WHY DO YOU LOSE?

In my lectures, I ask the audience members to tell me why they lose money trading forex. I am always fascinated that they know exactly why they lose. Let me repeat. They know exactly why they lose.

I suggest you stop reading right now and write up a list of reasons why you lose. Go on, stop reading and start listing!

Back to the lecture. The traders quickly jump up and list off the reasons why they lose while I write them down. Let me show you the list from the last lecture:
  • Overtrading
  • Greed
  • Not following system
  • No system
  • Too tight stops
  • Lack of understanding
  • Too emotional
  • Not paying attention
  • Lack of time
  • Going against pros
  • No goal
  • Lack of plan
  • Lack of confidence
  • No analysis of mistakes
  • Lack of capital
  • Compulsion to trade
  • Preconceived ideas
Sound familiar? I would imagine that you can find the reason why you don’t make money somewhere in that list. I know I can find the reasons why I have gone through losing streaks.

Typically, the audience is firing these reasons at me so fast I can’t keep up. It is always clear to me that they have thought about why they are losing and have a pretty clear idea. (Otherwise, why would they be sitting in this lecture?)

I think that this list can be grouped into three major categories: lack of self-discipline, lack of knowledge, and lack of capital. Some of the items fall into two categories.

I can’t say that where I place each of these reasons is the final word. Some of these reasons flow between different categories. I think that not having a plan is probably a combination of a lack of discipline and knowledge, but others might argue that it is simply a lack of either of these separately. Ultimately, how the reasons for losing are categorized is almost irrelevant because what we really want to do is focus on the three main categories and how to deal with them.

The three main categories are lack of discipline, knowledge, and capital. The latter two are probably the easiest to deal with and lack of discipline is usually the hardest. Why? Because it involves a change in your
character. Money and knowledge can always be acquired, but changing one’s character is usually extremely difficult.

Let’s talk first about the two lesser problems before going to the issue of self-discipline. I think you will soon see that self-discipline is the real key to success in trading because it permeates even the two lesser problems.
Source: WHY DO YOU LOSE?

Related Posts

at 4:46 AM
Labels: ,