Why most people fail at trading?

Do you know How the Amateur and Professional Trader go about Managing Risk and Who Gains or Loses at the End of the Day?

The Mindset of the Amateur
The untrained trader does not want to miss any opportunity and his focus is on only what he ‘thinks’ he can make. He’s the offensive all the time.
Naturally, he’ll consider trading anything. This is akin to a dog that chases after every car that goes by. It’s exhausting.

The Mindset and Strategy of a Professional Trader
The ‘Pro’ focusses on what he ‘knows’ he can lose, and so he focuses on playing the best defence of any of his peers.
He sees things in terms of volatility and percentage moves so he can calibrate his risk management with his emotional constitution.
When volatility is high, he buys fewer shares or contract. Conversely, when volatility is low, he can take a little more risk. There is an inverse relationship between position sizes and volatility.

The Difference: The “Amateur” is attracted and induced to take action by large price moves, whereas the “Pro” shies away from it. There will always be more opportunity tomorrow he figures.

Characteristics of "The Amateur"
Loves Big Unit Moves & Avoids small increments
Loves Punditry and he has several that are “must reads” because of their Klout Score
Sees Dollar sign and buys the number of shares needed to make his fantasy come true
Will focus on trading ‘1’ security all year (the beginning of the love affair). Is monogamous and rigid
His winners are due him because of his brilliance. He accepts and takes all credit. Loses happen because “the market sucks”
Loves the Action – I’m not trading if I’m not clicking my mouse
Leverages inputs from Pundits, TV Commentators, and Twitter
Closes all positions out by End of Day because account is too small and underfunded
Focuses endlessly on trading techniques and set-ups, especially when he gets into a trading rut. Then it’s time for a new strategy.

Characteristics of "The Pro"
Loves Low Volatility Moves, Avoids High Volatility
Loves the ‘price’ as it tells you the truth and it’s the only thing you can trust on Dalal Street
Modulates the position sizes by Volatility. The higher the Volatility, the less the security and vice versa. Position Sizing & Volatility are inversely related
Traders with the strongest trends. Is intellectually promiscuous and flexible in bias day to day
Attributes everything to his mechanised or discretionary methodology. When you are a professional trader losses are part of the business
Loves his Process – sitting on my hands is often the best trade
Hedges against Negative. Black Swans, Fat Fingers and Trading Errors
Diversified to Mitigate Potential catastrophic losses or firm failures due to nefarious activity
Focuses on increasing his sense of self-awareness, emotional intelligence, and specifically when he wants out of his trading.

80% of Successful Trading and Investing is attributed to one’s psychological and emotional constitution, yet most Amateur focus 100% of their time on finding the best security to trade as opposed to focussing on the largest factor that determines their success and failure at trading: themselves.

As far as trading the markets is concerned, if you don’t know who you are EMOTIONALLY, it doesn’t matter what you know INTELLECTUALLY.


Very true

1 Like

I want to add;

Amateur stops trading sooner than later coz market “sucked” him dry and he cud not last longer to reach “pro” phase.


Noob here.

Isn’t one of the major reasons because the pros have a team of experts & risk managers & complete overview of the order flow etc. at their disposal?

Read this on another forum & hence genuinely asking.

Every Amature will become pro after 10 years of successfull amature or things he do… Nobody will start as pro… so we all are amature at one point of time or now… but we need to decide with discussion where we are… main difference between both of them is BP(Blood Pressure). More temper immediate angry and loosing patience soon. I did all these mistakes 13 years and from last 2 years became pro as per above para… Good One for further discussions…



Wow…13 years… Holding up in terms of capital, emotional balance for 13 long years is not easy.

Why dont u narrate your journey here. Basically how u transformed youself mentally over the years. Why did u stick around so long. Im sure it wud be very interesting and insightful for others