Is It True That 90% of Traders Never Make a Dime!

[MightyMouse 12]

Wychoff,

 

Its a common misconception held by novices that professionals do not make mistakes. Unfortunately, for them, it leads to a life time of chasing shadows attempting to seek perfection in a game with imperfect information. It is also unfortunate when they lead others to seek the same. I suppose someone has to feed the bigger fish.

 

I am far from arrogant enough to call myself a professional trader, but I do make money when I trade. I have demonstrated it and can demonstrate it.

 

I do not teach, will not teach, but I will give steve46 a hand if he would like one.

 

MM

[MadMarketScientist 11]

Hi,

 

I think the we need to clarify what 'make a mistake' means. Most people on this thread who are talking about making mistakes everyday are speaking about 'getting stopped out of a trade', is that right? If that is the case, then yes you will most definitely 'make mistakes' everyday.

 

But according to steve46, getting stopped out is not a mistake, its just the natural course of trading. An example of a mistake would be screwing up your risk management and taking a loss bigger than you should have. If that is the case, then I agree with steve46, you better not be making mistakes everyday!

 

So the answer depends on your definition of 'make a mistake' ... what is everyone's definition of it?

 

thx

MMS

[wanr 10]

Well said Mad Market.

 

At the opposite, if making no mistakes means buying at a the bottom and selling at a the top of a trend on every deal, this is just not gonna happen. I guess we are always some kind of too early and too late in entries and exits. There is no way around and this could be considered as a mistakes if it is really to late or early (anticipate a reversal without clear signals or try to make some extra bucks on an hypothetic 4th or 5th leg)

 

Besides physical mistakes (wrong button, etc...), my biggest mistakes happen when I somehow try to feel and anticipate the market moves outside my rules (which are not very well defined so far because I am still experimentating, well I'm just a beginner). On the other hand it is also sometimes when I make my best trades...

[MightyMouse 12]

There are 4 basic mistakes that can be made.

 

Entering when you should not have entered.

Not entering when you should have entered.

Exiting when you should have stayed in.

Staying in when you should have gotten out.

 

You can make the claim, if you like, that you are not making mistakes if you are following your system to a tee. But, if you are following your system to a tee and went long because your system told you to go long when you probably should have been short or stayed out, I would strongly suggest that you made a mistake.

 

In spite of the mistakes, you do not have to trade "mistake free" to make money.

 

Don't foolishly mistake what I am suggesting to mean that you do not need a plan and you do not need to manage your risk.

 

Hopefully, some of you can see the positive in this message.

[cash123 10]

exiting a profitable position too early is not a mistake.I only wish I could do this more often :-). Finetuning often is detrimental to long term profitability imo.

Some of the most successful players consistently sell too soon.

[wanr 10]

MightyMouse,

 

Then you can summarize it in only 1 trading mistake: not trading well.

 

But I am not sure it helps. Anyway I understand what you mean. Optimizing these 4 actions would result in a perfect trading.

 

I consider I have to assume that no system is perfect and can make every trade profitable.

 

If my system indicates me to be long and then the market drops, I don't consider it to be a mistake. It was an opportunity that didn't realize.

 

I consider it would have been a mistake not to go long, even if the deal happened to be a loser, because it would mean that I don't take all the opportunities that makes my system statistically work on the long run.

 

For every art/technique involving random phenomenons, a very bad move can turn out good by luck and a masterpiece can turn out awfull by lack of chance. But on the long run, one can see if it was luck or mastery.

 

Anyway, this is pure procrastination. Whatever way you see the market, if it works for you, that is great. I am a just a beginner and far from getting confident in my current skills.

 

This is what I like in trading. You have so many different ways of understanding things and acting. It is still quite puzzling for me but I hope things will get clearer with time.

[gosu 10]

Hi,

 

I think the we need to clarify what 'make a mistake' means. Most people on this thread who are talking about making mistakes everyday are speaking about 'getting stopped out of a trade', is that right? If that is the case, then yes you will most definitely 'make mistakes' everyday.

 

But according to steve46, getting stopped out is not a mistake, its just the natural course of trading. An example of a mistake would be screwing up your risk management and taking a loss bigger than you should have. If that is the case, then I agree with steve46, you better not be making mistakes everyday!

 

So the answer depends on your definition of 'make a mistake' ... what is everyone's definition of it?

