the real reason so many retail traders fail has nothing to do with systems. The concept of a system in trading is frankly a load of pigeon 5hit in that success has nothing to do with a system. There are enough functional strategies freely available on the net that can be used to make money. The problem at the end of the day is knowledge. Understanding when to use a strategy, how to use it, and most important of all is understanding the basis that underpins the strategy's success.
lets take a moment to think about a archetypical retail trader.
- -He\She has a job that has nothing to do with trading.
- -Studying at uni. 95% of which has nothing to do with trading.
- -Retired, trying to increase wealth.
Retail traders begin their journey handicapped in every way. They face a plethora of information which they have to decipher on their own. Imagine teaching yourself to read and write Chinese where the information you are faced with has a seemingly endless variation of definitions. This is the reality of the retail traders world today and it should surprise anyone why so many fail.
The underlying reason is education. Lets for example use moving averages. For every person that says they work there is another person saying they don't. For every person that says the 200 is best there is another that says the 60 is best. The dilemma facing retails traders is deciphering it all. Who do they listen to? who is right who is wrong?
The problem is accentuated by the fact that we humans are wired to avoid losing and to always win win win.
There is a shimmer of hope I would like to add. Even if you didn't know how to read\write Chinese you will eventually learn the skills over time. The journey however, is filled with an endless supply of failure and most of you will never reach your goal because you not mentally able to withstand the torture for the time it takes to become proficient. How long with it take? the lucky ones get it in a year, most others take years.
Unfortunately this is the road we must walk. We don't have the privilege of being mentored by senior traders at financial institutions and as a result, we have to walk the road alone making the map up as we go along.
The path to success is a mindset that embraces failure as though its your brother. The key to success is successfully aligning your methodology so that it agrees with the market movers enough to make you money. We don't make teddy bears here, a system of red light green light isn't going to make you money period. I guarantee you the big boys that issue $150 million trades are not basing their decisions off that type of methodology. I know this because i know a several traders at a well known institute that base their trading off fundamentals and support\resistance only.
the best thing a retail trader can do is to educate him\herself about the tools that are used by market movers. furthermore, you need to understand what's underpinning market direction. Forget the red light green light BS out there. keep it simple and learn to think like a big gun.
