The truth about blowing up Pt. II

The symptoms are obvious. But the underlying causes aren't so clear...

Good evening valued subscriber,

Last week I highlighted the typical habits exuded by struggling traders. Many readers would be familiar with the habits since almost every trader (profitable or losing) has fallen in to the same traps.

The harder thing to do, is to pinpoint what actually causes people to do such things. The answer is complex because it relates to so many variables to different extents for everyone. Having been through the mill , making every mistake in the book, journaling, narrowing down the errors and iterating till I got things right, I feel I have a strong idea about what holds traders back. Having worked with several students have only strengthened my hypothesis.

I have not studied any behavioural aspect of economics or psychology. But I’ve been around the block long enough to know how to connect the dots correctly. Experience trumps any amount of theoretical knowledge and having made every mistake in the book and having seen several other traders make the same errors, some commonalities tend to pop up more frequently than others. This is a slightly longer post but bear with me, it will be worth it.