The one reason why human traders fail

What exactly is  it that makes a profit possible? Let’s see. If you have decided to buy something and you want to sell it for a profit, do you have to sell it for a higher or a lower price?

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Let’s say you buy a brandnew car. You drive it for 5 years or so and than you decide to sell it. Would you expect some buyer to pay more or less?

 

When I buy a car, I want to use it. When I open a trade, I want to make a profit! I can not use my position for any other purpose. The only reason to buy or to sell something on the markets is to make a profit. At least for me.

 

And yes, sometimes I have to find out, that I opened my trade exactly at the time, when the market goes against me. It happens often.  The only thing that could avoid that would be a good fortune teller.

 

And that is the problem, at least for me. I do not believe in fortune telling. If people would know market moves in advance, the moves could never happen the way they do, because of the undisputable law of supply and demand.

 

If you offer your used car for half of its value, lots of buyers will show up. If you offer it for a price that is double the value, nobody will buy it in a hundred years.

 

And if you trade to make a profit,  you will have to wait until your position is profitable.

 

It is very hard to do this for humans, but a trading system that is automated has absolutely no problems with that. It will wait until your long position reaches your Take Profit mark. It will not doubt, it will not spend sleepless nights to think it all over and it will not act out of emotional reasons.

 

For me the thing that made profits possible was the fact, that I could find a way to no longer think about my trades all the time. Yes, I check my status once or twice a day, but I do not always live in doubt and fear anymore. It is a relief to have your system do that for you.

 

I guess humans are uncomfortable with the pressure of trading and that makes us do stupid things when the pain is to strong.

 

Imagine how you could feel if you knew that there is someone trading exactly according to your rules 24/7 around the clock. But that someone has more discipline. That someone is not susceptible when it comes to emotion. That someone does not smoke another cigarette, eat another cookie or skips the next visit at the dentist.

 

If you could create a better You when it comes to trading, would you be willing to invest 5 minutes a day?

Yes, it might take you a few weeks or month before you reach your goal. But you will be older anyway, even if you do not improve your skills at all. So time is no argument for me. I needed two years to learn all that stuff, but there is hope for you. We are not going to learn all the possible functions that our programming solution provides. In fact it is only a tiny fraction neccessary to get results. So that will save you a lot of time.

 

 

You must also overcome one of the greatest enemies most traders don’t even notice. But that is another episode.

 

This time we are talking about a simple perception. If you buy something for a profit, the price must go up before you sell it. You wouldn’t sell your motorbike in the winter and you wouldn’t sell your ice-skates in the summer, because you know that it would significantly reduce the price you could achieve for your goods.

 

But when it comes to trading, people simply forget all these obvious rules. They buy and sell because of emotions. The loss hurts, so they close a position and watch the price move in their direction immediately afterwards. That makes them angry and they go all in and double their position, only to see the price drop once more.

 

Several years and a lot of loosing trades later they do the exact same thing and achieve the exact same results, still thinking they could beat the market. But if you do, what you have always done, you will get the same results over and over again.

 

Is this something that sounds familiar to you? Have you ever considered trading to be the only thing where your common sense does not produce the results that you would expect? Is your mind playing tricks on you?

 

Google the Edward Adelson checker board and you will know what I mean…