electrician. In this field, you won't be lifting heavy loads or working with big equipment. Instead, you'll be working with electricity all day.
According to the above data, the highest-paying trade job is an elevator mechanic (median salary $97,860 per year), followed by a power plant operator (median salary $94,790 per year).
Introduction: My name is Francesca Jacobs Ret, I am a innocent, super, beautiful, charming, lucky, gentle, clever person who loves writing and wants to share my knowledge and understanding with you.
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