WHY TRADING IS VERY HARD – Part 1
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People don’t want to hear the truth. But it’s the truth that can bring a solution. People are more attracted to lies than truths.
When a veteran trader says the truth, people ignore it. But when an impostor tells them what they want to hear, you see lots of responses. How many times have you been blessed by what you want to hear?
There are many rich brokers and many rich IBs (marketers), but there are not many rich traders.
Just like anything in life, they say trading is a zero (0) sum game (your lost funds go to winning traders, and versa).
But the reality is, trading is a minus (-) sum game: Commissions, negative swaps, spreads, uncertainties, efficient markets, small percentage of winners, and high percentage of losers. Trading is clearly expensive.
You think because you can open a brokerage account within minutes, deposit into it and start clicking or tapping, you’re going to be the next billionaire. No Sir or Madam.
Trading is the 2nd most difficult profession in the world: second only to the job of defusing nuclear weapons. Beating the market on an annual basis, and for the long-term, is one of the toughest jobs in the world. Beating the market seems easy in theory; but not in reality.
It’s almost impossible to beat the market on a long-term basis. Yes, anyone can make profits now, and tomorrow or in few weeks or few months or even a few years. However, to make profits on a long-term basis is almost impossible.
That’s why I always shake my head whenever I see charlatans posting a screenshot of a day’s or a week’s results, trying to impress simpletons.
Longer-term Trading Success Is Elusive
What we’re talking about here is consistency… A situation in which you declare profits on annual basis. It doesn’t matter whether the profits are small or big; what matters is that you declare profits on annual basis. Nonetheless, almost 99% of traders cannot achieve this because of psychological problems.
There are billionaire hedge funds managers who made billions in the past… They may make that for some years but not for every year.
Those who can really make permanent, consistent profits on annual basis for 5, 10, 15, 20 and 30 years in a row are extremely rare and few. The rest will just achieve short-term success and blow up and then disappear.
Whether you like it or not, there is nobody and there is no instrument that can predict the next move of the market with 100% accuracy always. Gurus and wonderful strategies are ultimately correct less than half of the time.
There are times when predictions and anticipation will go according to plan, and that would bring a false sense of having found the Holy Grail. Eventually, things will go back to even.
NB: These articles are not meant to discourage you from trading, but to make you realize that the reality is different from what most touts want you to believe. So if you seem to encounter roadblocks, performance ceiling (inability to make profits beyond certain levels) and frustration, it is not because there is curse on you, or there is a witch in your family, or your intelligence is low or you are unlucky or something is wrong with you. It is how the markets are structured to work.
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