Why do 90% of traders fail? Or put it as, why only 10% of them win regularly?
Is it because the majority lack the right skills?
However, failure is not far different than success in some contexts. Even failures are a conglomerate of various accumulated reasons over time.
Imagine a puzzle that you couldn’t solve. Laterwards, you try to gather all the pieces, putting them back in place. Doing so, might not help you accomplish what’s lost. But, it would definitely be an eye-opener as you will know where you went wrong.
So, the key point is not in undergoing the failure but is in learning the lessons that come along entailed with the falls.
Now that you have just started with a fresh 2020. This is the perfect time to learn from your 2019 trading mistakes. And, you can also stay double ensured to avoid repeating it at a later point.
Here we have the TOP 3 Trading Lessons Learnt in 2019 for you:
- Do not Try to Master Everything
- Avoiding Overnight Naked Positions
- Less is More
Let’s try to know more about each lesson, one by one.
1. Do not Try to Master Everything
There is always a saying, “Mastery of everything is mastery of nothing.”
Most successful companies in the world master one thing or process. They work on it. Learn it in depth. Then, they repeat it. And, indeed, they are the ones who win the bread at the end of the day. The same logic applies to traders too.
If you have a trading strategy, then focus on becoming the master of it. On using your system regularly over time, you will get to know the areas that need immediate improvement. You do it and get better over time.
Try always not to play with multiple systems or strategies. Instead, choose one system. Break it into small parts and master each one of them individually.
2. Avoiding Overnight Naked Position
Have you heard about Nick Leeson? This rogue trader was responsible for bringing down Barings Bank, the UK’s oldest merchant bank with his speculative moves.
As things started going against him, his position was by then incurring losses of more than £827 million (US$1.4 billion), double the bank’s trading capital.
The same scenario happened in the Indian Stock Market at the time of 2019 Elections when the market had crossed above its all-time high. For option sellers, that was a trap as they expected the market to go down, keeping in mind the weak global conditions. Anyhow, mere bad luck took away a massive capital in one go.
So, make sure to avoid overnight naked positions and try to hedge them as well.
3. Less is More
Yes. Less is better. Even author Greg McKeown recommends this simple yet powerful concept through his book – “Essentialism”. And, another vital 2019 lesson would be to embrace a minimalistic approach.
Doing less applies mainly in two contexts. Firstly, it could be about the number of trades/day. Traders try to re-enter, expecting more profits, and end up in a net loss. Secondly, another perspective could on choosing stocks that move less or show less daily volatility. You select a stock that can move upwards drastically. But, you forget to remember that it can even move downwards at the same speed!
So, now it’s your turn to share what mistakes you made in 2019 and wish not to repeat it. Share your thoughts in the comment section below.
Thank you for reading.