Research Suggests That 9 Out of 10 Traders Fail:
According to most sources providing statistics on the subject, research tends to suggest that over 90% of traders fail – that’s an intimidatingly high failure rate. So what exactly makes the failure rate so alarmingly high? I have a few theories that I believe play a large role in the problem.
For one, trading attracts individuals who like risk. They see it as an opportunity to make a lot of money fast, and instead of taking a systematic approach, they bring in a gambler’s mindset. As a result, they quickly blow up their accounts by not enacting proper portfolio allocation and risk vs. reward concepts. Secondly, people tend to let emotions get the based of them – it’s just human nature. And that urge to make decisions based off emotions instead of technical and fundamental analysis can ultimately result in bad decisions (one example of this is revenge trading). Thirdly, there’s a massive educational deficiency on Wall Street. A lot of marketing makes trading sound easy, coupled with the fact that it’s simple to open up a brokerage account, and it’s clear that most traders aren’t prepared enough to be successful before they blindly jump in.
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