There’s a common fallacy out there about trading, that it’s an easy way to get rich fast. But data shows something very different. Prior to the pandemic, retail traders, or traders who bought and sold securities for their own accounts made up about 10 percent of the stock market’s total trading volume.
Assess Your Risk Strategy and Cap Your Maximum Losses
When I started my journey as an independent trader, failures rapidly followed my initial successes. My losses were significant and I started questioning my capacity to make a living out of trading. Slowly, I realized that I would need more than just expert opinions if I wanted to make money long-term as a trader. I would need data to know when to enter the market and, more importantly, when to exit.Don’t Be Fooled By the Mirage of Instant Wealth
Minimizing risks is a good start but certainly not sufficient to grow rich in trading. Too often, I have noticed that what differentiates successful traders from those who fail over time is the scientific mindset the former have in common. They are patient, disciplined, and systematic in their approach to trading. They know that trading is very risky, and they do not neglect the slightest warning of losses.On the other hand, outsiders and newcomers tend to see trading as an eldorado. Generally, they have two main motives for investing in the markets. They either want to improve their family returns or to generate wealth quickly. Both reasons are wrong because the illusion of instant wealth drives them.
4 Reasons Why You Won’t Get Rich Overnight
1. It’s Easy to Fall Victim to Scams
Far too many people place their trust in con artists who swindle their money after classic phone call tricks. In my opinion, the reason why so many people fall victim to scams is that their appetite for instant wealth makes them vulnerable. The people behind these scams leverage our greed and our faith in the gurus of the moment.2. Expert Predictions Often Offer Misinformation
Anytime you pick up a tip as a trader, you need to evaluate its validity. First, identify the flaws and cross-check and identify the causes of the miscalculation. If you are a discretionary trader, you could potentially test these tips through demo trading. In systematic trading, this is easier because you are able to test ideas and strategies before investing money in them.3. People Blindly Jump In on Trends like Cryptocurrency
The opportunities in the cryptocurrency market are similar to gambling if you don’t have enough education in trading or have the wrong approach. The high volatility and the stories of people who got rich with Bitcoin provide opportunities to speculate, but the downside is that the fast movements can drag one from riches to rags. With the boom in trading, many have suffered considerable losses since the end of 2021.4. Many Traders Underestimate the Risks and Lose big
Many traders just focus on acquiring the tools that will enable them to analyze markets better and make decisions faster. They often realize too late that what matters the most in trading is not the goals you have set or even the resources at your disposal, but that you have a sound risk control strategy from the onset. Trading is a marathon, not a sprint.Perseverance Is the Real Secret to Success
The real secret to success in trading is patience and perseverance. I’ve experienced many failures in my career as an independent trader, and each time I fell down, I refused to give up as my passion for trading motivated me to keep going. Slowly, I turned failures into successes, won the World Cup Trading Championship four times, and set a world record that remains unbeaten to date.If you choose a systematic approach to trading, you may not get rich quickly but you will become independent as you learn to build your own trading system and earn a living on the stock exchange. You will look forward to making the best out of the economic shakeouts of the future.