Learning From Your Mistakes: Why Failure Is A Critical Part To Success

[Brendan Egan]

I am a firm believer that trading education is a critical part to becoming a stable and profitable trader. Without education traders make mistakes that could be avoided. However at the same time learning from your mistakes is a critical part of trading, and a part of the equation that cannot be bypassed.

I have spent a good deal of money on trading education and was fortunate enough to know a few traders who mentored me personally. I would say I received first class trading education for a fraction of the cost that it normally would cost. However, I still made tons of mistakes in my first year or so as a trader. All of my mentors told me that this mistakes were unavoidable and actually part of the learning curve.

In trading, there are certain concepts that you can only learn by experiencing them. And what this usually comes down to is making mistakes and having failures and then getting back on the horse with a new knowledge and understanding of the markets.

I remember I used to always use the level 2 screen (a tool that in my opinion is not very helpful) and I would disobey my method because I thought price would breakout due to what the level 2 was saying. However after I lost money a few times doing this, I realized the level 2 screen is not accurate and reliable and I shouldn't be using it. Now my mentors all told me not to use level 2, but I disobeyed them and ultimately the only way I learned not to use level 2 was by experiencing failure with the level 2 screen and then growing from this experience.

Another great example of this is when I used to use indicators. This is something I talk a little bit about in the price action trading course, however in short I had the same experience with indicators as the level 2 screen. Finally I realized it was time to ditch the indicators and learn and understand price action--and this again was something that I only was open to doing after I had experienced a failure.

So while trading education is extremely helpful in making sure you don't blow out your account making stupid mistakes, there is also a need for trial and error in trading--and some of the lessons that stick in my head the most are the ones that I experienced first hand with my trading mentor.

[Tomross58]

Wow,,,,you hit the nail on the head there,,,at least for me. I am in my first year and wonder if its just me going through this or is this normal. You do mention this in the course and its good to see you mention it again in the postings. I never blame the markets when I lose money but rather go over my trade and see what I either did wrong or where I can improve. I saw a segment on ESPN the other day and Johnny Bench was interviewed. He is a hall of fame catcher from the 70's an 80's which is my era. He said that the successful ballplayers learn from their mistakes and don't repeat them. Thats what seperates the players that never make it or average players from the best players. I guess thats what you are saying here and its really true. You have to experience all the pitfalls yourself before you can fix them. Great post and I continue to work at getting better.

Tom

[Brendan Egan]

I agree, Tom. Learn from your mistakes, improve your method, and try again. Eventually on your own and with the right help you will get it right.