Ask Colin

Your statements that " 9 out of 10 people lose" and that "It takes 5 to 10 years to become a good trader" contradict the idea that trading stocks with technical analysis is the best way to make capital gains. If I learn correctly, could I become a successful trader within 12 months?

The facts are not really in dispute. The best returns in the long time from asset classes puts them in this order:

Shares

Property

Fixed interest

Cash

It seems that you have picked this up from your research. However, what you should also have picked up in almost any book on investing is that it is not sensible to put all your money into shares. It is an extremely risky thing to do and would only be advised to someone who is young and then only in the forst stages of their saving and investing cycle.

I think it is even less sensible to only use technical analysis, even though it is my primary focus for timing. Making money in shares is done by assuming risk. However, only a fool does not try to limit or manage that risk. Timing is only part of the range of risks you need to manage. And relying only on technical analysis will not help you with many of the important risk areas. You must have a fully balanced approach. That means you need to use both fundamental and technical analysis.

Many people come to use technical analysis because they see fundamental analysis as too difficult or taking too long to learn. This is the worst reason and will lead to failure. They are looking for the easy way out. There isn't one.

You are also assuming that buying and selling shares - that is trading - is the best way to go. The evidence is far from conclusive and in fact stacks up rather heavily against trading. Many more people succeed through long-term consistent investment approaches than from trading. Just because there are some good and successful traders does not mean anyone can do it, rather like it is true that some people can run a marathon in under two and a half hours, but that does not mean either that anyone can do it. You have to have the aptitude, the desire and put in the work.

The reason people have failed is all bound up with the above paragraph. However, the prime reasons seem to revolve around:

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