In my travels as an educator, it saddens me to see so many fail despite working hard. But trading requires that we work SMART and HARD not just that we put in some sort of effort.

There are many, of course, who are looking for the ‘way to make a million that requires no effort, no capital and involves little loss’. This is a word-for-word question I was once asked. I told him: “Hmm if you know of such a method, I’ll be your student”. Some just don’t deserve to succeed.

But others put in effort, time and money; yet they experience the same lack of success. From my experience, the lack of success comes because they refuse to acknowledge that their actions are leading to failure. Instead they engage in bouts of rationalizations that would be funny if it were not so tragic.

Let me paint you a couple of pictures:

A close relative, Adam, has been trading as long as I have. Until recently he firmly held the view that he was a successful trader. Well, it is true he made profitable trades 90% of the time; but unfortunately, he never made money in any year! If you remember the Expectancy Formula, you’ll know why:

(Average $Win x Win Rate) - (Average $Loss x Loss Rate) MUST be greater than 1. If the result is a minus, then you must lose over a large sample size. (For a fuller description see The Nature of Returns) .

Adam never kept an equity journal, let alone a psychological journal. His way of dealing with losses was not to open the statements. Whenever I visited him, I could tell at a glance how he was doing by noticing the pile of unopened trading statements. If it was a large pile, he was losing; a small one meant he was winning. His refusal to face the ‘true’ results kept him from remedying the problem.

Let me now turn to Bob. Bob had almost completed the STC mentor course. He knew his stuff, but the knowledge was not being translated into profits. The problem was, once in a trade, Bob became myopic. Any information that did not support his mindset would be filtered out. Bob’s saving grace was he had learnt to faithfully place stops.

I saw in Bob a great potential to succeed. If I could find a way through the myopia, I knew his results would improve tenfold. The good news is we did find a way and when Bob completed STC, he had an approach he had learnt to execute consistently.

So, what about you? In which camp do you fit? Will you change to succeed? Or will you dig your heels in and stay within your comfort zone? Ultimately success or failure falls on your shoulders alone. That’s the beauty of trading.

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