Learning from Mistakes

I came across this article: When You Will Become A Professional Forex Trader? Honestly, this is a good and comprehensive article.
I would like to add few more points that I learnt from Marcel Link.

  1. One of the differences between a successful trader and a losing trader is how mistakes are dealt with. The good traders take note of what they did wrong and try to learn from their mistakes; bad traders make the same mistakes repeatedly and never learn.
  2. Making mistakes and learning from them are part of trading and its learning process. This is why traders who are well capitalized have a better chance of surviving; they have room to make and learn from mistakes without blowing out. A small trader can easily lose all his capital before fully understanding the lesson the market was trying to teach him. (Fortunately, Forex broker provides practice account, but demo trading do have significant differences if compare to live trading.)
  3. Why does it seem institutional traders succeed better than the average trader? The institutional traders have much more capital behind them. They can and do make the same mistakes but don’t have to worry that one mistake will end their careers; with capital and management behind them, they can survive those mistakes. When they start out, they go through training programs, are assistants, work on a desk with proven traders, or are given small accounts where they can’t do much damage. When they screw up, it costs the firm virtually nothing compared to the mistakes of larger, more established traders. As they get better, they are given more buying power and freedom. This doesn’t happen overnight but may take a few years as they go through their learning years.

Last thought: If professional trading firms expect their traders to take a few years to develop and are willing to risk a large sum of money in training them, why does the typical average trader (like us) think he can open an account for $1000 having never traded before and expect to make money immediately? (Those 2-3 days courses will give you some foundations/basics of trading, but these courses won’t lead you to become a professional trader.)
You should not get discouraged if you lose your initial capital; instead, should see it as part of the tuition toward their ultimate goal – being a winning trader.

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