Throughout my years of investing I have had the opportunity to be a part of many different experiences – some good and some bad. What I have learned by being trained and working with investors in all different markets is that the discipline to follow the fundamental rules to investing can make or break someone’s bank account. Sadly, I’ve seen a lot of great investors go from multi-millionaires to dead broke in a matter of minutes because they became foolish.

Whether I have seen a stock trader or someone who works in the options and futures pits, I have found that when they lose their shirt it is because they didn’t stick to the basics. While even amateur investors know these basic rules to investing, it is much easier said than done. Maybe this is because most investors have a competitive edge, and we think we can out-perform or outsmart the next guy. But the bottom line is it is pretty tough to outsmart the market.

Investing is a zero sum game

For every winner there is a loser, which is what keeps the market efficient. Knowing this, it is possible to develop an edge in order to win more than you lose. This is why some of the best trading systems make people so much money.

These systems have found a way to analyze trading opportunities and automate the process so you can get in and out of trades quickly and profitably.

However, many investors and professional traders still manage to end up in the red. These investors are unsuccessful because they let emotions get in the way, are too stubborn to be successful, or they think they know something other people don’t. They can literally have their trading system screaming at them to get in or out of a trade, and yet they ignore all the signs.

What these “losers” fail to realize is that the market is irrational because it is driven by emotion and institutional houses throwing their weight around. For that reason, it is nearly impossible to predict short-term directions and win every time. If you avoid the common mistakes that every investor makes, you can develop an edge and build an unlimited amount of wealth.

But, for those who like to make money, sticking to the basics may not be an easy task. It involves leaving your ego behind, some planning and sticking to the rules or trading system you have in place.

Jessica Donnovan, Guest Contributor
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