Monday, 30 October 2017

Why few traders make money? What lessons can we learn from them?

Quote:  "I am sure you will come across relatives or friends who have traded the markets for ages but ended up generating more losses than profits.   Accumulation of trading losses over years not only hurt one's financial well-being but is also psychologically damaging as one's self-confidence is eroded along with growing losses.  Eventually these traders quit the markets when they can't tolerate the losses anymore. "

What contributed to their losses and what lessons can we learn from them?

Their mistakes:

  1. Not cutting losses
  2. Taking profits too early
  3. Having too many stocks
  4. Having non-existent or wrong trading rules
  5. Borrowing money to trade/trade on contra
  6. Not doing enough homework
  7. Initiating positions based on tips
  8. Not understanding the risks being taken
  9. Buying high and selling low
  10. Not reviewing after each trade

Ref:  Jumpstart in Stocks and Future Trading
Choong Ty'ng Ty'ng

My comment:  One of the better book I have read on this topic of trading.

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