So, WHY are you trading?

Ok, we all know why we first started to trade. Dreams of making it big in the market and retire early, buy that boat, pay off those loans, etc. But, after a while, reality sets in and you figure - this trading business is harder than I thought. You got THAT right!

I believe that answering this question is vital in succeeding as a trader. Why are you trading? The easy answer is to make money, right? Of course. But the real answer is not so easy. Here's why: If you are looking to just make money, then emotionally you are in a losing battle even before you put on your first trade. You are thinking about making money and immediately your trade is influenced by emotions of fear and greed.

Now, consider this. Most traders have the intention of making money through their trading activities although they do not know quite how this is going to come about. They do not work their 'tails' off day after day. They are looking for something easy. Often they lack a clear understanding of their motivation for trading.

On the other hand, consider that your goal for trading is not only to make money, but to be RIGHT. That is, you have a system, you have backtested it, and it provides you with a decent 60-70% success rate. Or, you have a knack for scouring through data reports, earnings history, etc. and you are convinced that your trade is based on sound analysis and homework. In short, you have worked you 'tail' off day after day, night after night. The reward is to be PROVEN that you are right and correct in your analysis. Then, and only then will the money come.

We had a debate about skill and luck on Twitter today. My argument was that luck eventually runs out, but skill ensures you last and make a living. I would add that it requires skill AND hard work to succeed in trading, and I strongly believe that through this hard work and skill refinement, you are definitely able to make your own luck in this business. Make sure you have clearly defined goals, risk tolerance, a trading plan and you are on your way.

As always, good luck with your trading and I hope to see you on Twitter.