Among the reasons include:
*Being under capitalized
*Taking way too much risk (expressed as a % of capital per trade)
*Attempting to pick tops and bottoms
*Becoming obsessed by a scenario (e.g., Silver MUST go up)
*Trading with trading range
*Being compelled to become a day trader
above reasons, in composite, account for 80% of the failure among pedestrian traders.
“Trading with Trading Ranges” means the habit of buying at the top end of the ranges and selling at the bottom end of ranges. The mentality of the novice trader in this regard goes like this … “The market is really strong, it is going to breakout out this time … I want to get in before it breaks out.”
Waiting for a big pattern to fully develop and then become completed requires unusual patience. But it is just such patience that is needed. One should wait for confirmation of this move before entering the market. It is possible for a trader to repeatedly get burned within a trading range, in anticipation of a big move, only to miss the big move when it happens.