90% traders fail because they dont do what other 10% do

Hi there, great question!

I’m going to let you in on a (not so) secret: it’s much more than 90%. Most of the traders lose money, and even 90% is a conservative estimate.

1- Persistence, patience and grit

The number one reason why thousands of traders don’t make is very simple: they give up. As Rolf indicated, 80% of traders don’t even make it through the 2-year mark. Now, if you’re serious about trading, you treat trading like a business. Have a trading plan, put in the hours, be patient if things don’t work out immediately as you expect. So many professions take years of study, so why should trading be different? Don’t give up, instead have the patience, persistence and grit to carry on. Becoming a day trader is like running a marathon, not a sprint.

2- Trading feels unnatural

The reason why so many people belong to group one is because trading goes against our natural instincts and habits. If we see a dollar bill lying on the street, our natural instinct is to grab it so it doesn’t get away. If we lose our car keys, we don’t worry too much because we assume it will turn up again. This has worked for us for thousands of years because it has proved beneficial for us in life.

Trading is different though.

As a trader, we need to do the exact opposite. We need to go against our deeply engrained instincts and habits if we want to be profitable. Be aware of the cognitive biases that will influence your trading. It’s become the biggest trading cliché, but cut your losses short and let your winners run. Delayed gratification over instant gratification.

3-Profits trump excitement

Talk to any beginning trader and they will be able to tell you hours about how exciting it is once you’re in a trade. The thrill of being a part of the market is what they live for! The problem with this is that for many traders, the desire to be in the market is stronger than the desire to win. So after a while, they blow their account and just continue doing the same thing.

However, talk to any seasoned trader and they will tell you that trading is a process that has become somewhat boring. As it should be. They learned that they would rather be right than be in the market all the time, and have taken their emotions (mostly) out of the equation.

That doesn’t mean that they can’t be excited about a trade that turned out profitable though! It’s just that they have the self-knowledge to realise that the best way to be consistently profitable is if they execute their trading plan to the letter. The process becomes more important than the outcome. The results of that will eventually show.

4-Old habits die hard

If I could get a dollar for every trader that said to me: “oh, I know I should’ve let the trade alone” or “oh, I know I should be more patient to get into a trade” and then do EXACTLY THAT SAME THING AGAIN, I’d not have to trade anymore ;-) If this is you: unless you structurally change your habits and measure your results, you’re just blindly taking some random bets. Pick up some great books on trading psychology and start studying why these things happen and find actionable ways to fix them. Only then, you’ll grow as a trader.

5-Do not trade without a Stop Loss:

This one rule is the difference between the winning or losing traders. A winning trader gets out of a wrong trade with small loss. A loser lets the losses run.

When in profit, let the profit run.

Do not limit your profit by having targets. Control it with trailing stop losses. Let the market reward you for your patience.

6-Do not trade Alone

In the answer by John Roberson, where he found 20% profit making traders, the stated fact is that these people were trading in a competitive environment. Such trading improves your results. Even one fellow trader is enough with whom you can discuss your good and bad trades.

This interaction helps.

You may get new insights into your own trade which will help in reducing the losses or improving the profits.

7-Do not trade every day

Trade only when the trade setup presents itself. Trading for the sake of trading will not yield profits.

Limit the number of trades. Trade within your comfort zones.

8-Money Management is the Key

The loss happens due to trade going wrong. Some trades will certainly go wrong. What is required is the management of this loss amount.

Cut your losses in a wrong trade.

Let your profits run in a right trade.

Take small losses. Try to take big profits.

I have said— try to take big profits. One can only try.

Finally you will get what the market gives you. Do not take 1% profit when the market is willing to give you 6% or more. One good trade should be enough to make up for 2–3 bad trades.