Four reasons why first time traders often fail

High expectations.  When starting something new at almost anything in life we may have high expectations and high hopes of success.  Often we rate our own abilities to do something that others can't too highly.  We think we are better or at least the equal of others.  After all, when it comes to shares, how difficult can it be to trade the markets? All they do is go up and down.  Occasionally they stall and consolidate, but for the most part they go up and down, it looks like a 50/50 game, they go one way or the other.  Yet if statistics are to be believed 80-90% of traders lose and first time traders will often blow one, two or more accounts before giving up and moving on to something else.  Even worse, statistics tend to suggest that if you give your money to a professional money manager, most of them tend to underperform the market as well, but at least they get a fee to keep them solvent.

There is nothing wrong with having high expectations and a positive outlook as to what you can achieve, but it is important to remember that trading and investing is a marathon not a sprint.  Survival, continual learning, money preservation and staying in the game is what counts.  Many traders have stories of not making any money or even losing for several years before they got it right.  Excepting losses and failure is part of being a trader.  Failure can be a good thing provided you learn from the mistakes you make.  Anyone who expects trading to be easy will find that the markets will probably bite them back sooner rather than later.  Aim to survive and you just might join the 5-10% that do well.

Lack of Discipline.  Most beginner traders lack discipline, whether that is to stick to a plan, their chosen market or watchlist, lacking patience and waiting for the right opportunity.  There are many reasons why discipline breaks down, one of which is feeling the need to be doing something.  Trading, especially if your psychology is more geared towards longer term swing and position trading opportunities can be very boring.  The waiting game is something that many traders have to get use to.  Long periods of time where your strategy and trading plan may not be generating any signals.  If you have a plan, and you should have one, then discipline is required to stick with it.  You have to give it a chance to work, chopping and changing, whether it is the markets you are trading or chart patterns and indicators that you are using, will work against you if you cannot settle on your plan.

Frustration.  The markets can be a very frustrating place, most of the time it is likely that they will not be doing what you expect them to.  Expecting markets to behave in some rational or logical way is likely to get you into trouble big time and this can be very frustrating for those new to the game.  Remember that this is a game of fear and greed. One day the news will be full of events that make the market fearful, a few weeks later those fears might be priced in and the market reacts positively to exactly the same fears that it was negative to previously.  Then before you know it, they are fearful again. 

For those that say that technical analysis doesn't work, all a chart really does is reflect in a historical way those fears and greed in a series of up and down movements.  A chart is a past reflection of human, and increasingly computers programmed by humans, behavior in the markets.  Past behavior is a reasonably good guide to what people will do in the future, because we do tend to be creatures of habit.  Charts can help tell us what we need to know and if you can get past your frustration of what the markets are doing when you think they should be doing something else, learn to go with the flow and accept that the market doesn't care what you or I think, you might start to see some sense of what is really going on.

The search for the holy grail of trading.  Straight up, there isn't one.  There are good traders and bad traders.  Good investments, bad investments.  Find a way that works for you and that in a sense will be your holy grail.  Chances are it won't work for everyone else. Doesn't matter what it is, if you can make money from trading a couple of moving averages, do you need anything else?  Finding what works for you is the holy grail.