Home > Stock Trading - The Fatal Error That Underlies Most Difficulties

Most traders don't realize the huge mistake they make when beginning their trading career. There are several elements to the mental trap that people get caught in when they begin trading that sets them on the wrong course, but one particular error is the one that makes for imminent account blow out, or at least a rather long and painful road in becoming a successful trader.

Luckily, although this situation is one that is difficult to foresee and very understandable that it is made, there is a straightforward and rather simple solution to the issue.

The essence of the trading activity is definitely within the ability of most to grasp, however trading as an occupation does have a substantial body of knowledge to absorb and specific skills that are necessary to trade profitably and consistently. In addition to the fact that most traders are of above average intelligence,this makes for a situation where the success rate should be much higher than it is.

As is with most professions with a substantial body of knowledge, there is a progression to trading.

Here is an analogy to illustrate the problem. Let's take mathematics.

You start with the concept of numbers in general, quantifying items. Then one moves to addition, subtraction, multiplication and division. After that, one moves into algebra, geometry, and trigonometry. Once that base is developed, then one can comfortably move on to calculus, La Place Transforms, differential equations and other higher math.

If however, a person fails to fully establish the prerequisites for calculus, such as algebra or trigonometry, the concepts in calculus may be understandable, but solving the problems will be a considerable challenge, if not near impossible to solve. If a person were to attempt to go straight from basic mathematics to differential equations, it would make for a very long struggle indeed to become proficient at the higher level.

It has been documented in studies on the obstacles to learning that have found that there are specific physiological reactions when a person encounters this particular phenomenon - that of starting too high up in a learning gradient or missing foundational knowledge while trying to grasp concepts at a given level.

This is the fundamental mistake that many traders make, and they are generally not consciously aware of this particular situation and its impact. Many people begin active trading without the foundational knowledge to trade at the level where they become active. When this occurs, this presents a considerable obstacle to adequate learning within an sufficient time frame. Subsequently, the trader often winds up taking a severe financial beating, sometimes losing all their capital before they have established a proper skill and knowledge base to trade proficiently.

This is not the fault of the individuals. This is a problem of the system which unfortunately most have to suffer through. There is no required training or certification before a person is allowed to put themselves and their capital at real risk, so the high percentage that fail is simply the result of inadequate warning and preparation for what the business of trading entails.

Those that are fortunate enough to seek out the proper teachings and assistance are the ones that can minimize the effects of this phenomenon which is so prevalent in the trading world. If one can find a mentor that is aware of this particular obstacle and the others that are present in the development of a trader, then odds are greatly improved for a good trading experience. Most however choose to go it alone or simply make it on sheer persistence alone, while learning the lessons of trading the hard way - through personal experience and substantial losses.

Instead of falling prey to this mistake as many do, you have the option to save yourself considerable time, losses and personal grief. The first step is backing up so to speak and making sure that you've got the basics fully covered, and then moving forward with a focus on mastery and development.

This one factor can determine your destiny as a trader, so it is well worth acting on.

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