New traders often have extremely high expectations on what to expect
. And that is to be expected with all the hype in the market staring that people can double their money in a month and turn their measly savings into a large fortune in a year.
Because of this there are a few things that new traders tend to overlook when starting out in the market.
1.There are Bumps in the Road
Most people listen to the guru's talk about how they are making 100% of returns in the market for just a couple minutes of research per trade. The problem here is that people assume that making 100% of return is a realistic ground to start off on. It really isn't.
Great traders can consistently beat the S&P 500. Given the fact that the S&P goes up on average 10% a year, if you can make 20% or more then you are considered to be a fantastic trader. Given that fact why do so many people assume that they will come in and make a 400% return their first year of trading?
Trading is a learning game there are bumps in the road and you have to get through them.
2. You Win Some, You Lose Some
Another thing that is overlooked is that losses do happen. It is easy to be wowed by some "Guru" who shows you a trade that made 300% in 2 weeks, but that is just one example. Losses also occur in the market.
Out of that 300% return that was made, maybe 250 of this 300% was actually just recouping losses from other trades. All and all they might be up 4% for the month, but it just doesn't sound as impressive.
3. Not Everyone Should Trade Stocks
Although most people are probably capable to become a trader, not everyone will stick to it and keep at it through all the ups and downs in order to keep learning and improving. Just like in business most people will fail at it. Only those who will keep going can see everlasting success.