If you’ve been trading for any amount of time then at one time or another you will have heard the term “retail trader”.
When most people use the term “retail trader” they use it to describe the losers in the market. The market participants who do the wrong thing at the wrong time. The guys and gals who buy at the top and sell at the bottom. Trade undercapitalized. Trade hunches, news, tips and emotions.
The little guys.
Chances are, unless you work for an investment bank, trade for an insurance company, work for a broker or work on the floor of the exchange, then YOU are a retail trader.
And if you are, then this probably describes you:
- You have an account at any one of the several online brokerages.
- You trade in your spare time.
- You have another job that is your real career. And…
- Your knowledge of trading either comes from books, seminars or what you picked up on your own.
Non of this is inherently bad.
But there’s one thing you should know — those guys who say all those mean things about us — they’re right. A lot of retail traders lose.
90% apparently.
But why?
A number of reasons.
- Lack of trading education
- Lack of money
- Lack of commitment
- Lack of understanding
- Psychology
- Greed & Fear
- Desperation
Let’s look at these items one by one:
Lack of Education
You bought one book: The Idiots Guide to Trading — and you were ready to go. They made trading look so simple. Pull up a chart, plot a couple moving averages and presto – you’re a trader.
Um, okay. It didn’t really work out so well — did it? One way or another you will have to pay for an education – either to the market or someone who knows the market. I say go for a little of both.
Lack of Money
Irregardless of what the scammers tell you — you will not turn $1,000 into $1,000,000.00 in a month, or even a year. In the market you truly do need money to make money. Start by saving some up.
You can paper trade while you’re saving.
Lack of Commitment
You give it your best shot. You put on three trades. They don’t work out. You quit trading for good. LOL.
That’s life though, right?
Not everyone is here to go the distance. If you want to win in the markets – know this – it will require more work than most are willing to do.
Lack of Understanding
Trading the markets is not about calling tops and bottoms and the sure as heck aren’t about stock tips and what’s hot. It’s about self management, trade management and money management. Some traders never learn this.
Psychology
How you manage your emotions, your discipline, how you talk to your self, your childhood, your self talk — these things all come into play when you have money at risk on an uncertain outcome.
Greed & Fear
You will learn a lot about these when you are trading.
Get too greedy and you will blow up your account. Get too fearful and you will not have the courage to pull the trigger. You will need to put both in check if you hope to succeed at trading.
Desperation
You cannot learn how to trade or even make money when you need the money you are trading with to pay the rent. Period. Always pay your rent first.
That’s right, Retail Traders there a quite a few things stacked against you – not to mention the cost of commissions – but do not fear.
There have been several really successful Retail Traders over the years who prove with certainty that trading can be learned and that the part time Retail Trader can succeed in the market. Will you be one of them?
Well, that’s entirely up to you.
This post was written by...
David John Hall – who has written 127 posts
David has been trading non-stop for 6 years. He lives in Redondo Beach, California (an awesome place to live) and is super stoked to be able to blog about his passion here.
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