My main beliefs are:
1. Lack of capitalization
2. Over trading
3. Improper mindset
Just about every trader pays their dues to the market, without enough money, even a small draw down will paralyze you. A lot of newbie traders go in to the markets and trade time after time thinking they'll finally hit the right trade and end up blowing out their account. And lastly, you need to be able to handle the emotional aspects of trading. To be honest, most people out there are just not simply cut out to be full time traders. It takes a lot of work and dedication. It's a stressful FULL TIME job in itself. Brett Steenbarger's blog has a lot about newbie traders and their chances of success; it would be my top resource to check that stuff out; he can explain it a lot better than me.
He is one of my favourite trading resources, he's often quoted in the psychology section of T2W. Here's a link to his articles sections; worth finding time to read one a day IMHO, or perhaps one a week...
Changing Your Self Talk By Talking to Yourself
Brett N. Steenbarger, Ph.D.
www.brettsteenbarger.com
From the time we become self aware, we conduct an internal dialogue. We question ourselves, berate ourselves, congratulate ourselves, and make plans for ourselves. As I emphasized in my book, our self talk represents the "I" speaking to the "me". Just as we have relationships with others, our self talk is a manifestation of our relationship to ourselves.
I often ask traders to conduct their self-talk out loud. Sometimes we even record it. The playbacks are eye-opening. That's when we hear what we sound like when we talk to ourselves. Is the talk friendly and supportive? Is it angry and perfectionistic? Is it abusive? Is it constructive? When we hear our internal dialogue, we lay bare our self esteem: how we truly feel about ourselves and how we actually treat ourselves in this relationship between "I" and "me".
A cornerstone of cognitive approaches to change is that, to change the way we feel and act, we need to change how we process information. Much of our self talk occurs automatically, without our even being aware that it is occurring. When we keep a cognitive journal, we are making the internal dialogue explicit: writing it down so that we can be aware of it and gain some distance from it. Change begins, I find, when people recognize their self talk in real time and come to the realization: "This isn't how I want to talk to myself!"
This is especially relevant to trading. How we talk to ourselves about a trade will affect how we manage that trade. When we "lose discipline" and fail to adhere to a trade plan, it's often because the information processing we engaged in to develop the trade idea has been hijacked by a very different kind of self talk during the trade.
Here's a very simple method to alter our patterns of self talk:
Recall our visit to the expert trader Marc Greenspoon. Marc keeps with him a pocket recorder for dictation. He talks to himself through the recorder, reviewing his performance. In many of the tapes, Marc sounds like a coach talking to a player. He is both critical and motivating. His tone is no-nonsense, and he hones in on what he needs to do to improve his trading. Most important of all, Marc uses the taping to achieve a certain level of emotion and motivation. Like a half-time talk from a coach, Marc's talks to himself help him sustain the alert information processing that he needs for his kind of trading.
I believe Marc's technique--talking to himself as a way of rehearsing desirable self talk--has a great deal of promise, not just at the end of a trading day, but at the start and the middle as well. The key rule when doing the taping is to not stop the tape until you have truly hit an emotional level that represents the kind of relationship you want to have with yourself.
A major shortcoming of written journals is that they can be emotionally sterile. They don't shift us into different ways of processing information and relating to ourselves. The best way to change our self talk might just be to practice talking with ourselves. We're always going to have a relationship with ourselves. The only question is whether or not that relationship is within our conscious control. Taking the time to consciously talk to ourselves is a great way of making our self talk conscious.
http://www.brettsteenbarger.com/articles.htm
