Why Smart and Successful People Fail at Trading

12/24/2015 6:00 am EST

Focus: STRATEGIES

A common misconception among intelligent traders is they believe they will succeed at trading the same way they always have, but Andrew Falde, of SMB Training Blog, explains that this mentality needs to change since he’s found there’s very low correlation between past success and success at trading.

SMB trains traders from all around the world. And we’ve discovered something interesting.

We’ve learned that there is a very low correlation between past success and success at trading.

Ivy League graduates and successful entrepreneurs alike often struggle with their trading despite past successes.

A common misconception among these intelligent traders is that they believe they will succeed at trading the same way they succeeded at everything else. With willpower. Students are taught to get every answer right. And entrepreneurs are taught to never give up.

These are valuable ideas in school and business. But when applied incorrectly to trading, it can backfire. Some of the best traders on SMB’s desk are right only slightly more than half of the time. In school, that would be a failing grade. But in trading, it’s more important to take small losses than it is to score a 100%.

You could have a 90% success rate and fail if you don’t know how to deal with the handful of trades that are wrong.

If you need to change your mentality about being right in the market, then you may benefit by following those who think the way that you need to start thinking.

Andrew Falde, Contributor, SMB Training Blog

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