The second biggest reason why traders fail is because they do not have an edge in the market they are trading. The definition of edge is that the odds are in your favor. Any experienced gambler will tell you that understanding the odds before placing a bet is crucial. If you have ever watched a poker game or been in one, then you can surely appreciate what it means to feel that you have an edge. This usually leads to a poker player going for it, or pushing all those colorful chips into the pot and stating,"All in." It is no different with trading.
No one can predict the future. The best a trader can do is understand the probability of a situation occurring. Quantum mechanics also states the same thing. Having a better feel for the underlying probability of a certain situation occurring is crucial to a traders’ success. This is called positive expectancy. Positive expectancy comes from solid, historical research. We never know what will happen on any given trade, but we can trade with an edge because we know there is positive expectancy in the system or model(s) that we are trading. This also gives a trader confidence to play an uncertain game with the odds in their favor. So, how does a trader get an edge and succeed in trading?
The answer to this goes back to some plain, old fashioned, values and ideas your parents should have taught you, or that you have learned along the way. If not, please allow me to teach you these ideas right now. They come in no particular order but they include: hard work, patience, discipline, optimism, and persistence. With these a trader will not only succeed in the game of trading, but he or she will also succeed in the game of life. These qualities are necessary because they will be required of you as you do your homework and research and study the market you are interested in. In my case, I specialize in emini trading on the SP500 index. Do not fool yourself and think this will come easily. It will probably take years for you to develop an edge. Maybe we can help you get it a little faster...
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