The top three reasons people fail in the marketplace
According to legendary trader WD Gann, there are three main reasons people fail in the stock market. The first is that a poor trading strategy leads to earlier failure. He may have heard the saying “Failure to plan is to plan to fail”, this is the same as nothing. Without proper trading strategies and rules, most people fail early on, losing money on their first few traders. They never bother to learn the right strategies early on and have already set themselves up for failure.
The second reason for failure is trading with a lack of proper knowledge and materials. Most of the material sold to investors is junk. He said this is that he read over 200 books on stock trading (over 50 years ago). That said, only about a dozen books contained quality material, with WD being one of the few. It’s the truth! WD material has provided traders and investors with successful methods and techniques for almost 100 years to date. He has provided the most comprehensive teachings on the science of the market.
Trading without proper knowledge is like a young man trying to become a doctor because he attends medical school etc. Although the law here requires it, look at the amount of time many spend getting a four-year education and perhaps doing graduate work. The amount of time spent here preparing to earn income is very high. Applying similar study time to investing is one way one can become familiar with time-tested trading methods that ensure highly probable success.
Lastly, failed trading rules and methods lead to the demise of markets. Simply stated; Even with the correct strategies and methods, your portfolio will never be profitable without successful trading rules. 85% of traders admit to not using stop loss orders, and many don’t even have rules to determine when and where to buy and sell. By developing a rules-based trading method with capital protection (stop-loss orders), one can give themselves the best chance of taking the thrill out of the trading game by entering the market with a pre-set path to follow.
Emotions certainly increase with money at stake and he teaches us to set rules first that allow us to make non-emotional decisions in the market based on probabilities while keeping exposure to a minimum by using currency hedging methods. By removing the number one weakness, the human factor, traders have the best chance to make unemotional decisions and excel at trading according to a predetermined rules plan.
Gann teaches traders how to spot trends in fast moving markets and how to trade them while protecting 90% of all capital in an open trade. With this, traders can take up to 10 trades before going broke with their money. He paints a series of rules based on volume, price, and time that reveal to traders when to be in the market and when to get out.
In conclusion, the human factor is the weakness that breaks most traders because they trade on emotion and the game turns into a bet on fire. By removing emotion through rules and stop-loss orders, traders offer themselves the best opportunity to excel in their trading, this is the same thing. Without proper trading strategies and rules, most people fail early on, losing money on their first few traders. They never bother to learn the right strategies early on and have already set themselves up for failure.
