I received this question from one of our community members today. From my experience there are a few different things that are the majority of the reason why so many traders fail. My thoughts on the subject are below and I would appreciate others feedback here as well.

1. Unlike most careers, outside of starting capital, there are no barriers to entry to get into trading. Anyone with enough money to fund an account get go live and start trading whenever they want.

2. Feeding off of number one is that most people will not put in the time necessary to learn how to trade and/or think that you can learn how to trade by taking one course or reading one book etc. Like anything else from what I have seen those that are successful at trading are those that put in the most time and effort to learn their craft.

3. Feeding off of numbers one and two, people get sucked into all the easy money get rich quick crap that is out there. Successful traders realize that if you can make 15 to 40% a year trading then that is phenomenal returns that will make you rich in a short period of time.

Money managers that are able to do this consistently, are some of the most famous traders in the world and have billions of dollars under management. With this in mind it is unreasonable to expect that an individual, newsletter, system or whatever is going to return hundreds of percent a year consistently.

4. Most traders spend 90% of their time on picking their entry and exit points and 10% of their time working on other components of their strategy such as money management and how they exit trades. Successful traders spend the majority of their time on money management and determining what they are going to do once they are in a trade as they realize that this is the most important part of trading.

5. Psychology, understanding your own reactions and biases, and how this affects yourself and the markets is such a huge part of trading that most people completely ignore. Successful traders understand this and spend a lot of time learning about the topic.

--- Trading without a (written) plan

--- Or worse, trading with a plan that hasn't been back tested

--- Or even worse, trading with a plan and not having the discipline to stick to it.

IMHO, entry/exits, technical analysis is a small part of the process. The psychological aspects are the hardest to deal with. There is no greater adversary in the market than yourself - 'paper trading' is not enough. Only when real money is on the line will you know. That's why many successful traders blew their accounts BEFORE success came.

this was one of my first lessons David.

The mental side makes it difficult - there are traps all over the place.

I couldn't agree more about the mental traps I think its something that even the best traders in the world struggle with constantly. Good thing is though once a trader realizes they are there he or she is well on their way to getting over them on the path to success.

Best Regards,
Dave