In this article, we will talk about what is the 90 90 90 rule in trading. We will also talk about why the 90 90 90 rule in trading is not bad as you think it is and how to use it to your advantage in your trading journey to become a better trader.
The 90 90 90 rule states that 90% of the new traders lose 90% of their money within the first 90 days. And this rule is mostly true. Most traders do lose most of their money with trading in the first 90 days of trading. There are several reasons that this happens.
The Reasons Why This Happens
You might be wondering why this happens. Why do so many new traders lose so much money in a very short period of time? There are a lot of factors that cause this. Now let’s look at the 3 main reasons that cause this to happen.
Lack of Knowledge
Most new traders do not have the correct knowledge to become profitable. That is not their fault. There is so much false information about trading on the internet. This will confuse most of the new traders out there.
If you are a new trader you must spend a lot of time learning how to trade and learning about different profitable trading strategies. The best way to learn this is with our completely free guide. You can check it out here.
But remember one thing, just going through this guide will not make you a profitable trader. You must put what you learn into action. Set a time every day to learn and put what you learned into action. We recommend you to set at least 1 hour per day but ideally 2 hours per day. Don’t say that you don’t have time. If you have a really busy schedule try waking up 1-2 hours earlier or going to sleep 1-2 hours late. This will give you enough time to learn and practice trading.
Lack of Emotional Control
Most new trades do not have the emotional discipline to be successful but that’s alright. Because no new trader starts with a high amount of emotional discipline.
You develop this emotional discipline over time. The key to becoming emotionally disciplined with trading is to practice taking trades in the live market. If you are a new trader, initially the market will destroy you. But you got a hang in there if you want to become a successful trader. But to be honest, 90% of the traders will not hang in there to be profitable. Don’t be like the majority of the traders.
Unrealistic Expectations
Most people get into trading thinking it is a get-rich-quick scheme. They think that they can become rich quickly by trading and quit the job they hate. You definitely cannot get rich quickly with trading. But you can get rich with trading, it is been proven time and time again.
There are quite a few millionaires, if not billionaire traders out there. Becoming rich through trading is a long process. You have to be extremely patient when it comes to trading. This could take months or years depending on how disciplined you are as a trader.
The main thing here is to understand that you need a lot of practice in the financial markets to become profitable with trading. First, your goal should be to learn about trading and different profitable trading strategies. You can learn from our free guide here. Then you should practice these strategies in a demo account with virtual currency. Then when you become profitable with a demo account, then only you should move into trading with a live account.
Now, this still doesn’t mean that you will be profitable with a live account because you were profitable with a demo account. This is mainly because when real money is on the line with the live account, your emotions will act differently. If you are new to trading you will lose money in the live account. And you should prepare to lose money in the live account.
Even professional traders lose money. The key is to have more wins or larger wins than losers. Again, the key to being a profitable trader is to have a positive net gain. That means you will definitely lose some traders but that is okay.
Also, most new traders do not journal their trades. Journaling your trades is extremely important. Journaling every single trade will definitely make you a profitable trader over time because you will find out what works and what doesn’t. So when you are starting out don’t have the goal of making millions with trading but have the goal of having more winning trades or larger winning trades than losing trades.
How to avoid being in the 90% of the new traders
If you are new to trading, you will lose a decent amount of money, that is the reality of trading. But remember, that is okay. In trading, you have to lose some money to learn some lessons. If you are trying to avoid being like 90% of the traders in the first 90 days of your trading, just don’t.
Because most new traders will go through this phase and it is alright. What actually determines your success is what you do after your first 90 days. The next 90 days. Most new traders will give up because they lost some money. Then they will say that trading is a scam and will never trade a gain.
Honestly, if you are afraid to lose some money with trading, trading is not for you. It’s better to get a 9-5 job instead but remember that if you do this you will never achieve the financial freedom you want in your life.
But of course, you can minimize your losses by spending a lot of time studying how to trade and practicing taking much trades as possible. As discussed previously always keep a trading journal. Make sure to get our trading journal here (it is completely free). Try your best to track every single trade you take.
Conclusion
As we discussed majority of the new traders lose money but that is completely alright because it is a part of the process of becoming a profitable trader. Becoming a profitable trader is not easy at all and it is not for most people. Because most people cannot take it when they lose some money and they don’t have the disciplined to become a profitable trader.
If you are starting out, try to make many mistakes as possible in your first 90 days of trading. You will learn a lot from this and then in the next 90 days, you can start cleaning out your mistakes and actually become a very profitable trader. If you haven’t checked out our trading guide, make sure to check it out here.
