Why Do More Than 90% of Traders Lose?

[Pony 10]

Why Do More Than 90% of Traders Lose?

 

Simple answer: They don't.

The "Traders" referred to were never Traders to begin with.

 

The question posed by the Article, and found on countless "Trading Forums" should be:

 

Why do 90% of PEOPLE who attempt Trading lose?. If 90% of people who attempted to perform surgery, without benefit of a Medical Education failed, would it be correct to say "90% of Surgeons fail"?

 

I've been wondering this same thing. I'm new to this. I just got done with my third book and have developed my own little system. So far I'm about 60% accurate, and the forty percent are usually sideways movements. But I haven't placed an actual trade yet. I am putting a lot of effort to be successful in this, before I've even started, and it doesn't seem like it's rocket science, (though I haven't actually put my money where my mouth is) but you can't just see that it's gone down and say, "well that means it should go up then." I learned that lesson when I was 18 and trying that system.

 

Anyway, in about two months, when I feel like I truly am ready to risk real money (and I still expect to loose a little bit in the "real world." That's all depending on whether or not I get my job as a financial adviser next week, but I can't imagine enjoying a sales job as much as just learning about day trading, much less doing it.

[steve46 12]

The comment above is as close to the truth as can be.

 

If you don't find a way to get an education, you are going to fail (you are going to lose money)

 

If you find a way to get an education (a real challenge in this environment) you will still lose money but, you will have a way to get it back....

 

that is the difference.

 

Now the question is where do you look to get the education you need?

 

and how much should it cost?

 

You might start (at no cost) by reading my thread "an institutional look at the S&P futures"

 

Best Regards

Steve

[Snow Dog 10]

Trading should be simple but isn't. It will most likely be the hardest thing you ever do (and get right). The barriers to entry are none existent. A few bucks and an internet connection and heyho lets go. People spend more time deciding on which burger to buy that they do in looking at this as a business that takes time and effort to get right.

 

Goodness gracious I was looking at a thread that is clear for 4hr, lowest 1hr. Some guy bless him, when 4hr had signaled a perfect move up a few hundred pips ago and was now signaling move done, wass asking why his 15 min entry buy didn't work.

 

I could go on but my missus is :crap: suggesting i switch computer off.

 

Its a business treat it like one.

[bonchi07 10]

Very interesting article. Losing is part of the game. The key question is knowing "How much can you lose and still be able to keep going." Have you read the biography of Jesse Livermore? He went broke 4 times and every time he was able to come back strong, not only financially strong but psychologically more aware of what the market represents. You are right!! It is not a quick get rich job. It takes years to learn and to master it. This learning process has to do a lot with human psychology. It is the process of learning about our emotions and how to control them. This is the real hard learning that takes place when fighting with ego and greed.... It is a hard path because we dont fight the market, we fight ourselves!!!

[Enigmatics 10]

Very interesting article. Losing is part of the game. The key question is knowing "How much can you lose and still be able to keep going." Have you read the biography of Jesse Livermore? He went broke 4 times and every time he was able to come back strong, not only financially strong but psychologically more aware of what the market represents. You are right!! It is not a quick get rich job. It takes years to learn and to master it. This learning process has to do a lot with human psychology. It is the process of learning about our emotions and how to control them. This is the real hard learning that takes place when fighting with ego and greed.... It is a hard path because we dont fight the market, we fight ourselves!!!

 

Got my interests peaked in that biography ..... Gonna try to snag a copy ....

[horsesense 10]

Concentrate on the techniques and work ethics of the 10% who do make money. Go easy, stay focused, be patient and always protect your cash.

Keep reading and learning. Think of your loses as the price of tuition. It's a tough challenge. That's why we do it.

[Snow Dog 10]

It is the process of learning about our emotions and how to control them. This is the real hard learning that takes place when fighting with ego and greed.... It is a hard path because we dont fight the market, we fight ourselves!!!

 

Have to fight our own get rich quick impulses first. Take any new method demo it until completely happen you understand it and when you can demo sufficient win % and profit % to put you ahead then go live.

 

Doing your own method, back test in trending and ranging days that it'll stand up. Then go live .................................. with confidence in your methods.

[Snow Dog 10]

Have to fight our own get rich quick impulses first. Take any new method demo it until completely happen you understand it and when you can demo sufficient win % and profit % to put you ahead then go live.

 

Doing your own method, back test in trending and ranging days that it'll stand up. Then go live .................................. with confidence in your methods.

 

Happy not happen!!!!!

[Pony 10]

The answer sir or madam, is that retail (amateur) traders lack education, aptitude, skills, experience and are usually under capitalized....In addition, they are often guilty of simply visiting sites like this one, asking everyone around them how to trade and then throwing money down the drain on approaches that utilize lagging indicators. Clearly you can't learn to fly jets by watching "Top Gun" and then pretending to be Tom Cruise...and generally speaking you won't become a special forces soldier by watching Sylvester Stallone in Rambo....what is needed is education, guidance and time...otherwise the odds are in favor of failure and loss of capital...

