Mike Cohan

The 'Learning to Trade' Dilemma for Private/Retail Traders 📈📉📈 Imagine entering trading and being presented with two "game" options: Game 1 – The Short Game: This is a game where you are rewarded for playing in a certain way. Every month, if you trade prudently, you could earn a return of around 5-10%. Over the course of a year, this could nearly double your money, and such gains might continue for 1, 2, 5 years, or even very occasionally, longer. You're told that this game is easy to learn and that success can be achieved relatively quickly. However, there's a hidden catch: one day, you could lose 100%. You won't know when or if this will happen, but when it does, there are no fail-safe mechanisms—catastrophic losses will occur suddenly and without warning. Game 2 – The Long Game: Game 2 requires a longer period of learning, often taking several years before consistent success is evident. Even then, the typical monthly return might only be around 1-2%, meaning it could take 4-5 years to double your initial capital once you become good enough to play the game well. However, this approach incorporates a fail-safe mechanism that makes 100% losses virtually impossible; at worst, you might experience occasional small drawdowns of 5-10%. --- These two games symbolize the core mental challenge and dilemma faced by most new traders. Most traders desire the quick, lucrative wins of Game 1. They of course want to avoid its severe drawdowns, but the allure of rapid success is a powerful motivator. Most people, therefore, opt for Game 1, and if and when they experience a prolonged streak of early success, they naturally start to believe they are highly skilled. However, when a catastrophic failure occurs—as it almost inevitably will—most don't see it as a flaw in their approach. Instead, they believe it was simply bad luck and are tempted to return to the same risky game. Even if they decide to switch to the safer, long-term approach of Game 2, they face new challenges: their muscle memory, reflexes, automatic responses, and default reactions are aligned with the more aggressive, riskier Game 1. Unlearning these ingrained behaviors can be difficult, delaying their learning curve and making the process longer, more erratic, and more painful. This dilemma is further compounded by hearing about the rare "lucky" Game 1 traders—the 1 in 10 million who never experience a 100% drawdown and who can eventually cash out their winnings. Yes, such cases do exist. These people won the lottery. Their stories are shared, repeated, and often become legendary. They claim to be highly skilled, because they have no reason to believe otherwise. In truth, their success is almost certainly due to extraordinary luck working in their favor. The overwhelming majority of new traders unwittingly choose, or are pushed into, Game 1. But the truth is that most traders who have built sustainable, healthy trading businesses and practices have chosen to play the longer, more consistent Game 2.