Why Do More Than 90% of Traders Lose?

[emg 12]

Steven, imo it's much more difficult to trade nowadays as apposed to 20 years ago, and I think it will continue to become more difficult as the markets become more efficient. The meat of the move is in the larger time frame. It's hard to compete as a few tick scalper with so many HFT systems hitting the tape all day long.

 

Small traders must join the house (HFT, Hedge, banks, prop) in order to become a successful trader. The house will provide CPA, platform, data feed, desk, computer and mutiple monitors, bosses, etc etc etc.

 

There is no way a newbies begin their trading at home will be successful with an account size $5000

[wheernCow 10]

Hello there All people, Just signed up with Traders Laboratory - Active Trading Community. I hope this is actually the proper place to share our olpinions as well as the views. By the way is "Full Discussion" is the suitable place to submit introduction topic?

[wheernCow 10]

Hi all Every body, Just joined Traders Laboratory - Active Trading Community. I hope this can be a perfect place to talk about our olpinions and also views. Btw is "Full Discussion" is the proper place to post introduction topic?

[ropgreampwall 10]

Hello!

 

I have to say hello to every one, I'm absolutely new here

You've really nice forum, I hope I can also be of assistance right here needless to say you will feel just like you have questions to for me, why not ask

Lets hope to find new associates and to come to be active inside website.

 

Thank you good friends!

[TimRacette 11]

emg,

 

I find trading successfully, above all else is dependent on your ability to fully accept the risks associated with placing each trade. If you can learn to detach yourself from the money and trade with size small enough that does not instill fear of loss, then you stand the greatest chance to succeed as a trader.

[Tradewinds 12]

I found another interesting article:

 

Chicago Board of Trade workers hold weekly bible study classes - Chicago Sun-Times

 

More than 90% of small traders lose in a "Spectacular Fashion." They just lose!!

 

From the article:

 

“There are hundreds and hundreds of systems that you can trade,” said the 56-year-old Chicagoan. “Ultimately, if God wants those to work, they work. If He doesn’t, they don’t.

 

“If I operate within His system, then I can have peace and He makes order out of chaos for me.”

 

From the article, it seems to me, that what is happening, is that when trust is put into God, it has a psychologically calming affect on the trader. This in turn may make a big difference in their ability to trade well. In effect, the trader may be detaching themselves from any concern. So I think it is possible that a person could trade better from having a Bible study. But I would like to point out some serious concerns. When people attribute success in anything to God, there is always extremely dangerous dynamics that get set up. An implication can be made that God's favor is on certain people, and not on others. This can turn into a situation where some people become self-righteous, believing that God is on their side, and the other people are somehow inferior.

 

The outcome of dynamics like this can be catastrophic under the right circumstances. People do all kinds of bad things in the name of God.

 

Let's say that 10 million people pray to win the lottery every week. Sooner or later, one of the people who prayed wins the lottery. So, did God favor the person who won the lottery? Does God have something against all the others who didn't win the lottery? Was it simply a statistical probability that if enough people pray to win the lottery, one of them will eventually win?

 

If two sports teams who are playing each other both pray before the game, did God favor the winning team? What if both teams were of the same religion? What if they were both from different religions?

 

What if two sports teams with two different religions played each other every year for 50 years. And at the end of 50 years, each team had won 25 times? Whose God was greater?

 

It might be that all those people praying to win the lottery, win their sports game, and make money trading have absolutely no idea what they should be praying, or the character of God or what God wants from people.

 

I'm not writing this to discount God, or give people an excuse to ignore God.

[august8 10]

Emotions may be one of the main reason why most failed in trading...

 

http://goarticles.com/article/Trade-Stock-Successfully-with-Emotional-Detachment/4674012/

[pbylina 10]

Because they trade "Spot" Fx and they have no access to orderflow and dont know what it is and why its important.

[Wourrybar 10]

Hello!

 

I must introduce myself to every body! It's a good community forum. I'm enthusiastic about marketing on this web site, similar to ad banners or even personal communications. Is it possible right here? I would not find any specifics of it.

 

Thanks and finest take care!

[SRspider 10]

I think one of the reasons most traders lose money is because they don't have a firm belief in the process of what it takes to become successful. They do not test their plan on a simulator before going live. What ends up happening is that after a few losses the trader throws the plan away and starts all over again buying another system or plan. And the cycle repeats after some losers. While this is happening frustration and anger are slowly building up inside as the next system fails them.

 

The trader needs to learn the system , and test the system analyzing losses to figure out how to improve on the plan. After a few months of positive results the trader can then go at it live with real money with small size. Few people have the discipline to do this, since they want the quick money, and their emotions take over. People get frustrated and angry, a deadly combination in trading.