 

This was posted a while ago, but what's wrong with lagging indicators, and why do they have them if they aren't meant to be utilized?

[steve46 12]

This was posted a while ago, but what's wrong with lagging indicators, and why do they have them if they aren't meant to be utilized?

 

 

Whats wrong with lagging indicators?

 

Ok I'll play...theres nothing wrong with lagging indicators, however if you rely on them for your entry you are always late.....thats one

 

#2 they have no predictive ability. What you need is the ability to predict continuation or reversal of trend and then continuation...indicators can't do it consistently....thats 2

 

#3 They "HAVE THEM" so that naive newbies will use the software thinking that they have a way to make money....I believe thats 3 strikes.....

[Pony 10]

The third one isn't really against lagging indicators. That's like saying, "high school kids drink beer, so beer is terrible," when in fact, beer is awesome. However, I get your point. But you do not utilize them at all?

[tommaso 10]

Here is an interesting article i came across.

 

http://articles.latimes.com/2011/ap...rading-20110403

 

Think real real real hard if you want to pursue trading. Your dream of making money, your dream of getting rich quick, your dream of driving a Ferrari are all a myth. Movies u watched how traders get rich quick are all a myth.

 

The reality is, more than 90% of small traders lose!! They just lose!!!

 

I am looking for the best answers

 

To successfully trade 2 types of capital are needed:

 

- risk capital

- intangible capital (intelligence)

 

This combination is relatively rare. So you have:

 

:haha: Pr ( risk capital > 500K AND intelligence > chimpanzee iq | trader ) << 10%

 

 

T

[Enigmatics 10]

Whats wrong with lagging indicators?

 

Ok I'll play...theres nothing wrong with lagging indicators, however if you rely on them for your entry you are always late.....thats one

 

#2 they have no predictive ability. What you need is the ability to predict continuation or reversal of trend and then continuation...indicators can't do it consistently....thats 2

 

#3 They "HAVE THEM" so that naive newbies will use the software thinking that they have a way to make money....I believe thats 3 strikes.....

 

#3 is the most glaring to me.

[TimRacette 11]

Do as others do and you'll end up like everyone else. You're better off in doing your own thinking trading your own methods and being different.

[Snow Dog 10]

Use indi's don't use them. If you go with them make sure you understand their +'s and -'s. If I told you of a trader that trades gu 4hr macd divergence only 30-50 full lots at a time (not piddling 5 digit broker stuff) would you reconsider indi's.

[dangermouseb 10]

Seems pretty straightforward.

 

Everybody looses the bid-ask spread and commisions on average.

 

Anybody taking more risk than is sensible for their account will loose because they will hit the point where they are broke. (Basic position sizing).

 

Whether that corresponds to 90% of traders or not I don't know.

 

Anyone with zero edge who places appropiate betsizes will gradually drift down at a rate determined by the bid ask spread and commissions with noise superimposed.

 

I assume then as people blow up their account they then look for things to blame (e.g. wrong indicator etc) rather than just admitting they have no edge yet.

 

-- DM

[johnw 10]

Do as others do and you'll end up like everyone else. You're better off in doing your own thinking trading your own methods and being different.

 

 

You have hit it in a nutshell Tim.

 

90% of Traders fail because they listen, read and learn from the 90% of failed Traders that have gone before them.

 

Sadly, this truism is why Sites like this one are breeding grounds for failure.

 

All the ingredients for success lie within this Site wrapped up in a handful of posts and carefully hidden in plain view ...

[TRADEZILLA 10]

Anyone that has an edge that is real, the more you play the better your odds given that you're trading the way you're supposed to.

 

The best theory that applies to the market is game theory because this is ultimately gambling. A gambler that counts cards at the blackjack table, the more he plays, the more his edge kicks in. If he keeps losing, its because he's not counting the cards right. The same applies to trading. If you're doing everything right and you're not consistently profitable on a weekly/monthly basis, then your edge is not real but imagined, or you're not adhering to the way you're supposed to trade.

 

The macro thesis of your method needs to be sound, then you just need a way to capture the edge that your thesis assumes in the micro details on how you're supposed to trade.

[Rande Howell 10]

Here is an interesting article i came across.

 

http://articles.latimes.com/2011/ap...rading-20110403

 

Think real real real hard if you want to pursue trading. Your dream of making money, your dream of getting rich quick, your dream of driving a Ferrari are all a myth. Movies u watched how traders get rich quick are all a myth.

 

The reality is, more than 90% of small traders lose!! They just lose!!!

 

I am looking for the best answers

 

Most traders, like many people in life, refuse to examine their lives and themselves. These people, when in trading, are faced with their self delusion and insist and maintaining it. Steve46 is quite accurate.

