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They fail for the same reasons many new businesses of any kind fail: lack of capital and a poor analysis and understanding of the existing business environment. |
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The secret to success is to be a disciplined trader. For starters, you need more than simply meeting your broker's minimum account balance requirement. You must make sure you are adequately capitalized, which ultimately will allow you to become a disciplined trader and to think and act like one. |
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In addition, discipline requires that you are adequately prepared and that you learn the real-time realities of stock market trading. This book has been a good start in that direction. |
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Even if you want to be a part-time trader, remember the competition is full time and professional. You are going against seasoned market players who have no interest in bailing you out of bad trades except as it will affect them. Think of the competition as cruiserweight type A's with a special fondness for your miscalculations and your paycheck. |
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Scott Foster, president and CEO of Dominion Capital Management, a trading firm managing more than 350 million dollars, characterizes the competition this way: |
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It has been obvious to me from the beginning that I'm competing with the best and the brightest in the world. I believe that the smartest people in the world are not curing cancer; they are in the financial markets, because that's where the money is! And if I am going to make a dollar, I have to pry it out of somebody else's hands. When you begin to look at trading that way, that there are two sides to the market at all times, you need to be certain about identifying what is your Edge. To be able to compete effectively against these traders and institutions, who possess unlimited financial resources and research capabilities, you need more than just a great trading plan. You need absolute discipline in everything you do. |
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The market has a unique way of constantly testing your discipline in the same way it relentlessly tests itself. Just as buyers and sellers continuously struggle to establish real value, the market has a knack for challenging the best prepared and most conscientious among us and showing utter disdain and wreaking humiliation on the ill-prepared, poorly researched, and undisciplined. |
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Bruce Johnson, a professional market maker, observed: |
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The market just has a way of knowing what you are all about. It knows when you are really trying and needing to make money. |
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