It is really near to impossible to get rich by trading. A study was published by several university’s professors. They studied for a specific year and determined that only 13% of traders could achieve a profit.
Moreover, the study figured out that less than 1% of traders could make money consistently. However, success rate is high in swing trading. How to pick stock for swing trading is the main factor to success in swing trading.
Two traders, who got rich by trading
Jesse Livermore
Jesse Lauriston Livermore was a famous American trader, who was well-known for huge gains and losses from the stock market. He made his fortune by earning $100 million in 1929 market crash. But he lost his money in 1934. Later, he killed himself in 1940.
William Delbert Gann
William Delbert Gann was an interesting trader. He used to forecast market based on astrology, geometry and ancient mathematics. He made his fortune by teaching others about stock trading. WD Gann also wrote some books about stock market.
In order to succeed in trading, you should learn about swing trading and day trading strategies. More importantly, you have to avoid trading mistakes by following the golden rule of stock trading.
Moreover, many expert advice that you should avoid day trading unless you become master on day trading strategies.
Want to get rich by trading?
Trade trend reversal strategies can show you the right direction to get rich faster. Many traders can make fortune in uptrend market. But, they lose money in the downtrend market until they utilize the downtrend market trend.
Unless you become master on trading strategies, you should avoid trading and can start investing. You may know Warren Buffett and his investing strategies. Warren Buffett was a successful investor. He had achieved enough knowledge, skill and experience to succeed in investing career.
But a successful trader needs more knowledge, intelligent, skill and experience than an investor to succeed in trading career. Moreover, Long term Investment in stock market is less risky in case you can know- how to buy stock for long term investment.
Why more the 90% traders fail to get rich?
For your easy understanding, I want to share top reasons why most of the traders fail to get rich by trading. Moreover, a large number of traders are unable to preserve trading capital.
Why a number of traders can’t get rich by trading?
High commission rate
As commission amount is related with transaction amount, traders fail to make profit unless they can sell stock at high margin. In many countries, commission rate varies from 0.25% to 1% for each transaction. So, your broker is making money on every transaction. Commission rate is the number one reason to lose more money.
Trading mistakes
Even an expert trader can’t guarantee the success of a trade. They also make trading mistakes. Any mistake can bring a devastating result in trading career. To get rich from stock business is really hard for traders.
Failure of developing trading strategies
Every successful trader has own strategies. You can learn from others. But you need to develop your own strategies. Many newbies blindly follow others’ strategies. As a result, they make trading mistakes and lose all of the capital.
Wrong stock selection
Wrong stock selection is not a big deal. But if a trader makes wrong stock selection mistakes continuously, he will go out from market sooner or later. So, take a stock more carefully. Try to win in buying by avoiding wrong stock selection.
Ignore stop loss rule
Stop loss rule is the golden rule of stock trading. Naturally, traders can’t predict the market all the time. Even, they may unintentionally select the wrong stock. But for every mistake, they can’t get out trade early. So, instead of getting rich by stock trading, they become poor by losing entire trading capital.
How to get rich by trading?
Correct your trading mistakes early
Stick to your plan in each and every situation. Early get out from trading mistakes can help to preserve the trading capital. Hence, correct your mistakes by following the golden rule of stock trading.
Follow stop loss rule by any cost
It is too much difficult to follow stop loss rule. Because human beings are greedy and fearful. They don’t lose a single penny. So, when a trade goes down, they wait for some time to recover the losing trade. Later, the amount of loss will double, triple and so on.
Choose a stock more carefully
Wait for right time to buy a right stock. You can read the post about right time of buy or sell stock. You should try to choose a right stock at right time.
Apply new strategies
Did you fail to preserve your capital each time? If your answer is “Yes”, don’t worry. Try to apply new strategies to experiment the market. A trader may lose 100 trades and win 20 traders. His success or failure will depend on how much money he makes in winning trade. He is a successful trader in case he could earn more than he had lost.
Study the market
Study the market to take a perfect trade. A trader is a student where a market is a learning platform. So, always study the market to find out new opportunities.
Choose low commission broker house
Traders should choose low commission broker house so that they can take more trader with low cost. As most of the trading house charges high commission, a trader should invest some time to find out a cost-effective trading house.
Read trading books and blogs
Sometimes successfully traders share their experience in writing books. You can read their trading styles. But you should develop your own strategies. Moreover, you can read some trading blogs like “The Financial Ask” and “Investopedia” to get the update knowledge about market.
In short
Trading is a game for intelligent traders. You shouldn’t start trading career unless you have enough knowledge about stock market. You can start from basics to advance. Then learn about day trading tools. A guidelines about day trading for beginners to advance can give you a complete trading solution.
On the other hand, avoid trading if you want to get rich early. No one can easily earn money from stock market. It needs time, patient, skill and experience to get rich by trading.
Founder of The Financial Ask