 

Rande Howell

[johnw 10]

Anyone that has an edge that is real, the more you play the better your odds given that you're trading the way you're supposed to.

 

The best theory that applies to the market is game theory because this is ultimately gambling. A gambler that counts cards at the blackjack table, the more he plays, the more his edge kicks in. If he keeps losing, its because he's not counting the cards right. The same applies to trading. If you're doing everything right and you're not consistently profitable on a weekly/monthly basis, then your edge is not real but imagined, or you're not adhering to the way you're supposed to trade.

 

The macro thesis of your method needs to be sound, then you just need a way to capture the edge that your thesis assumes in the micro details on how you're supposed to trade.

 

 

Another Truism Tradezilla, I wholeheartedly agree with you.

 

If you have the strength and courage to move yourself beyond a state of self delusion as Rande mentions, you are then in a position to view price with an OPEN MIND.

 

Then and only then, the obvious will become obvious ..crystal clear in fact to a point where you wonder what all the fuss is about...

If you think you have moved beyond delusion but you still cannot see the puzzle then you have simply deluded yourself yet again... so back to square one.

 

But when you suddenly see Price in an entirely different light and your view of price does not shift from one day to the next or one month/year to the next then ...

 

This is your EDGE.

 

This is what you can count on all day and everyday if you are day trading ES and others.

All you have to do is to maintain your state of OPEN MINDEDNESS all day and every day and your edge will do the work.

 

Is this possible ... and if so, is this difficult.

The answer is no and yes if you are inclined to think this way.

Or the answer is yes and no if you are prepared to commit yourself to change ... radial life altering change.

[emg 12]

there is not one good single answer on why more than 90% of small traders lose.

[bobcollett 10]

there is not one good single answer on why more than 90% of small traders lose.

 

Hi emg

Just a thought

Have you ever read that famous book "How to make friends and influence people"

Regards

bobc

[TRADEZILLA 10]

there is not one good single answer on why more than 90% of small traders lose.

 

I think it can all be summed up in 2 answers, either the trader has not found a reliable edge that is comprehensive or their psychology/discipline does not allow them to give their edge a chance to kick in.

 

I believe the biggest delusion many traders have is that they believe the market allows for a big edge. Any edge that can be found will be slight, but its the trust in this slight edge that will do wonders for your results. However, your edge needs to be comprehensive and not just entries, meaning good probability in both entries and exits, R/R, risk management and etc..

[TRADEZILLA 10]

Another Truism Tradezilla, I wholeheartedly agree with you.

 

If you have the strength and courage to move yourself beyond a state of self delusion as Rande mentions, you are then in a position to view price with an OPEN MIND.

 

Then and only then, the obvious will become obvious ..crystal clear in fact to a point where you wonder what all the fuss is about...

If you think you have moved beyond delusion but you still cannot see the puzzle then you have simply deluded yourself yet again... so back to square one.

 

But when you suddenly see Price in an entirely different light and your view of price does not shift from one day to the next or one month/year to the next then ...

 

This is your EDGE.

 

This is what you can count on all day and everyday if you are day trading ES and others.

All you have to do is to maintain your state of OPEN MINDEDNESS all day and every day and your edge will do the work.

 

Is this possible ... and if so, is this difficult.

The answer is no and yes if you are inclined to think this way.

Or the answer is yes and no if you are prepared to commit yourself to change ... radial life altering change.

 

John,

I think what you're describing is a realization and not necessarily an edge. An edge has to put the odds in your favor everytime you take a risk. Knowing that price moves the same everyday does not in itself increase your odds of trading in the right direction or not getting stopped out. I don't think price moves the same every day because markets have different types of days, trend/bracket/congestion and etc.. In addition, mixed in there is a lot of random behavior.. It is possible but certainly difficult because the slight edge that is available is almost always very well hidden..

TZ

[johnw 10]

John,

I think what you're describing is a realization and not necessarily an edge. An edge has to put the odds in your favor everytime you take a risk. Knowing that price moves the same everyday does not in itself increase your odds of trading in the right direction or not getting stopped out. I don't think price moves the same every day because markets have different types of days, trend/bracket/congestion and etc.. In addition, mixed in there is a lot of random behavior.. It is possible but certainly difficult because the slight edge that is available is almost always very well hidden..

TZ

 

Hi TZ,

 

Yes, I am describing a realisation and yes it flows directly into an 'edge' that exists each and every day.

You appear to me to be thinking of the overall behaviour of the day when you write 'trend/bracket/congestion and etc..'

 

I have no interest in this behaviour until the day becomes yesterday, in which case it may have some influence on how today trades out....

 

Primarily I am only interested in each Price Wave and that is what I trade.

Some days present more trade-able PWs to me than others, but on days that present fewer PWs, they tend to be longer in duration.

 

TZ, please consider me as a simple person who tries to relax into simplicity each day

by seeing the simplicity in the things I do.

 

This attitude neither makes me right now wrong ... it just keeps me simple.