There are several components to the mental trap that people get caught in when they first start trading that sets them on the wrong course, but one particular mistake is the one that makes for imminent account blow out, or at least a rather lengthy and loss-filled journey in becoming a successful trader.

Luckily, even though this situation is one that is difficult to foresee and very understandable that it is made, there is a direct and rather simple resolution to the problem.

The essence of trading is certainly within the ability of most to grasp, however trading as an occupation does have a significant body of knowledge to absorb and specific skills that are required to trade profitably and consistently. In addition to the fact that most traders are of above average intelligence,this makes for a situation where the success rate should be much higher than it is.

Like with most professions with a substantial body of knowledge, there is a gradient to trading.

Here is an analogy to illustrate the problem. Let’s take mathematics.

Mathematics begins with the concept of numbers in general, quantifying items. Then one moves to addition, subtraction, multiplication and division. From there, one moves on to algebra, geometry, and trigonometry. Once that base is developed, then one can comfortably move on to calculus, La Place Transforms, differential equations and other higher math.

When it happens that a person does not fully establish the prerequisites for calculus, such as algebra or trigonometry, the ideas in calculus may be understandable, but solving the problems will be a tremendous challenge, if not near impossible to solve. If one were to attempt to go straight from basic mathematics to calculus, it would be a very long struggle indeed to become fully competent at the higher level.

It has been documented in studies on the obstacles to learning that have found that there are specific physiological reactions when a person encounters this particular situation – that of starting too high up in a learning gradient or skipping foundational knowledge while trying to grasp concepts at a given level.

This is the fundamental error that many traders make, and they are generally consciously unaware of this particular situation and its impact. Many people begin active trading without the foundational knowledge to trade at the level where they become active. When this happens, this creates a sizable obstacle to adequate learning within an efficient time frame. Subsequently, the trader often winds up suffering severe losses, sometimes losing all their capital before they have established a sufficient skill and knowledge base to trade proficiently.

This is not the fault of the individuals. This is a problem of the system which unfortunately most have to endure. There is no required training or certification before a person is allowed to put themselves and their capital at real risk, so the high number that fail is simply the result of inadequate warning and preparation for what the business of trading entails.

The traders that are fortunate enough to pursue the proper teachings and help are the ones that can minimize the effects of this phenomenon that is so prevalent in the trading world. If a person can find a mentor that recognizes this particular obstacle and the others that are present in the development of a trader, then chances are likely for a positive trading experience. Most however choose to do it themselves or simply make it on sheer persistence alone, while learning the lessons of trading the hard way – through personal experience and numerous losses.

Rather than fall prey to this mistake as many do, you have the option to save yourself significant time, losses and personal anguish. This begins with backing up so to speak and ensuring that you have the basics fully covered, and then proceeding forward with a focus on mastery and development.

This one factor can determine your destiny as a trader, so it is well worth acting on.

This article covers only one of the components of “The Subtle Trap of Trading”. To find out the rest of the story and pick up a free copy of the powerful report, ‘The Seven Traits of Winning Traders’, go to http://insideouttrading.com.

For more resources & insights into trader development, go to InsideOutTrading.com

To download your free copy of the powerful report ‘The Seven Traits of Winning Traders’, go to http://www.insideouttrading.com

- Brian McAboy