5 Simple, Concrete Reasons Traders Fail
When traders have a hard time reaching their goals and establishing a pattern of reliable profitability, they often turn to trading coaches, books, and articles for advice. Often, the advice focuses on trading psychology. Time and again you will see the advice that you just need to “visualize yourself succeeding” or so on in order to start manifesting the success you dream about. While focusing on trading psychology is a good idea for a lot of traders, the sheer volume of this advice can actually distract traders away from the simple, concrete explanations for their struggles. While it is true you could have the best system on the planet and all the resources you need and still fail with the wrong mindset, it is also conversely true that you could have the best mindset in the world and fail if you do not have the tangible resources you need.
Here are 5 simple, concrete reasons that traders commonly fail.
1. Not having a working trading method.
Focusing on trading psychology may be the hardest thing in the world for some traders, who may shy away from anything that requires honest self-inquiry. But other traders may not struggle with honest self-inquiry at all. They may struggle with the technical side of trading, and may be more than happy to distract themselves with article after article on trading psychology while ignoring the mechanics of success.
You simply cannot hope to succeed at binary options trading without a trading method, though, no matter how much self-awareness you have. Trading throws you into an environment where chaos presides, and you are there looking for that razor-thin edge that is going to help you identify patterns and succeed again and again. That edge relies upon order. The only way for you to create that order is to create or find a trading method which provides you with a reliable set of rules for entering and exiting binary options trades. Without that edge, you cannot hope to succeed, at least not for long.
2. Having no budget for trading.
This is another painful but hard truth to face, and that is that you will have a really rough go at trading if you are tackling it on a shoestring. Many traders are not prepared for the fact that the “real” entry barriers for trading binary options are a bit higher than they first appear. While you can start trading with just $100, you will be making very little money for a very long time.
Click here for an opportunity to trade on a shoestring.
This is not the end of the world if you are a patient trader. You do not have to pay commissions when you trade binary options, which makes it so much more affordable than stock trading. You do have to accept though that on a responsible money management plan, you will not make enough to live on your first month, or even your first year trading. In fact, you probably will be trading for years before you grow your account enough either through trading or by depositing money from your day job before you are profiting like you imagine you will someday.
This basically means you will not be “profitable” in a financially meaningful sense for a long time. If you are profitable in terms of percentages, however, and your account is growing, no matter how slowly, you would be foolish to allow yourself to get discouraged and define this as “failure.” You are not failing, even though someone else might look at your slow growth and think that you are. You are succeeding slowly. One day, you will be succeeding much more quickly. But that day will only come if you do not give up. A lot of traders do when they realize how long it will take to get to where they want to be. And giving up does cause failure.
3. Lacking the time for trading.
While the phrase “making time” is a standard part of our vocabulary, let’s be honest here … it does not make a whole lot of sense. Time is something each of us receives in a finite amount. It is not something you can create, however much you may want to. And if you are working two jobs and taking care of a family and balancing other important projects, odds are you are not going to be able to “make” a whole lot of time for trading.
This is not meant to discourage anyone. You can still find time to learn how to trade, but as with the low financial budget, you will have to accept that a low time budget will result in very slow progress. Even if you dedicate just half an hour each day to trading, you will eventually make real progress. But you will be moving along much more slowly than a trader who can dedicate two or three hours or more each day.
4. Not being prepared for how long this journey really is.
It can be a nasty shock to find out how long it will really take you to succeed at binary options trading. Most novices jump into trading with the expectation that they are embarking on a great adventure, but they forget that in real life, adventures typically feel more like misadventures. They are fraught with danger, loss, and pain. You do not emerge from a real life adventure unscathed or unchanged. So yes, trading binary options is an adventure, but probably not the one you are picturing. It may be a rags to riches story, but you cannot expect your fairy godmother to come along and tap you on the head with her magic wand, and voila, you are rich. You will walk much of the road alone, and even when someone is able to help you, they cannot do the work for you. There are dragons on this quest, and they will burn you before you reach the treasure at the other end.
5. Being misguided.
Another reason traders sometimes fail is because they have no good guides on their journeys. This goes back to what I was saying earlier. Many coaches and traders will urge fellow traders who are struggling to focus on their psychology, telling them that with a better attitude, they will win. These guides often are not a very good influence, because they completely overlook the issues addressed in this article: a low budget in terms of time and capital, no method, and a lack of preparation and perspective.
Why are these issues so often overlooked? Quite simply, it is because these challenges are not faced by everyone, and many successful traders built their success on better platforms. Maybe your trading coach started out with $10,000 in his trading account, not $100. Maybe your fellow trader only works 40 hours a week, not 60, and is not balancing other important commitments. Those two reasons for failure are overlooked particularly often by those who have not faced those challenges.
Conversely, some traders are misguided into believing failure is inevitable if they start out at a disadvantage. Coaches and other traders who have not faced disadvantage will generally do one of two things. They will either completely overlook the problems you are facing (behaving as if they do not exist), or they will tell you that you cannot become a binary options trader if you are lacking a big budget or plenty of time.
These coaches and traders absolutely lack the perspective needed to help traders who do face these struggles. If you are starting out at a disadvantage, you can either give up or continue on. Those are your only choices. My recommendation is that if you really care about binary options trading, you continue on. But if you do, you will need to make the following adjustments to your perspective:
- Know that you cannot “make” infinite time. You can reschedule and reprioritize to try and make more space for trading in your schedule, but odds are you will progress very slowly if you are overcommitted. This does not mean you cannot succeed.
- Know that you will be making money very slowly in the beginning with a shoestring budget. This does not mean you cannot succeed. It does mean you will need great patience and resolve to continue on.
- You do need a trading method, and you must take the time to test it before going live, even if that means waiting a long time to trade with real money.
- Becoming a profitable trader takes many traders three to five years and sometimes much longer. A trader who is starting out with $100 in an account and two jobs will take many years longer to succeed than a stay-at-home-mom with $20,000 in her account and a spouse who makes six figures.
- Not every trader or coach you meet can relate to where you are coming from! Ignore people who tell you that you cannot make it because you did not start with their advantages. But also ignore people who act like your obstacles are nonexistent. Members of higher social classes simply cannot always relate to members of the working class.
If you can revise your expectations and start surrounding yourself with traders who can relate to your situation, you will gradually make progress toward your goals. Be courageous and be ready for a long haul. One day when you are successful and profitable, you will be able to lend a hand (and some real perspective) to other traders just starting out who may not have time and money on their side.