The Possibilities of Learning to Trade

Becoming aware of that which you don’t know, is undoubtedly one of the single most important qualities of any trading education. Not only does this help one to steer clear of danger, but it also makes us aware of our weak points. You can be rest assured, when traders make mistakes, consequences are inevitable. So’ let’s take a look at some of the common mistakes made by traders and also at the price they have to pay for making those mistakes.

The most common, and in many cases also the most costly mistake made, is when a trader expects results which are simply unrealistic. Remember, there are two basic emotions which come into play when trading. While some traders experience fear, others become greedy and it’s this greed which then leads to into expecting too much.

A recent query I received serves as an excellent example with regards to unrealistic expectations. In fact, it goes beyond greed in my opinion. A trader with a $10,000 account asked me if it’s possible for them to make about $5,000 per month. Perhaps they should first have taken a look at what trading profits the professional are making. In general, the professionals are more than happy if they can consistently get yearly returns of about 240%. Making $5,000 per month off a $10,000 account would essentially mean a yearly return of 8,549%. As you can see, there’s a vast difference.

While a proper trading education can’t be achieved overnight, you can certainly protect yourself from failure as long as your expectations are within reason. By setting yourself realist goals, you’ll have far more chance of being successful. Also, if you double your money each year, you have every reason in the world to be pleased with your achievements.

If you’re making steady gains throughout the year then you can be rest assured that by the end of the year, all those gains would have added up nicely. Of course you may also want to consider longer time frames as well, rather than subject yourself to unnecessary pressure which tends to accompany short time frames.

In the first paragraph I mentioned traders not being aware of their own weak points and how such a situation can lead to failure. Well, this is exactly what causes traders to over estimate their own ability with regards to understanding the various charts and tables. These are important decision making tools so I find it extremely unfortunate that so many traders make the common mistake of guessing what some of these charts indicate.

Do you remember me mentioning emotions earlier in this article? Well, it’s those emotions I mentioned earlier that often cause traders to follow a hunch. New traders in particular, are prone to making the mistake of basing decisions on a gut feeling. Whether the hunch stems from something you read, or whether it’s due to something you’ve heard, following hunches is a dangerous approach, and a strategy which should be avoided at all costs. Providing of course that you have a solid system in place, you need to stick to it without making any exceptions. Basing your decisions on solid information and a trading plan is not only the safest way to trade, but it also gives you the best possible chance of reaching your goals. If you ever find yourself thinking that you’ve out-smarted then just remember, many have tried, all have failed.

By becoming aware of what you don’t know, you’ll be in a position where you can make it your business to find the answers to your questions and start to learn to trade. Remember, there’s no such thing as a silly question so if that’s what’s been putting you off in the past, you need to swallow your pride and take advantage of all the information which is available. In fact, there are scores of free trading educations available nowadays and which can be readily accessed. If you’re struggling then you’re also wasting valuable time so rather go and find the answers to your problems. After all, you’re not here to pose as a trader but instead, you’re here to make money.