The Greatest Weakness Is The Human Element
 

In his book "45 Years In Wall Street" (1942), W.D. Gann page 25 states in relation to trading psychology the greatest weakness is the human element.


He writes that when a trader makes a profit, he gives himself credit and feels that his judgment is good and that he did it all himself. When he makes losses, he takes a different attitude and seldom ever blames himself or tries to find the cause with himself for the losses. He finds excuses; reasons with himself that the unexpected happened, and that if he had not listened to some one else's advise, he would have made a profit. He finds a lot of if's, and's, and but's, which he imagines were no fault of his. This is why he makes mistakes and losses the second time.

The investor and trader must work out his own salvation and blame himself and no one else for his losses, for unless he does he will never be able to correct his weaknesses. After all, it is your own acts that cause your losses, because you did the buying and the selling. You must look for the trouble within and correct it. Then you will make a success, and not before.

One of the main reasons why traders make losses is because they do not think for themselves and allow others to think for them and advise them, whose advice and judgment is no better than their own. To make a success, you must study and investigate for yourself. Unless you change from a "lamb" to a thinker and seek knowledge, you will go the way of all lambs, - to slaughter underthe margin caller's axe. Others can only help you when you help yourself, or show you how to help yourself.

Mr Gann goes on to say that a person can get the best rules and methods (or strategies) in the world for trading, and then lose money on account of the human element (Trading Psychology) which he considers the greatest weakness. He says you will fail to follow rules. You will work on hope or fear instead of facts. You will delay. You will become impatient. You will act too quickly or you will delay too long in acting, thus cheating yourself on account of your human weakness and then blaming it on the market. Always remember that it is your mistake that causes losses and not the action of the market or the manipulators. Therefore, strive to follow rules, or keep out of the speculation for you are doomed to failure.

Straight forward words from Legendary Trader William Gann about how trading psychology can greatly impact a trader without his or her even knowing it.