90% of You Are Going to Fail
By Cliff Clark
Do you understand the magnitude of the task that you are embarking on? Becoming a successful trader takes years of hard work and most of you will not be willing to put in the time or the effort that it takes to succeed. You are looking for the easy path to riches. Unfortunately there is no easy path to riches except perhaps through inheritance or the lottery. Do you have a rich daddy or mommy? Do you like your chances with Power Ball or Mega Millions? If so I wish you the best of luck!
What are the main reasons people don't make it in this business? I'll list a few of the major ones but I am sure you can come up with many more.
Reason 1 you will fail is because you are just not willing to put in the time or that you don't understand the amount of time it will take to succeed at trading. It is said that it takes 10,000 hours to become an expert in any field. Think long and hard about that. That breaks down to five years if you are putting in 40 hours a week. It sounds daunting doesn't it. Well it is. It will take you that long to become an expert trader. That's not to say that you won't make money sooner than that but to become a true expert will likely take you at least that long. I've been trading 12+ years and by no means consider myself an expert.
Reason 2 I think you will fail is that you haven't gotten an education. You need proper training to make it as a trader. Think about it, the trader's on the other side of your trade's have years if not decades of experience. How are you going to overcome that without some level of training. It's important!
Reason 3 I think you will fail is that you have no long term plan for success. I'm talking about a business plan as well as a trading plan. You need to have a road map to lead you to success. Most people without one end up jumping from one thing to the next always chasing the next hot system or trading room. That won't lead them to long term success.
Reason 4 I think you will fail is you have no trading plan (trading rules). If you have one it's either incomplete or not thoroughly tested. There's really not a lot to say on this one if you don't have trading rules and a trading checklist you are just gambling, you will not have long term success in this business.
Reason 5 I think you might might fail is that you are just not suited to trading. Not everybody has the psychological makeup to become a trader. Trading is a very emotional business. If you can't learn to control your emotions perhaps you are not suited to trading. I've known several people that did everything the correct way but still had to give up trading after 2 or 3 years because no matter how hard they tried they couldn't control their emotions. There is nothing wrong with that. What you learned along the path will still benefit you in many other endeavors. I am working with a trader who recently told me the biggest thing he has learned on his path to becoming a trader was learning to learn! How cool is that? It's something he will always have.
Reason 6 I think you will fail is there is no accountability for us in trading. We are self directed as such we have to manage ourselves. Everyone is different but if you want to succeed you need to put some kind of accountability in place for times you break your plan. For me it was weekly trade reviews with my wife every Friday afternoon. This worked for me because I found it rather embarrassing to go to her with a bunch of trades where I wasn't able to follow my pretty straight forward rules. Plus she was the chef of the house and after a time I got tired of franks and beans and I learned to follow my rules. OK, just kidding about that last line. It was really the diamonds I had to buy when I failed to follow the rules!
Reason 7 I think you will fail is you don't review or track your progress. You can't succeed if you don't know how well you are doing. If sounds simple enough. How do you know how good your plan is if you don't track it? You can't test your plan without data. You can't have data unless you track your progress. You also need to review your trades to make sure you are sticking to your rules.
There are probably lots of other reasons traders fail but I think those are the major reasons. If you can somehow manage to overcome all of that you might just become one of the luck 10% that make it in this business.
I've discussed many of the above issues in previous articles.
2 trades for me today with +1.5R total
1st Trade QCOM +2R
148.39/149.97 exit 143.25
12% gap down under pivot support and 50ma after a strong daily double top rejection,. I took it on a congestion breakdown with a fairly wide stop, leaving my 2R target 50c over its ATR, slow but consistent move down with great RW, hit my target on the penny before it bounced.
2nd Trade AQB -0.5R
9.40/9.70 exit 9.56
I rarely trade stocks under $10 and even more rarely short them. I liked this daily chart as it broke its uptrend channel and stayed under a strong 9.50 support line enough room to its daily 50ma. I entered after a pullback with a fairly wide stop but only 1/3 of its ATR used at the time. It failed to break down with the strong market open and stayed in a narrow range.
I actually broke my plan with this trade as I lowered my stop to a pivot where price made a big bounce earlier at 11am with a large seller sitting there. My thought was that if it breaks that level again then it will likely...
1 trade for (-1R)
I took a BD on QCOM. I was worried about the target being close to the daily range, so I took a tighter stop on the 2 min chart. I am looking through PTS right now, most of the examples have 2 options for where to put your stop. It looks to me like one of the stops would be at the bottom of the main consolidation area, and the other at the bottom of where there has been a shakeout or turnaround bar (if there has been one). Due to the daily range I took the tighter one on this. In hindsight it seems obvious to take the wider stop, but in the moment it looked ok.
I was then looking at the 15 min 3BP on QCOM, but the reason I used a tighter stop in the first place was because of the range. The 15 min 3BP would have needed to have gone even further than the wider stop on the 2 min BD, so I didn't take it.