 

thx

MMS

 

Harping on your "mistakes" is a mistake. LOL

 

I use the word "error." Some errors are major, most are not. The two biggies for me are misreading sentiment and not obeying when sentiment changes. The first is related to the trading methodology and the second is related to behavior. These two errors are very serious and go to the core of extracting from the market.

 

Less serious errors are that of timing, what people describe with the terms "early" and "late." All beginners know that fine tuning the timing of actions is worthwhile. Hence they spend an inordinate amount of time and energy looking for entries (usually called "setups") and exits (good if at "profit targets," bad if at "stop losses"). Compared to errors in misreading the right side of the market and not staying on the right side, timing errors are very minor but overemphasized by conventional wisdom (read: educators, writers, system sellers, etc.).

 

Negligible errors are things like hitting the wrong key, forgetting to switch contracts at rollover, trading with a hangover, etc.

 

 

Now to your point about whether "getting stopped out of a trade" is a mistake. Of course this is a mistake. Getting stopped out is in the first category of errors stated above that go to the core of extracting from the market. It is a very serious mistake, and people who trade this way as a rule are fish posing as serious players.

 

Yet look at how the entire vendor industry is organized around setups and stops and profit targets. These are just experienced fish selling to newer fish.

[wanr 10]

Hi gosu,

 

Interesting post. Could you elaborate on the first 2 points?

 

How do you trade? Daily, swing, long term? What time frame? What tools do you use to read the market? Only Technical analysis / Price action?

[MightyMouse 12]

Harping on your "mistakes" is a mistake. LOL

 

I use the word "error." Some errors are major, most are not. The two biggies for me are misreading sentiment and not obeying when sentiment changes. The first is related to the trading methodology and the second is related to behavior. These two errors are very serious and go to the core of extracting from the market.

 

Less serious errors are that of timing, what people describe with the terms "early" and "late." All beginners know that fine tuning the timing of actions is worthwhile. Hence they spend an inordinate amount of time and energy looking for entries (usually called "setups") and exits (good if at "profit targets," bad if at "stop losses"). Compared to errors in misreading the right side of the market and not staying on the right side, timing errors are very minor but overemphasized by conventional wisdom (read: educators, writers, system sellers, etc.).

 

Negligible errors are things like hitting the wrong key, forgetting to switch contracts at rollover, trading with a hangover, etc.

 

 

Now to your point about whether "getting stopped out of a trade" is a mistake. Of course this is a mistake. Getting stopped out is in the first category of errors stated above that go to the core of extracting from the market. It is a very serious mistake, and people who trade this way as a rule are fish posing as serious players.

 

Yet look at how the entire vendor industry is organized around setups and stops and profit targets. These are just experienced fish selling to newer fish.

 

In the market if there are winners and fish and stops morph you into being a fish, the trade with only a target and no stop. By your logic, you will be a winner.

 

I do agree that I need stops to be hit for me to make money, but that doesn't stop me from mitigating risk through the use of stops.

[MightyMouse 12]

MightyMouse,

 

Then you can summarize it in only 1 trading mistake: not trading well.

 

But I am not sure it helps. Anyway I understand what you mean. Optimizing these 4 actions would result in a perfect trading.

 

I consider I have to assume that no system is perfect and can make every trade profitable.

 

If my system indicates me to be long and then the market drops, I don't consider it to be a mistake. It was an opportunity that didn't realize.

 

I consider it would have been a mistake not to go long, even if the deal happened to be a loser, because it would mean that I don't take all the opportunities that makes my system statistically work on the long run.

 

For every art/technique involving random phenomenons, a very bad move can turn out good by luck and a masterpiece can turn out awfull by lack of chance. But on the long run, one can see if it was luck or mastery.

 

Anyway, this is pure procrastination. Whatever way you see the market, if it works for you, that is great. I am a just a beginner and far from getting confident in my current skills.

 

This is what I like in trading. You have so many different ways of understanding things and acting. It is still quite puzzling for me but I hope things will get clearer with time.

 

Trading profitably is knowing how to take more money from the market than it takes from you. It's a skill that you develop from within. It has nothing to do with charts or indicators.

[zdo 20]

Great posts, all.

 

MightyMouse’s

Entering when you should not have entered.

Not entering when you should have entered.

Exiting when you should have stayed in.

Staying in when you should have gotten out.

