Time and time again, we see new traders enter the markets trying to make a fortune overnight. These traders, fueled with ambition and high hopes, view day trading as a lottery ticket rather than a high-level skill that takes years to develop. This disposition alone is enough to hinder a new trader. Expecting to strike gold within a short period of time is a naive assumption that relies heavily on pure luck. Essentially, this mentality shifts the responsibility of success from you, the trader, to random factors that are out of your control. Account for the fact that 90% of traders fail and you're now brewing a recipe for disaster.
Don't be mistaken; this isn't to say that setting ambitious goals should be perceived as a negative trait, nor is this post intended to berate those who do. Instead, this post is focused on having you change your mindset, thus allowing you to repave the path you need to take to get where you want to go. Becoming a solid trader takes time, hard work, and, often times, failure. To ignore this would be foolish. I'm not saying to lower your standards. I'm saying that you need to be realistic with your plans to achieve your goals. We've talked about how you can set better goals in another post, and I always stress the fact that consistency is key. So, what does all of this mean for your trading?
Trading takes time. Some of you may be familiar with the book The Outliers by Malcolm Gladwell. In this book, Gladwell discusses the findings of his research on successful members of society. He claims that it takes roughly 10,000 hours to master a skill. This finding is based on Gladwell's research on some of the most influential members of our society, ranging from Bill Gates to the Beatles. You may be wondering why I'm bringing up this reference. After all, this is a trading community not a book club. I bring it up because it speaks to a few key points about trading.
Becoming a Day Trader: You need to put in the hours
Gladwell claims that it takes 10,000 hours to master a subject. If you don't believe that, that's fine; take it up with Gladwell. In no way am I claiming that it takes 10,000 hours to see the results you want. For our purposes, this as a broad concept, not a golden rule. I'm not proposing that you need to spend 10,000 hours studying the market before you can become successful. After all, our trading courses are only 10+ hours. I am, however, supporting the idea that mastering the art of trading requires consistent practice and studying. Sure, you may get lucky, but if you really want to become a great day trader you need to constantly be working on your craft. There is no replacement for hard work. Study educational material, observe the markets, paper trade, place real trades, etc. The more ingrained you become in the market and the more hours you put in, the better off you will be.
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Natural Talent is Irrelevant to Day Trading
The thought that you need to have some sort of "natural talent" to succeed at day trading can be discouraging. Sure, some people are better at math, reading charts, or analyzing a business, BUT these skills can also be acquired through time. Many of the traders at Investors Underground have a broad range of backgrounds, many not related to the finance niche. Gladwell claims that successful individuals are not born with their skill; they put in the effort to develop it. This concept should be inspiring to traders seeking to improve their current results. It means that anyone who puts in the proper efforts has the chance to achieve their desired results.
Here are some of the interviews from traders in our room:
Learn from the Successful Day Traders
When Gladwell was preparing his hypothesis for the "10,000-hour rule" he went straight to the source. He studied the minds of people who have proven to be successful. He studied their behavior from a young age all the way up to their big success. The same approach can be applied to trading. Study the behavioral patterns of successful traders and pick their minds if you get the chance. There's no better way to learn than from those who have already achieved what you've set out to accomplish. This isn't to say you should be idolizing successful day traders: not in the least bit. You should, however, focus on what they did to become successful, and attempt to emulate those behavioral patterns.
Understanding the work involved in becoming a successful trader allows you to take a realistic approach to your trading. This can keep you from placing risky trades that can blow up your account. It also allows you to celebrate the successes along the way. If you're expecting to make $100,000 in your first month of trading, making $200/day for 5 days in a row may seem insignificant. Contrarily, if you understand that trading takes time, you can celebrate the fact that you're on your way to being a successful trader. You can try to find ways to expedite your success but you shouldn't expect to find shortcuts. Sure, you should be working smart instead of working hard, but trying to find a way to hack success is risky, especially when putting your capital on the line in the markets.