Overwhelming majority of new traders fail and loose their money. What are the successful traders doing differently? Are they using a better trading system, is their money management more sophisticated or is it their psychology that makes the difference?

Experiment

Imagine picking out from the crowd two men that are from the same social background, graduated from the same school and are equally intelligent. You will ask them to trade. Both will get the same start capital and will follow the same money management and trading systems with exactly the same rules.

You would expect they achieve very similar results, right? But you may be surprised. After a month or two one of them may have lost all his capital while the other one may have returned a nice profit.

The culprit

What can cause such a deadly difference? The trader’s own psychology is the culprit. Even though he should follow the same trading system, strategy and rules his emotions, his own fear, greed, denial, pride, panic, down tour or euphoria can alter his planned decisions.

Most traders think the right trading system is the winning formula for success. The truth is chocking. The trading system is only around 10% of the success. The money management makes another 30% and the most important, with the whole 60%, is the psychology of the trader.

Emotions

You need to learn to control your emotions and irrational behavior. The fear of losing is a very strong emotion. It is much stronger then the positive feelings associated with the trading gains. Most traders make mistakes, by abandoning their trading system and reacting emotionally to their fear or greed. Sometimes the market awards them for such a behavior and consequently make them incline to trust their guts and feelings instead of their trading system.

To trade successfully you must follow religiously the trading system and rules you have developed, follow the entry and exit points your system is suggesting and never allow your emotions to change that. The self-control and discipline are the keys for success. If you let your fear or greed to control your decisions, you cannot achieve any significant success in the long run and sooner or later you will loose all your money.

Can you learn to control your emotions? Can you learn to become a disciplined trader? The answer is YES. If you have the burning desire and commitment to succeed, you have the right predispositions for it.

Recommended reading

There is one book that can really make the difference in your learning process. It is The Way to Trade by John Piper.

Dr Alexander Elder, author of the famous book Trading for a Living writes about the book:

“John Piper takes you beyond theory. He provides an essential lesson that most never get."

Find the book in your local library or book store or purchase it online in the digital form. When purchasing online, you will be able to read the book within minutes.