 

Think about about why people lose their discipline in trading and do things like, add to losers, revenge trade, or chase the market. The real reason is that they are tying the results to who they are as an individual. When in reality it has nothing to do with who you are, and everything to do with the quality of your setup. You might have a plan or setup and if you have a loser and your thinking starts going negative, and you start saying to yourself, "I am stupid", "I need to get that money back", "This will never work", "I have wasted all these years trying to figure this out". Your emotions take over and you start making mistakes like chasing or adding to losers etc. Which in turn leads to blowing out your account and a huge draw down day. One day of anger can end your trading career.

 

A trader with just one belief can begin to turn things around rather quickly. What is the key? In my opinion , convince yourself that the only way, the only way, to make this work is to choose a setup or plan, and stick to it for 30 days , no matter what the results are. Re affirm that belief every single day, forget about the results and see what happens. Do it on a simulator. Once you train yourself to do this for thirty days the next thirty days will be easier. I said easier not easy though. And soon you will be thinking about improving your setups and plan, since you will not feel personally responsible for the losses and your emotions will be in check.You will stop blaming yourself and start analyzing the setup for clues as to why it didn't work. Did you follow it exactly as you should have? Or was there a nuance that you notice that makes this particular setup inferior at times. This takes work and patience, but well worth the time and effort. When compared to spinning your wheels, going from system to system, guru to guru without any results.

 

I can go on and on, but this is getting a bit lengthy. I hope it helps some.

[Scott112 10]

It is possible to go to success as a small trader as well.All small traders are not losing.You have to choose the right trade for you.

[Balazs227 10]

Sorry guys, but I think this question is stupid. You should rather ask how the 10% sucseeds? You won't become a successfull trader by studing the losers. You become succesfull by studing the people in the 10%. Maybe too many traders ask the wrong questions? Perhaps 90%. Thats just my 2 cents.

[TimRacette 11]

Striving for consistency is the goal. It's always possible to get access to more capital if you have a consistent trading strategy. IMO it was harder trading smaller, trading larger became easier, ironically.

[MadMarketScientist 11]

Sorry guys, but I think this question is stupid. You should rather ask how the 10% sucseeds? You won't become a successfull trader by studing the losers. You become succesfull by studing the people in the 10%. Maybe too many traders ask the wrong questions? Perhaps 90%. Thats just my 2 cents.

 

Great post! I think the successful traders have a complete commitment to trading and do it full-time. If it is a hobby or a secondary pass-time, I know how the bottom line will be big red numbers. Trading must be addressed as a profession because if you do not treat it as so, those who do will separate you from your money very quickly.

 

MMS

[Tams 20]

the 10% who are not losers,

or the 5% who made it,

or the 1% who made it big...

they all share one trait,

they don't argue with the market.

 

in trading,

nobody cares about your reasons for success,

nobody cares about how you use your MACD or VSA or Fib numbers or whatever,

because nobody cares about your excuses for non-performance either.

 

there is only one job to do... that is to get on the train.

you can be a guru, you can be a rocket scientist, you can be a wiz kid,

if you are not on the train, even if your "prediction" is right, you are still a nobody.

 

 

ps. if you got on the train and got stopped out, sorry, you are worse than a nobody.

[SIUYA 11]

Sorry guys, but I think this question is stupid. You should rather ask how the 10% sucseeds? You won't become a successfull trader by studing the losers. You become succesfull by studing the people in the 10%. Maybe too many traders ask the wrong questions? Perhaps 90%. Thats just my 2 cents.

 

as Tams said in his wonderful manner.....

these answers are here, freely available and most of them revolve around the same old thing of dont fight the trend, run the profits, cut the losses, wait for the opportunity, have a plan and be consistent.

 

Most of the 90% seem to want to prove that these things dont work, and the few times/examples/people that going against these general rules succeed they trump out as the new holy grail.

I have done it as (or tried ) I am sure most have, and some continue to do it to their peril - you dont need to reinvent the wheel.

 

The lure of taking on the market and picking a top or bottom is more addictive and just as soul destroying as the worst narcotics.

[Pedro01 10]

The market is like a bucket.

 

Lots of people put money in to the bucket. All of them want to take more money out of the bucket than they put in. This is physically impossible. Hence, whether you realise it or not, you are competing with people for that money.

 

Unlike a bucket, the market also has brokers, back office staff, sales people, lap dancers, marketing etc. etc. etc pulling money out too.

 

Why do 90% lose? How could it be any other way?

[Tams 20]

The market is like a bucket.

 

Lots of people put money in to the bucket. All of them want to take more money out of the bucket than they put in. This is physically impossible. Hence, whether you realise it or not, you are competing with people for that money.

 

Unlike a bucket, the market also has brokers, back office staff, sales people, lap dancers, marketing etc. etc. etc pulling money out too.

 

Why do 90% lose? How could it be any other way?

 

I do not agree with that analogy.

