What is the most difficult thing about trading successfully?

There are many things that make trading a difficult task (this should read “trading successfully”, because anyone could trade, no previous experience is necessary, you just need to know how to click one simple buy or sell button). Just to name a few:

You need a sound strategy. You need to find and edge, you need a set a rules that identify low risk trade opportunities, you can use technical indicators, Fibonacci, Elliot waves, price action, or whatever fits you and makes you feel comfortable.

Discipline. Our main goal as traders is to trade consistently, we are not looking for unexpected or random gains (aka outguessing our system), and the only way to get them is by following our system to a 100%, period.

Risk and money management techniques. This is a must for everyone; we need to be able to control our risk on each trade and more importantly our capital! How much are we going risk on each particular trade: amount of pips (risk management) and trading size (money management).

Patience. We need to wait for the right time to enter the market. When is the right time? When your system signals it. Sometimes we see the market moving, and we get eager to trade, but we just need to wait for our signal, which is when the odds are really on our favor.

You need to be realistic. Some traders think it is possible to have 100% of return per month, is it possible? Yes, it is, but not on a consistent basis. In order to get such returns you need to risk a similar amount, and what happens when the market doesn’t smile at you? Your account vanishes.

And this list grows and grows. But... in my opinion what makes trading one of the most difficult tasks, is that it is different...

Picture these two scenarios:

You are asked to answer one of the most difficult questions ever: 2 + 2 = ?

Scenario A. 2 + 2 = 4, right... you get your candy.
Scenario B. 2 + 2 = 4, wrong... you get slapped.

Most areas in life are like Scenario A. You do everything right, and you get good results. You follow your rules, you do what you are supposed to do, and everything runs smoothly, no body yells at you, no body slaps you, and you get the desired results.

But trading, trading is a little different. In fact, it is more like Scenario B. Even when you do follow all your rules, even when you do exactly what you are supposed to do, you could be wrong. Hey, but it gets weirder, listen to this... you could also do everything wrong, you could do the opposite of what you are supposed to do and you could be right!!! Weird isn’t it? I don’t know about any other areas in life where it gets like this... if you know of any, let me know, I have a tendency to like them :)

That’s right, even when you follow your system, let’s say you go short at 13:30, the market could stop you out at 13:31... But you are still doing things right (if you followed the system).

So we need to adapt, most of us think that there is a positive relationship on doing things right and the $$$ result (monetary result). But in trading it isn’t like that, the relationship that is really important about “doing things right” is: whether or not we did follow our system: The relationship is like this:

So far we have talked about doing things right (following your system), and having a negative outcome. But the other side is even more devastating: Not following your system and the market goes on your favor. When this happens, you’ll start to think that you are even better than your system, unconsciously you will not trust it and try to outguess it and you know what happens next...

Remember, we do things right when we follow our rules, regardless of the end result of our trades.

And the next time you outguess your system, I hope the market turns against you... believe me, It will be better for you!