Ken Wolff has written an excellent piece on why many traders wash out. (You may want to save that locally before Yahoo expires it.) Here are the seven reasons, the article goes into more detail on each one:


  1. When people won’t do their own homework.

  2. When people can’t explain their reasoning for a trade.

  3. When people make things more complicated than they need to be.

  4. When people enter a trade for a good reason, then lose their nerve and exit too soon.

  5. When people hesitate, or follow others, and enter a trade too late.

  6. When people will not contemplate the real reasons for their failures.

  7. A defeatist attitude, especially in me.

I had to pull out this section from #5, which I talked a bit about the other day:

This is hard stuff because it’s all about confidence. When you are under pressure from a spouse who disapproves of your trading, or under pressure to pay bills, etc., you are working under an enormous amount of fear and pressure. And that is automatically going to cause hesitation. I know that’s a hard situation.

But I tell you, if you don’t get that under control and learn to trade like you don’t need the money — with control and a system, leaving out emotion — you are not going to make it. You must find a way to ease that pressure.