Unrealistic Trading Expectations: How to Get Real

By February 6, 2018Trader Tips
Unrealistic Trading Expectations : How to Get Real

Unrealistic Trading Expectations: How to Get Real

One of the main drawbacks of trading is quite simply high trading expectations that border on the unrealistic—especially among beginning traders.

Download the key points of this post as PDF.

Expecting to make your first million in a week, or even in a few months, is quite unrealistic. It’s best not to think in terms of millions. Instead, think in daily earnings that compound. Getting ahead of yourself distracts you from the task at hand and usually leads to disappointment and failure.

Unrealistic expectations are emotion and emotion is one of the trader’s worst enemies. If you can’t combat this, you’ll lose, succumb to frustration and then lose more or give up entirely.

A trader’s goals should be focused, realistic and short-term. Especially if you’re just starting out, it is not helpful to set a long-term goal that you don’t yet know how to achieve. Allow yourself space and time to discover what works best for you. And, setting small milestones can be motivating when you achieve them.

Have a goal going into each day and a plan to achieve that goal. Live in the present reality and perfect it.

Take if from STT lead trainer Tim Bohen, who’s seen plenty of new traders dive in with unrealistic expectations and then get burned.

“New traders think they are going to turn $500 into $500,000 in a year. They go too far, too fast,” says Tim. “They get their position sizes too big. They hold on too long. They blow up and then they say trading doesn’t work. It’s important to let go of expectations when you start trading.

But most importantly, says Tim, “Remember that 90%+ of traders lose, so if you don’t take this seriously, you will likely become another statistic. Even the most experienced traders have a 35%-win rate.”

It’s unlikely that you’ll see a home run with your first stab at a strategy. A trading strategy is like a tailored suit. One size doesn’t fit all and there are always alterations to make. The best way to manage your expectations is to understand from the start that you can easily alter your view of the market depending on what price action is telling you.

If you understand that you can’t control the market, but can manage your expectations, you will be able to make trading decisions that are rational. Rational decisions lead to more wins than losses and that is the ultimate goal here.

While we always hear about the wild successes of other traders, there are far more stories about mistakes and lessons learned—they just aren’t shared as enthusiastically. But, at the end of the day, as a trader, you will learn much more from your mistakes than you will from your wins.

The bottom line: Don’t be afraid to lose. Losing is unavoidable. The trick is controlling your losses by sticking to your plans and stop losses. It’s also important to understand that not all losses are the result of doing something wrong. The market isn’t always rational; in fact, it’s a sentient being thanks to all the irrational players speculating on it.

No setup is going to work 100% of the time. As long as you’ve done your homework, it’s not your fault.

As we repeat vigorously here at STT, one the most important steps in trading is to have a plan for entering and exiting a trade. Consistently profitable traders have a plan, people who don’t have one fade away.

So, do you have unrealistic expectations? We’ll help you determine that by posing a few questions. If the answer to any of these questions is ‘yes’, it’s probably time for a rethink:

 

#1 Are you over-trading?

Are you making too many trades simultaneously? More than a few trades and you won’t be able to manage them or to keep up with events that dictate when you should exit. This is where your plan can fall apart.

 

#2 Are you ‘re-trading’?

Even worse, are you repeating the same trade you just made, because you exited on a loss and want to try again? Or, are you buying the same trade you just sold because you think you sold too early and could have made more? Don’t chase losses and don’t buy or sell impulsively.

 

#3 Are you over-leveraging?

Are you too impatient with the pace of growth in your trading account and upping your position out of impatience rather than based on sound research?

 

#4 Are you trading randomly?

Some traders don’t feel like doing their homework. It seems overwhelming, so they just close their eyes and make a trade that seems good. Random trading works about as much as gambling. Gut feeling isn’t enough here.

 

#5 Do you believe in the Holy Grail?

