Success doesn’t come easy. That’s true in most areas of life, including trading. If it were simple, everyone would do it. But it’s not. But despite its many complexities, if you can master the art of the trade, you can see a handsome return on your investments. 

Trading is hard, but it can be worth your time and energy. This article explores why trading is so difficult and what you can do about it. 

3 Reasons Why Trading is So Difficult

1. Misinformation Abounds

Trading is a global game. Hobbyist traders and career investors alike permeate the market, and you’ll find an array of opinions and trading advice across the spectrum. Understanding which advice to take seriously and which to take with a grain of salt can be challenging, especially if you’re new to trading. 

  • Investor Education: Educate investors about the basics of stock trading, the risks involved, and how to recognize credible sources of information. This can be done through online courses, seminars, and educational materials provided by financial institutions and regulatory bodies.
  • Critical Thinking: Encourage critical thinking among investors, teaching them how to verify information before acting on it. This includes cross-referencing news with multiple sources and being wary of sensational headlines.

2. Spend Time Researching 

You don’t know what you don’t know. Only by spending time learning can you equip yourself to make trading decisions that cut through the noise of misinformation. Invest time researching how trading works so you can invest your money wisely and reap the rewards. Learn the market, research successful traders and how they make investment decisions, and educate yourself on the varied approaches to investing and trading strategies. 

3. Information Overload Causes Decision Paralysis

You can feel stuck when you’re bombarded with an endless stream of trading and investing content. Decision paralysis is common among investors of all skill levels. The overwhelming feeling can make you feel confused or afraid of making the wrong choice, so you don’t take action at all. A stagnant portfolio isn’t doing you any favors. 

  1. Simplify the Choices: If the decision feels overwhelming, break it down into smaller, more manageable parts. Focus on one aspect at a time, such as analyzing the fundamentals of a stock or looking at technical indicators.
  2. Evaluate Options Individually: Instead of trying to consider all possible outcomes at once, evaluate each option separately. This can make the decision-making process feel less daunting.
  3. Focus on Key Data: Too much information can lead to analysis paralysis. Limit your focus to the most relevant data points and indicators that align with your trading strategy.
  4. Consult with Others: Sometimes talking through your thought process with a trusted advisor, mentor, or trading community can help clarify your thinking. They may offer perspectives you hadn’t considered.
  5. Use Automated Tools: If available, consider using algorithmic trading tools or decision-support systems that can help automate aspects of your trading strategy.
  6. Shift Perspective: Remind yourself that not every decision needs to be perfect or lead to immediate gains. Focus on your long-term goals and how this decision fits into your broader investment plan.
  7. Step Away: If the pressure is too intense, take a break from trading. Sometimes stepping away for a short period allows you to return with a clearer mind and renewed perspective.
  8. Decision Matrix: Use a decision matrix to weigh different factors and prioritize options based on their importance to your trading goals.
  9. Risk Management: Ensure you have stop-loss orders or other risk management strategies in place. Knowing you have a safety net can make it easier to make decisions.

7 Ways to Overcome Trading Difficulties

1. Pick a Trading Strategy and Take the Next Best Step 

You don’t have to make all the right choices every time you pick a stock or make a trade. Combating decision paralysis is as simple as making one decision at a time. Exploring trading strategies can help you determine how you want to approach investing. Pick a plan and stick to it. Evaluate your results, then assess the best way to move forward. 

2. Recognize the Many Pathways to Trading Success

There’s no one right way to approach trading, and there are many pathways to success. Because of that, investors can be tempted to jump from strategy to strategy if results don’t come on their timelines. 

Consistency is key to determining a strategy that works for you. Rapidly switching strategies because you want to find the fastest or “best” way to profit doesn’t allow you to identify a strategy that works. When there are many pathways to trading success, it’s difficult to choose a plan that works and stay consistent with it.

  1. Clarify Your Objectives: Start by defining what success means to you in stock trading. Are you looking for short-term gains, long-term growth, income generation, or a combination of these? Your goals will shape the path you choose.
  2. Assess Your Comfort with Risk: Each pathway to success comes with its own level of risk. Understanding your risk tolerance is crucial to choosing a strategy that you can stick with, especially during market downturns.
  3. Learn from Experts: Read books, follow reputable traders, attend webinars, and consider taking courses on different trading methods. Learning from those who have succeeded can provide valuable insights.
  4. Set Evaluation Periods: Give yourself a set period, such as six months to a year, to fully implement and evaluate the effectiveness of your chosen strategy. Use this time to refine your skills and make adjustments as needed.
  5. Blend Strategies: As you gain confidence, you might find value in blending multiple strategies. For example, you could combine value investing with occasional swing trades or integrate dividend stocks into a growth portfolio.
  6. Engage with a Community: Join trading communities, either online or in person. Engaging with like-minded individuals can provide support, new perspectives, and help reinforce your chosen strategy.
  7. Reflect on Your Progress: Regularly review your trades and strategies to identify what’s working and what isn’t. Learning from both successes and failures is key to long-term growth.
  8. Avoid the Noise: The stock market is filled with noise and distractions. Stick to your plan, and don’t let short-term fluctuations or hype-driven narratives derail your strategy.
  9. Track Your Learning: Consider success not only in terms of financial gains but also in your growth as a trader. Each experience, whether positive or negative, adds to your knowledge and expertise.

