Why is it so hard for us to pick winning trades?
90% of the people who are engaged with trading activities end up losing money in the financial markets…
That’s an amazing number.
What’s more amazing is the fact that these days almost half of them (didn’t check the real statistics behind it.. have to admit) have been through some sort of financial education, whether it is fundamental analysis or technical analysis.
Unlike 20–30 years ago, people these days have access to enormous amount of data and educational content that should help them achieve better trading performance and yet the overall statistics hasn’t changed — Most people continue to lose money.
Why is that?
Why is it so difficult for most people to make the right trading decision?
Why is it so hard to pick winning trades?
Dan Gilbert, in his great Ted Talks presentation, suggests that we simply can’t estimate odds, probabilities and value correctly — we have this flaw as human beings.
Although I totally agree with him, and I do think that we have a real problem with estimating odds, risks and value — I think that there’s much more to it and… more importantly, I think that there are few things, simple things, that you CAN do in order to improve your chances of making better trading decisions and start picking winners over losers.
The 3 mistakes
Although there are many mistakes that traders do that lead to the end result of 90% losers in the financial markets, I want to focus on 3 main reasons I think that lead people to making bad trading decisions:
- Too much external noise
2. Lack of Trading Strategy
3. Quantity over Quality
The first reason obviously is a distraction issue — People fail to focus on what matters due to overdose of information that surrounds them.
The second and third reasons are related one’s actions, trading methodology and trading psychology.
Want to read more? Want to learn how you can improve your trading performance by addressing these 3 issues?
