Trading is an engaging activity. It can take all your money, or it can give you all the other people's money. And it can do it in seconds. Financial markets, perhaps, are the only instant feedback loop, where you instantly see the results of your actions. This feedback loop attracts and corrupts people. It always lures us into making wrong decisions, and it’s too damn good in its dirty deeds.
Different statistics show different results, but about 70% of traders lose money, another 25% stay breakeven, and only about 5% of traders earn something. “Something.” This “something” it what other 70% lose. In other words, 5% of people get money from 70%. Terrible news, isn’t it? Not really. It depends on perspective. If you are in this almost mythical group called “profitable traders,” then you are more than happy with the situation. People come and give you their money. If you are the one who loses money, it’s, indeed, a troublesome situation. But, once again, it depends on perspective. I perceive it as opportunities. Opportunities to grow, to develop, to become better. To turn these opportunities into success, you only need one thing — preparation.
Why do you think people lose money? It is because of two things: lack of knowledge and lack of emotional control. I believe that we can summarize both of them as “lack of curriculum.”
Before we continue, let me take a step back and give you an example of what an excellent well-structured curriculum means and why it’s crucial. Let’s consider how we study mathematics. In schools, we follow a strict program of what we study first and what we study afterward. We start with digits, which are the fundamental structural element. Then we go to figures, which are combined digits. Then we go to the addition, which is jumping from one number to another. Then we study subtraction, which is the opposite of addition. Then we move to multiplication, which is multiple summations. Then we go to a division, which is the opposite of multiplication. And it goes on and on. Every step that we take is a logical consequence of the previous one. Such a natural flow of information helps you to build robust, comprehensive knowledge.
I hope now you understand the importance of a curriculum — it gives you all the necessary knowledge in a transparent way. Now let’s go back and take a look at what we have in Trading. Nothing. Niente. Nichts. We don’t have any curriculum at all! We have a lot of free useful resources, great books, marvelous videos, but we don’t have structure. Thus, we wander. We wander trying to find something that works and, judging from the figures above, we never do. We lose money, and we stay defeated. This raises another good question. Why do we even go into this dangerous loop? Why do we think that it’s enough to study three simple patterns to become a trader? We don’t think it’s enough to study three simple surgeries to become a doctor, do we? We don’t think it’s enough to study three simple laws to become a lawyer, either. So why do we dive into this dangerous industry? The answer is clear. Trading is available.
You need something about eight years of studying and several years of practice to become a doctor. You need something about six years of studying and several licensing exams to become a lawyer. But you only need two days to open a brokerage account. Options are not equal, though professions are. All of them are highly intelligent, highly paid occupations, and if you want to succeed in trading, be sure to pay your tuition.
To sum up, if you want to become a successful trader, study first. Remember, success is when opportunity meets preparation.