Communicated Content- There are countless statistics in the digital landscape suggesting that it’s rare for traders to make any real money. Some people say that 80% of day traders lose money, while only around 20% make a consistent profit. Other statistics go even further, claiming that only around 7% of traders remain active and profitable after around 5 years.
However, while these statistics can be effective at scaring people away from the trading environment, they’re often not very useful at explaining why the majority of people struggle to thrive in this environment. The reality is that most people can be successful in the trading landscape, but only if they have the right combination of knowledge, experience, and skills. Let’s discover why most traders end up losing cash, and what you can do to avoid becoming one of them.
The Crucial Ingredients of Successful Trading
To understand why so many people don’t achieve their goals in the trading space, you first need to know which ingredients are essential to success. Many people assume that you need a lot of cash or a mentor to thrive in this space, but it actually comes down to three simple factors, which are knowledge, experience, and commitment. Look at any successful trader in the world today, and you’ll see that they got to where they are by investing in their education, practicing their strategy, and committing to long term growth.
When you dive a little deeper into the statistics around trading, you also get an insight into where things are going wrong. For instance, 80% of traders quit in the first two years, which means they struggle with the components of experience and commitment. Additionally, a dream of getting rich quick can often mean that many people refuse to put the right amount of time into building their knowledge before they take big leaps.
How to Become Part of the 20%
If you want to be part of the 20% that actually make money through trading, rather than the 80% who lose cash, then you need to commit yourself to developing the crucial ingredients for wealth development. That starts with working on your knowledge. Start by looking up articles and guides for what is forex trading online, and collecting as much valuable information as you can. Read up on the industries or sectors that you’re interested in, and join community forums where you can have discussions with experts.
The right degree of knowledge about the industry that you’re getting involved with will also help you in creating a trading plan you can rely on. Don’t expect the education portion of your process to move too quickly either. Some experts say that it takes between two and five years to learn how to consistently make a profit. Commit to as many learning opportunities as you can from day one, and never stop looking for ways to improve your knowledge and skills. Remember that the marketplace changes all the time, and that you need to be ready to adapt.
Gaining Experience and Showing Commitment
Aside from developing your knowledge as much as possible, you can improve your chances of success by gaining experience. This doesn’t mean throwing yourself into dangerous positions just so you can potentially learn from your wins and losses. Instead, it means committing to your strategy and thinking carefully about what you discover along the way.
Start by ensuring you have realistic expectations about what you can accomplish with your investments. This will improve your chances of successfully committing to your trading goals, and reduce the risk that you’ll end up making decisions driven by greed and fear. It’s hard to show commitment and remain patient to building your experience if you’ve decided that you won’t settle for anything less than getting rich overnight.
Remember, you don’t always have to spend money to gain experience either. There are various practice and demo account tools out there that allow you to experiment with your trading strategies without spending anything at all. This kind of experience could be great for someone who has a limited budget to work with when first getting started.
Commit to the Long Term
Finally, keep in mind that all three of the ingredients for successful trading are things that you need to be working on all of the time. You need to constantly be building your knowledge by checking the market insights, and updating your strategy. You should be looking for new ways to develop experience and learn from your wins and losses all the time too. Plus, you need to be willing to commit to staying strong when you’re winning and losing if you want to achieve results in the long-term.
