Ignore the herd and plough your path

IF 90 per cent of traders are not successful in the market, what can you do to be different?

The easiest thing to do is to look at what the majority are doing and do not do it! In short, find out what 90 per cent of websites are promoting that traders should do and you will know what successful traders don’t do.

What do you need to be successful in the market? There is an old saying, “what a wise man does in the beginning, a fool does in the end”. When I ask people about their trading process and what rules they use, I find that so many have followed the path of the 90 per cent and few see their own mistakes. If you trade without the right knowledge the market will eventually take your money. More men than women try to take short cuts and end up taking higher risks. The 90 per cent who fail, fail to plan properly. They have missed or ignored a critical step because they either do not have a trading plan, or if they do, I have found it has not been tested using the right process. Having the right attitude is critical. Be clear about what you want to achieve and why, and commit to it. A successful trader commits time and money to developing the right knowledge, skills and gaining experience in the market.

So, are you one of the 90 per cent or are you different? Being different means you have the foundations to become a great trader. It is positive to see the All Ordinaries Index pulling back for a couple of weeks from the high at 6245.9 points last month. Trade disputes between Europe and the US continue to weigh on markets, which assisted the index to trade lower at the right time.

The market softened to a low of 6072.6 points on Wednesday, before it traded up and found support about 6100 points at the end of the week. May and June are typically down months so the selling activity at this time is normal. Portfolio managers reshuffle holdings in July and this is often when the market experiences a strong rebound. Overall, the current outlook remains bullish.

Dale Gillham is chief analyst at wealthwithin.com.au