Week in Review: Why Retail Traders Fail

Posted on Jul 11 2015 - 6:10pm by Sharpe Trade

Greece.

China.

Greece.

China.

Yes, although saying yesterday that we wanted our own “Grexit” from the media overload with Greece (really, if you live in Europe, I feel for you.  This has to be a bit like water torture) … I have just a few follow up comments regarding that entry on … Greece and China.

In that conversation, we also begin to discuss attention span, and focus.  Memory.  Which led us to into our main topic …

Why do retail traders fail?

So grab your cup of coffee this weekend, as we dive into this topic, in the following podcast … 

If you prefer to listen to this podcast on YouTube, you can do so here.  Our podcasts are also on Podbean, and at the same time, we have an itunes feed and you can find our podcasts on itunes if you prefer to subscribe there …

3 Comments so far. Feel free to join this conversation.

  1. Robert July 12, 2015 at 8:24 pm - Reply

    Hi guys,

    Its funny you mentioned Daniel goleman I think I listened to the exact same lecture by him a couple of weeks ago.
    https://www.youtube.com/watch?v=HTfYv3IEOqM

    If you like him then, I think Tony Robbins courses, personal power for example will really interest you.

    I will have finished my first year trading come september, I was up for the year over 10% and in spectacular fashion I blew that 10% and a further 22% of my initial capital out of the water.

    Its the second time that’s happened this year and I recovered from the first time, its not persistence and patience that are the cause at least I think in my case, but in both scenarios I had one losing trade(there was nothing special about the losses 1-3%), and for some reason I just couldn’t accept that it was a losing trade.

    Its like I’m saying no no Mr Market I know you will come to your senses and I’m going to pile on my next trade to make up for the little loss to my account.
    I think its just not being able to accept a loss, and/or losing more money than I’m comfortable with so I try to make it back quickly before the pain of the loss sets in.

    The good news is I recognize the emotion that I get before this happens, so all I have to do in future is switch off my computer and walk away. Thats what I did, and I think its one of the reasons I still have money in my account.

    Since then I have added 7% to the account, but I’m trading a lot more defensively.

    In conclusion, I think learning to take losses could be a big reason why traders fail. I know its one that I have experience with.

    I have a question though, if sharpe trade is about education, then why is there not a recommended reading list apart from the books mentioned in the how to begin series?
    I ask this question for a couple of reasons, the first being that if we want to know more about a particular topic we can refer to the books that are associated with that topic, the second reason is that we know what to look at because there are literally hundreds of books that we could read on trading and investing the third reason is it could save you guys time answering questions.
    For example a book you would recommend as and introduction to the bond markets or commodities, maybe one book for each of the categories on this site?

    I know that time might be a problem for a lot of the folks that follow you guys so you dont want to bombard them with information but there’s nothing like a good book on a topic.

    Thanks for reading in advance 🙂

  2. Dan Shy July 12, 2015 at 8:57 pm - Reply

    Oh sweet … thanks for the link to the video mate … I’ll be checking that out. I had only read that piece from the Farnam Street Blog.

    “The good news is I recognize the emotion …” …

    Indeed.

    And coupled with your record-keeping … you’ve seen the cycle through once. That’s why you’ve seen me go SO defensive right off the bat with draw-down. I know I’m screwing up somehow … so I hit that number, I start to think about getting defensive right off the bat. The “religion” to me … almost becomes that draw-down number.

    And like you said, you’ve seen the cycle play through once … we’ve all been there … so as you see the cycle again and again … you’ll get to a place where you react more and more quickly, which means your performance can continue to improve.

    🙂

    Regards,
    Dan

  3. Robert July 13, 2015 at 9:53 am - Reply

    No problem, I never read Farnam street blog I will check it out.
    Thanks for the feedback and encouragment.

    Here’s another audio book on the concept of flow, the speaker is not as interesting to listen to as Goleman but the state he describes would definitely be a useful one to be able to get into.
    Part 1
    https://www.youtube.com/watch?v=uLWus0nt0m0
    Part 2
    https://www.youtube.com/watch?v=CSUPsBXUuFI
    Have a good one.

    Rob

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