If you think there’s a Holy Grail trading strategy, then you likely have unrealistic expectations. There isn’t one. There’s just sound research and planning. There are far too many variables in the market for a Holy Grail.

You can learn more about how to control your emotions and set realistic expectations by watching STT’s Steady Trade podcasts with Tim Bohen. You can also take advantage of the lessons learned from podcast co-star, rookie trader Stephen Johnson.  

 

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Join the discussion 17 Comments

  • Joe Zinser says:

    Is there a rule of thumb percentage for a good loss? Where do you set stops?

  • Richard says:

    Thanks, great advice

  • Jackie says:

    Hi.
    Thanks for the information.
    I understand that this is not a sprint….I look forward to the journey.

    Jackie Cook

  • Henry says:

    Thank you for the lesson.

  • Raphael O'Riley says:

    Thanks I was doing alot of this then I wised up and started to read more books reread the books that I have and watch lessons over and over

  • Stan Carver says:

    Thanks

  • Turumetua Hewett says:

    Hi Tim,

    # Question 1: Yes I did when I was trading forex last year for the first time and I lost a couple of grand, simply because I did not quiet understand how it works. When the market was volatile I got too greedy and opened up more trades and then found out that I could not close them fast enough before the positions reversed to a loss. Yes I learned my lesson because I did not know anything about stop losses but when I started trading one trade at a time with stop losses in place I finally started to make profit. Even though the profit was small I knew then that I was heading in the right direction.

    # Question 2 : Yes definitely I did repeat the same trades. Found it out the hard way.

    # Question 3 : Yes I did at first till I lost my two grand. After that I stopped and I started to take things slowly and thats when I started having results.

    # Question 4 : I did at first but when I started joining webinars I then realised that there is a lot more to learn about trading.

    # Question 5 : Yes I do believe in the Holy Grail on the spiritual side but as to trading my answer is definitely no.

    Tim I dont have a million dollar account and currently not yet trading but will be aiming to build from a very small account once I fully understand how stocktotrade works. I honestly believe that Stocktotrade is the system for me once I grasp and fully understand how it works.
    Thanks for reaching out.

    Kindest regards,
    Turumetua Hewett

  • shawn says:

    experienced traders only win 35% of the time? I’m confused by this. I thought experienced traders can win 50, 60, 70% of the time.

  • Hanh Vuong says:

    Will you guys add profit.ly to the watchlist anytime soon? Similar to the tweeter one

  • Noah Steenken says:

    I’m a trader not yet trading because of a lack of knowlage in proper steps for homework before beginning. I hope to start the Tim Sykes Challenge to begin to learn and be a successful gainer years to come. This seems like a great tool to have

  • MAURICIO says:

    Great article. I’ve got 4 out of 5… [email protected]#k!!
    Thanks guys.

  • Thank you for your time, for the sound advice. Being a rook its overwhelming but with patients and determination and your help i know i will get this, again thank you for your incredible knowlege and care. Molly

  • Ted Jansen says:

    Extremely impressed with how well organized it is becoming. Please do not deviate from organizing this educational process. Baby steps for me, signing up today for the silver plan to watch the 4k videos. Once that is understood, stocks to trade will be the next step. Thank you so much on your pod cast of the two extreme traders. Both with passion but total opposite maturity levels.

  • William Mote says:

    Almost ready to start, moving funds from Ally to E-trade has been a challenge. Once that’s finished I’ll be ready to go.

  • Lewis Jones says:

    I believe in a 3 to 5 year plan. After watching your videos for the last 2 months i understand how difficult it will be to make a million dollars in 1 year. Specially since i will be starting with a small account, but i also believe in the power of 3. I have 2 small businesses ready for launch. With the help of trading 3 years is a very realistic goal. I work my ass off, and with your help i will pull it off . signed The RoadRunner Lewis Jones

  • Alice says:

    Very instructive and practical.

  • Peter says:

    Good advice, not trading yet trying to get my head around all the information

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