Recently, I started asking myself a couple of questions. I believe there are so many reasons why trading is a good discipline. However, one could argue that most people start trading for the wrong reasons. In this article, I want to expose those reasons. Those are not all wrong the reasons why people start trading. There are more. In the ideal, if you recognize yourself wanting to trade for one of those reasons, think about it again. You might be better to wait for a while in order to re-evaluate why you want to trade.
1) Desire To Gain Money Fast
This is obvious. New traders believe that they will be able to make money in a matter of minutes. Technically it is true. If you take a high-probability trade, you have good chances of experiencing a gain. However, that will not be suitable over time. After a while, you will experience a loss and will be destabilized.
The same happens when you get a new job. You may have some skills at first but it is given that you will make mistakes. It is very unlikely that you will create something big that will change the whole company.
The bottom line: you will not be able to sustain winning trades in the very beginning. Everything in life works by steps. You must start at the bottom and work your way up. Fortunately, it is very doable in trading.
2) Desire To Make Big Gains
How wonderful would it be to end up with $1 million as a trader within the next three months? That is not doable unless you start with more than $1 million. New traders will not, as explained previously, be able to become millionaire that fast. Don't get me wrong, trading is a great way to make a lot of money but it doesn't happen overnight.
Now, I am a very positive person. I am not here to drag you down and reduce your hope. However, I do not want you to start trading and then getting discouraged before giving up. It’s better to start trading on the right foot than to lose a big amount that you’re looking to recover. Trust me.
3) Social Proofing (peer pressure)
Social Proofing is a very interesting concept. Simply put, on a daily basis, people are influenced by other people. Whether you’re influenced by one or many people, you may start to trade because you don't want to miss an opportunity or you want to prove your peers that you can do it.
That is also a wrong reason to start trading. If you do not have any interest in trading, you will be more likely to give up once it gets harder.
It’s easy to fall in the trap of proving something to your friends. However, when you start something such as trading, you should do it only for yourself. If your reasons to trade are internal (within yourself), you will have a much higher commitment.
As an example of social proofing, I often hear people around me talking about investing in stocks. Sometimes, only a few people talk about it. Then suddenly, a lot of people talk about their investments and they’ve invested in the same companies the first ones invested into. Why is that? The first investors showed other there was an opportunity in investing and the second batch doesn’t want to miss out on the opportunity. They are all excited to make money and scared to not benefit. Unfortunately, sooner of later, the stock market will experience a drop and people will start to panic. Some will say it’s time to sell and others will follow. Do not fall into that peer pressure trap.
4) Need For Excitement
That was an important reason to start trading for me. I saw Forex and stock trading as being like in the movies…really exciting. While I believe that a minimal amount of excitement is necessary to start and keep trading, I also believe that your excitement shouldn’t take over your strategy. The plan comes first and the excitement to trade the plan comes by itself.
Every week, I’m excited to trade my strategy. I love it. I designed it such that I enjoy it while making money. In fact, following a plan or a strategy doesn’t have to be repetitive and boring. You have to live it too. If you want to know more about how you can develop your own trading strategy, I recommend you to check out my Intro To Forex Trading eBook. You will discover the whole process of creating your own trading strategy. Some very simple strategies are also provided.
I always want to remember you: whatever Forex education you get, make sure you apply it and test it yourself. You do not need to buy by eBook or anything I sell. However, I'm telling you that all my stuff is useful if you apply it.
In conclusion, one key in becoming a pro trader is to determine the reasons why you want to start trading. If those reasons, like the ones mentioned above, are wrong, you aren’t setting yourself up for success. The goal is to build a strong profile of yourself that will make it harder for you to give up. I strongly encourage you to write down your own reasons and review them from time to time.
What are the strong reasons you have to keep trading? Have you started to trade for the wrong reasons as well? Are there other wrong reasons why people start trading? Comment below and we’ll discuss about it.