3. Simplify Your Trading Strategy 

Don’t try to do it all. Simplify your trading approach. Pick a strategy and stick with it. 

Trading and investing are highly emotional, but wise traders aren’t driven by emotion; they’re driven by data. Assessing the efficacy of your current strategy based on numbers, not intuition, allows you to identify strengths and weaknesses to refine and simplify your trading strategy. 

4. Be Patient, Success Takes Time

We live in a world of instant gratification, and that mindset can bleed into how we approach trading. Genuine, lasting, and sustainable success takes knowledge and wisdom that can only be cultivated over time. 

Many people enter trading looking for shortcuts, foolproof approaches, copy-and-paste methodology, and easy money. While these approaches might appeal to some traders, they make trading much more complicated and can result in significant losses. 

  • Immerse Yourself in Learning: Dedicate time to understanding the fundamentals of stock trading, market psychology, technical analysis, and risk management. Consider taking intensive courses, reading books by successful traders, or following expert traders.
  • Learn from Mistakes: Early in your trading journey, mistakes are inevitable. Treat each loss as a learning opportunity to improve your strategy and decision-making process.
  • Set Clear Goals: Define what “quick success” means to you—whether it’s a specific percentage gain, a certain amount of profit, or mastering a particular trading strategy. Having clear goals will help you stay focused.
  • Consider Active Trading: Strategies like swing trading or day trading are more suited to those looking for quicker gains. These strategies involve taking advantage of short-term price movements, but they require discipline, fast decision-making, and a solid understanding of technical analysis.
  • Paper Trade First: Before committing to real capital, practice your chosen strategy through paper trading or with a small amount of money. This allows you to refine your approach without the pressure of risking significant capital.
  • Use Trading Platforms and Tools: Utilize trading platforms that offer advanced charting tools, real-time data, and automated trading features. These tools can help you execute trades more efficiently and identify opportunities quickly.
  • Avoid Overtrading: The desire for quick success can lead to overtrading, which often results in losses. Stick to your trading plan and only take trades that meet your criteria.

5. Set Realistic Goals 

Change your expectations. Embrace the reality that your trading journey will have ups and downs. It’s not a constant stream of profits; don’t expect it to be. Building a lucrative portfolio will take time. 

Set realistic expectations for your investment journey and trading strategy. When milestones are realistically achievable, you’re more likely to stick to your trading strategy, which is the most effective way to successfully and sustainably build your portfolio. 

6. Get Comfortable With Risk

Every trade involves risk; it’s inherent to investing. And while higher-risk trades typically yield greater ROI than conservative investments, a poor decision can result in significant loss. Misunderstanding the risk of an investment choice can derail your trading and finances. 

  • Position Sizing: Determine the size of each trade based on your total capital and risk tolerance. A common rule is to risk no more than 1-2% of your total capital on any single trade. This way, even a series of losses won’t severely impact your overall portfolio.
  • Use Stop-Loss Orders: Set stop-loss orders to automatically exit a position if the price moves against you by a predetermined amount. This limits your losses and helps prevent emotional decision-making in volatile markets.
  • Spread Risk Across Assets: Don’t put all your capital into one stock or asset class. Diversify across different sectors, asset types (stocks, bonds, commodities), and geographic regions to spread risk.
  • Use Uncorrelated Assets: Consider including assets in your portfolio that don’t move in tandem with your primary investments. This can help reduce overall portfolio volatility.
  • Develop a Routine: Establish a daily routine for reviewing market news, analyzing charts, and preparing for trades. This helps create consistency and reduces the likelihood of reacting to short-term noise.
  • Stick to Your Plan: Develop a clear trading plan with predefined entry and exit points, and follow it strictly. Avoid making decisions based on fear or greed, which can lead to poor outcomes.
  • Monitor Performance Regularly: Keep track of your trading performance, analyzing both successful and unsuccessful trades. Look for patterns or areas where your strategy could be improved.
  • Avoid Short-Term Speculation: While short-term trades can be profitable, constantly chasing quick wins increases risk and can lead to burnout. Focusing on a long-term, sustainable approach can provide steadier returns and reduce stress.

7. Implement Risk Management Strategies 

Risk is a reality in the stock market, but that doesn’t mean you have to succumb to it. Implementing a risk management strategy empowers you to analyze potential risks carefully so you can work around them. 

Determining an exit strategy helps you know the max you’re willing to lose. Position sizing allocates a set amount to each opportunity ahead of time. Carefully choosing your trades (instead of getting swept up in emotion) helps you make wise decisions as you pick your stocks.  

Track Your Trades with Data-Driven Precision 

TradeSage is a trading journal that keeps your investment strategy on track in the often chaotic, fast-paced world of trading. We help you track picks and trades and keep tabs on the metrics that matter most to you. Our easy-to-use interface allows you to seamlessly import your trades, keeping all your data in one place so you can make informed decisions. TradeSage then automatically gathers vital trading metrics, calculations, and data so you can overcome the many challenges we explored above.  
Trading is difficult, but you can do something about it. Start by creating your TradeSage account today to enhance your trading strategy.