There is an infamous saying in the trading community, and you’ve likely heard about it: 90% of traders lose 90% of their trading capital within 90 days. That’s a high number of day traders who fail in this game. But why do new traders struggle? What are the reasons behind this poor performance?
Day traders are a special breed of people. They’re willing to risk their money and sanity in pursuit of big payoffs that can happen within hours if they’re lucky.
The odds are stacked against them, but they try anyway because the reward is worth it. Unfortunately, not all day traders stick with it; some fall by the wayside for various reasons. In this article, we’ll review some common pitfalls that new traders should avoid if they want to succeed in this challenging but potentially lucrative field. Here are the most common reasons why new traders struggle and ultimately fail.
Table of Contents
- Why Do New Traders Struggle: They Don’t Have a Plan
- The Keys to Success as a New Trader
Why Do New Traders Struggle: They Don’t Have a Plan
As the old saying goes, you plan to fail if you fail to plan. Quite frankly, this can be directly applied to trading. More specifically, if you fail to trade without a plan, you’re planning to fail. Why do new traders struggle?
New traders often jump into trading without any real plan, leading them to make poor decisions and take significant losses. The best way to avoid this mistake is by doing homework and testing different strategies before risking real money.
An effective trading plan is a road map for your trading. It will help you identify your strengths and weaknesses, manage risk, prepare emotionally, and stick to your strategy.
It’s important to understand that no one can predict the future with certainty; however, a plan will help guide you through any unforeseen obstacles or unexpected opportunities.
Luckily, we have a solution; check out the Bullish Bears website for various trading plans based on your desired trading style.
Why Do New Traders Struggle: They Don’t Have the Right Mindset
The ability to stay focused and disciplined is crucial for day traders. Day trading is not for the light of heart. You need to be able to handle the stress and pressure of working in such an environment. If you’re not mentally strong enough, it will be hard for you to succeed as a trader.
Why do new traders struggle? You also need to have good emotional control over your actions–you should be able to manage your emotions at all times during trades, or else they might lead you down the wrong path!
They Aren’t Prepared for the Emotional Toll
Why do new traders struggle? You might think that trading is all math, but it’s a lot of psychology. The emotional toll of losing or winning can devastate your psyche and account balance.
You may also feel anxious about not knowing what will happen next in the market–and that’s a big problem for traders who don’t have their emotions under control.
The best way to deal with these issues is to prepare beforehand to be ready when they come up in real life!
Why Do New Traders Struggle: Not Sticking With the Plan When Things Go Bad
Why do new traders struggle? When you’re a new day trader, and things go bad, it’s easy to get emotional and do something stupid. You might think you should sell or buy something when the market goes against your position. Or change your strategy entirely because of one bad day.
Don’t do any of these things! If you stick with the plan and stay calm during stressful times, your losses will eventually turn into profits again (or at least break even). If not, then trading isn’t right for you after all.
The Keys to Success as a New Trader
The key to success as a day trader is planning and preparation, which means knowing your risk tolerance, having a solid strategy, and sticking to it even when market conditions are unpredictable or challenging.
Mitigate Your Risk
Risk management is one of the most important aspects of trading because it lets you control how much money you lose if something goes wrong with your trade. If you don’t understand how to manage risk properly, you could lose all of your money instantly if things go wrong with just one trade!
As a day trader, it’s important to prioritize risk management for your success. It’s crucial to be prepared to cut your losses and never put in more than you’re willing to lose.
If you find yourself in a situation where the market isn’t in your favor, and there’s no clear sign of recovery, it’s best to exit the trade. Keep in mind that good risk management should always take priority over greed. Why do new traders struggle? They don’t mitigate risk.
Learn a Trading Strategy
Becoming a successful day trader requires learning a trading strategy. You can gain knowledge from experienced traders through their videos on YouTube or by reading their blogs. Additionally, reading books on trading strategies and concepts is crucial.
The Bullish Bears has an excellent library of free resources for beginners; click here to get started. Then you won’t need to be someone wondering why do new traders struggle?
Find the Right Broker
If you’ve already signed up with a broker, that’s a good start. However, it’s crucial to find the right one for your needs.
Why do new traders struggle? Not all brokers are the same, and they may have different fee structures and levels of customer service. It’s essential to do some research before committing.
When considering a broker, here are some things to remember:
- What are the fees?
- Do they charge flat fees or commissions, and
- What kind of trading platform do they offer? Is it user-friendly, especially for those with less experience using computers or smartphones? Are there any additional features, such as charting tools, that could be useful in the future?
Practice, Practice and More Practice!
Why do new traders struggle? They want to start with real money immediately. Practice with virtual trading platforms such as Interactive Brokers, TradeStation, and Ninja Trader that offer free practice accounts so you can get used to using their platforms before investing any money.
Once you have mastered the basic trading skills, you can test your ability by opening an account with a real-money broker and investing real money!
Trading stocks is a great way to make money, but it isn’t for everyone. Why do new traders struggle?
Besides the lack of quality trading education, day traders repeatedly make the same mistakes. There’s no doubt that day trading can be very risky, and it takes an enormous amount of discipline and focus to be successful at it.
However, if you are willing to work, learn from your mistakes, and manage your risk correctly, you can become a successful trader!