I’m sure that most of you will already be aware of the number of people out there who are willing to take your money from you and give you little to nothing in return. This is no different in the world of trading. But for all the fakery out there, the number 1 trading CON that stands head and shoulders above the rest – the Commitment Of Newbies.
Reasons to Trade
Newbies tend to come in looking for a system or method to trade rather than to learn and hone their skills. With such an easy parallel drawn between the outcome of single events being winners and losers, newbies frequently get sucked into the “well this doesn’t work” line of thinking when things aren’t going so well.
The simple fact that they’re usually trading either to make money or to conquer the markets, motivates them to discard whatever system they’re currently looking at and go on the hunt for another. Their drive and short-term results-based conclusions demand them to do so in order to find success – to find the key to unlock untold riches that the markets promise.
The trouble is, often people don’t understand the root causes of failure and because of this, their commitment isn’t always steadfast.
Look in the Mirror
What a newbie tends to do when they try a system and lose money, is blame the methods and systems they’ve utilized instead of asking questions about their own level of application. In fact, there’s definitely a type of trader who actively seeks trading solutions in order to abrogate their own responsibilities – of course this is unlikely to be a conscious ploy, but it’s certainly not uncommon. Over time and having spent lots of money, they can become bitter over having had their money taken from them by unscrupulous vendors and this only serves to further mask the real issues they face.
A World Full of Hobbyist Traders
The way some people go about learning to trade could be best described as hobbyist in nature. Frequently they achieve a high level of knowledge, understanding and expertise in the trading world. But all too often, you’ll also find a lack of professional business-like application that’s needed to be successful in the long run.
How a newbie starts out in their trading is indicative of whether they have a chance of success in this business. A newbie who is organized, motivated and committed is clearly going to have a much better chance of making it than someone who is not. Someone who has a desire to be a success, but fails to get to grips with measurable performance is always likely to struggle.
The hobbyist newbie traders have other traits that make them stand out too. They want to learn and tend to use the time they have for trading to investigate new methods, strategies, indicators and innovative software platforms. They spend less time on what they themselves are doing and more on what everyone else is doing. They give over some of the time they have available to trading, rather than making time for trading. When they face set-backs, they take some time away from the markets instead of redoubling their efforts. They frequently trade based on subjective opinions rather than facts. They fail to define and work to a structure – i.e. they haven’t got a trade plan.
The language a newbie trader uses in their self-talk is usually non-committal too. When they want to do something, they “try” or “have a go” rather than “do” or “assess”. They figure that the market “should” do something but when it looks like it might not, they “hope” or “wish” that the market will turn around and not hand them a loss. A professional however, is more likely to readily accept the loss and use the valuable information the market is giving them relative to their original expectations.
The type of chatter that goes on inside a trader’s head can have a huge influence on whether they are successful or not. In fact, the same can be said about success and failure in any walk of life. Using non-committal language breeds non-committal actions.
Number 1 Trading CON
The biggest trading CON out there is the commitment of newbies. However enthusiastic an individual is, if they don’t have the commitment needed to act in a professional way, they are likely doomed to failure. But it’s about being committed to the right things. So ask yourself whether you avoid spending time on the most important aspect of all – your personal trading. If you do, there’s a danger that you’ll become a hobbyist trader.
For more updates from Mark and the team at NetPicks, be sure to visit their trading tips blog at NetPicks.com.