 

you are not competing with people to get the money out,

the money is freely available to everybody,

you just have to go get it. Nobody is stopping you, or hindering you in anyway.

you do not need the strongest arms, or brightest brain, or largest capitals, or fastest speed, to succeed.

There are plenty of money for everyone who wants them.

 

 

regarding the broker, back office, etc., you are referring to the zero-sum game argument. That's a whole lot of different story... beaten to death over the last 10 yrs on various forums. If you think it applies to the discussion here, you can go ahead... not my cup of tea; it is totally irrelevant to me.

[bwebber 10]

The market is like a bucket.

 

Lots of people put money in to the bucket. All of them want to take more money out of the bucket than they put in. This is physically impossible. Hence, whether you realise it or not, you are competing with people for that money.

 

Unlike a bucket, the market also has brokers, back office staff, sales people, lap dancers, marketing etc. etc. etc pulling money out too.

 

Why do 90% lose? How could it be any other way?

Exactly. That's how I see it too.

[mslk 10]

The lure of taking on the market and picking a top or bottom is more addictive and just as soul destroying as the worst narcotics.

 

yes i agree - for most people trying to trade, they treat it like a form of gambling, it just easier and more fun to try and pick tops and bottoms instead of sitting down, putting together a risk-management plan, wait for the 1 or 2 trading opportunities, execute, and watch it for the exit. its just too much boring work! its more fun to buy and sell throughout the day! - mslk

[noego 10]

yes i agree - for most people trying to trade, they treat it like a form of gambling, it just easier and more fun to try and pick tops and bottoms instead of sitting down, putting together a risk-management plan, wait for the 1 or 2 trading opportunities, execute, and watch it for the exit. its just too much boring work! its more fun to buy and sell throughout the day! - mslk

 

So True....My favorite line is "I get paid to wait"......if you can do that and only look for quality PLANNED plays and MANAGE your money you have a chance to keep some of your money. Fail to do that and your resume will need to be updated. Very simple but very few actually do it.

[mslk 10]

Very simple but very few actually do it.

 

isn't it interesting that its 'very simple' but damn freaking hard! it requires so much discipline. and with the overflow of information these days it makes it even harder. thats being discussed in the other thread: Information overload!! - Page 2 - Traders Laboratory Forums

- mslk

[noego 10]

Correction.....trading is not simple. The waiting and discipline is what should be simple yet very few folks find that to be fun and exciting so that was the basis for my comment. Trading is work. No doubt about it. There is no need to make it harder by slamming the buy/sell button everytime a candle changes color. Sorry for not clarifying.

[DionysusToast 10]

I do not agree with that analogy.

 

you are not competing with people to get the money out,

the money is freely available to everybody,

you just have to go get it. Nobody is stopping you, or hindering you in anyway.

you do not need the strongest arms, or brightest brain, or largest capitals, or fastest speed, to succeed.

There are plenty of money for everyone who wants them.

 

 

regarding the broker, back office, etc., you are referring to the zero-sum game argument. That's a whole lot of different story... beaten to death over the last 10 yrs on various forums. If you think it applies to the discussion here, you can go ahead... not my cup of tea; it is totally irrelevant to me.

 

In terms of competition - it is a very abstract form of competition. You are not head to head against anyone per se. Still, if you trade outright positions, then when you buy you are doing it with the expectation that someone will buy from you later on at a higher price. As such, there will always be a set of 'bagholders' who don't have a greater fool to sell to.

 

The 90% are the perpetual bagholders.

 

If you watch the ES for any amount of time, it is quite clear that there is a lot of gameplay going on. Most days develop as a series of shakeouts, fakeouts & reversals. The people doing this have almost unlimited risk. The people getting shaken out have 4-10 tick stops. It is transfer from weak hands to strong.

 

The 90% are the perpetually shaken out.

 

There is not money for everyone. If 90% of the people had what it took to be profitable then "what it took to be profitable" would change. It's akin to the laws of physics - what goes in can come out and nothing more. Perhaps we should expect it to be a bit fair and for only 50% to be losers BUT life isn't like that.

 

The guys that are the best at the current game are the ones taking the spoils. The game could of course change in which case I sincerely doubt that distribution would be anything like equal. In that case, I'd still expect 99% of people to simply not cotton on to what the game was and for the few to win out.

 

The 90/95/99.999% losers is a transient trading population that will come, see and be conquered. It will always be like that regardless of how many books Alexander Elder publishes (or perhaps it's because of how many he does).

 

Effectively - there is nothing to see here, move along, all is as it should be.

[Enigmatics 10]

Those who do have the capital are left to soak up the accounts $5k at a time from the dreamers and gamblers.

MM

 

In my time reading stock message boards over the course of the last 2.5 years, this is really the first time I've seen someone else openly say this. It became so painfully obvious to me early on.