The Biggest Obstacles in Trading

CMTrading ClipartMany people are allured by the often glamorous and seemingly easy life of a trader, mostly because they have no idea as to what goes into it. We’d largely attribute this perceived image to the media, where a trader is often portrayed having a glamorous lifestyle. Many movies and shows, even many that are centered around trading will make it seem that it is a game or make it look like its easy to make money as a trader.

In reality, this is not how things work. Trading isn’t easy, and there are many challenges and inherent risks that need to be starred down by a trader each day. Every trader has to be aware of the risks and be prepared to mitigate them to avoid being suddenly thrown into financial turmoil. In this article, we’ll look at 5 obstacles that traders will face in their journey.

Traders Need to Study A lot

When someone wants to become a manager, a painter, or a programmer, they will have to study a lot. The same principle applies to when someone wants to become a trader and get satisfying results. The misconception is that you can get good results without learning. In reality, if you don’t understand the trading instruments and how the markets work, you can’t make money for long even with all the luck in the world.

If your sole trading strategy is to rely on luck, it isn’t sufficient or adequate. You will most likely encounter losses. That’s why to grow as a trader; you need to continue learning, by finding new information, reading articles, watching videos and reading books.

The Markets Are In Forever Changing

Now if there is one thing that’s predictable about the market, it is that that all markets are unpredictable. Everything is consistently changing and fluctuating, which can make it difficult for a newbie to understand. That’s why it is so essential for traders to stay on top of what’s going on in the world at least with regards to the financial world.

It can be near impossible to evaluate an asset by just looking at it, and that’s why it has to be studied. You need to learn the fundamentals of technical analysis and then use the candlestick patters to figure out its trend. You can then use that broad knowledge about the market to decide on the most effective approach.

Trading is risky

The inherent risk associated with trading is that you can end up losing your entire investment, and it happens to a lot of seasoned traders too. People can lose their entire investment for a myriad of reasons which include but isn’t limited to unpredictable price changes, incorrect evaluation of the market, trading with emotions etc.

Even the most experienced trader will have to deal with failure some of the time. If anything, it can be a major challenge to come up with a highly successful trading strategy that also accounts for risks.

Emotions Getting in The Way of Reason

Emotions are something that traders can find hard to deal with apparently. Even if a trader can understand the market, they can sometimes find controlling emotions to be complicated. Traders who have full control of their emotions tend to be the most successful. Dealing with emotions isn’t easy for most people. Two of the most common emotions that traders need to deal with is fear of loss and greed. Plus, there is a bit of excitement too, which can ruin a perfectly good approach.

Emotions often force traders to make decisions which are rushed, irrational and for which they have no control of the outcome, which leads to a loss of their investment. That’s why it is so essential for traders to know how to manage their emotions appropriately just as well as studying the market.

Uncertainty and Impatience

Impatience isn’t an emotion, but it can be just as detrimental to a trader. As a trader, you get used to the fact that there are no guarantees and you never know what’s going to happen next. However, most people don’t like uncertainty because everyone wants the best outcome. That’s why trading requires a more strategic approach and more patience.

Conclusion

Now with everything, we’ve discussed above do you think that trading is “easy”? Trading is generally the implementation of an elaborate plan that combines analysis tools, market knowledge, emotional control, implementing a risk management strategy and managing your expectations to curb impatience.

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