 

is the same list as

 

1 Entering too early

2 Entering too late

3 Exiting too early

4 Exiting too late

 

just from a different perspective

 

Entering when you should not have entered is same as 1. Entering too early. It’s entering way way way too early – something I’ve done more than a few times in the conditions of the last couple of weeks

Not entering when you should have entered is same as 2. Entering too late. It’s entering way way way too late so late you don’t enter at all in some cases

Exiting when you should have stayed in. is same as 3 Exiting too early. Cash123 posted “exiting a profitable position too early is not a mistake.I only wish I could do this more often :-). Finetuning often is detrimental to long term profitability imo.

Some of the most successful players consistently sell too soon.” This is highly system specific and if, for whatever reasons (sychological mostly), we jump out and don’t stay with a position to the optimal exit, that is a mistake… many more aspects of this exist than we’re covering here… but those ‘most successful players’ are not selling too soon. Specific to their system, they are selling just at the right time…

Staying in when you should have gotten out. is same as 4 Exiting too late. Giving profits back is one side of this mistake. The other - letting a loss run = exiting way to late! :doh: No Stop is the account killer mistake. Any outcome is possible this trade. Getting stopped out is not nearly as big a fkn mistake as is not getting stopped out when you should have. Not having a loss point set is stepping out over the edge and being delusional about the ultimate result because the market’s random-like outcomes sometimes makes the ‘magical’ intermittently possible .

 

When in flow, the opposite of those mistakes happens. Paradoxically, the ever present and varying degrees of imprecision are embraced. They become like 'da nada'. I operate in an environment of ever changing conditions, uncertain outcomes, and in opportunity and risk elevated above ‘normal’ and repeatedly ‘restart’ to personally bring those factors conscious and up front

 

For me, the biggest trading mistake possible is to stop working on clearing whatever is standing in the way of creating COMPLETE WHOLE HEARTED COMMITMENT!

 

I thought about expanding on some of these ‘mistakes’ thoughts and posts further, but … might as well practice what I preach. In the end, we will all be better served moving our attention to what is working and how to make that work better instead of on obstacles and what is wrong…

 

All the best,

 

zdo

[MightyMouse 12]

Great posts, all.

 

MightyMouse’s

Entering when you should not have entered.

Not entering when you should have entered.

Exiting when you should have stayed in.

Staying in when you should have gotten out.

 

is the same list as

 

1 Entering too early

2 Entering too late

3 Exiting too early

4 Exiting too late

 

just from a different perspective

 

Entering when you should not have entered is same as 1. Entering too early. It’s entering way way way too early – something I’ve done more than a few times in the conditions of the last couple of weeks

Not entering when you should have entered is same as 2. Entering too late. It’s entering way way way too late so late you don’t enter at all in some cases

Exiting when you should have stayed in. is same as 3 Exiting too early. Cash123 posted “exiting a profitable position too early is not a mistake.I only wish I could do this more often :-). Finetuning often is detrimental to long term profitability imo.

Some of the most successful players consistently sell too soon.” This is highly system specific and if, for whatever reasons (sychological mostly), we jump out and don’t stay with a position to the optimal exit, that is a mistake… many more aspects of this exist than we’re covering here… but those ‘most successful players’ are not selling too soon. Specific to their system, they are selling just at the right time…

Staying in when you should have gotten out. is same as 4 Exiting too late. Giving profits back is one side of this mistake. The other - letting a loss run = exiting way to late! :doh: No Stop is the account killer mistake. Any outcome is possible this trade. Getting stopped out is not nearly as big a fkn mistake as is not getting stopped out when you should have. Not having a loss point set is stepping out over the edge and being delusional about the ultimate result because the market’s random-like outcomes sometimes makes the ‘magical’ intermittently possible .

 

When in flow, the opposite of those mistakes happens. Paradoxically, the ever present and varying degrees of imprecision are embraced. They become like 'da nada'. I operate in an environment of ever changing conditions, uncertain outcomes, and in opportunity and risk elevated above ‘normal’ and repeatedly ‘restart’ to personally bring those factors conscious and up front

 

For me, the biggest trading mistake possible is to stop working on clearing whatever is standing in the way of creating COMPLETE WHOLE HEARTED COMMITMENT!

 

I thought about expanding on some of these ‘mistakes’ thoughts and posts further, but … might as well practice what I preach. In the end, we will all be better served moving our attention to what is working and how to make that work better instead of on obstacles and what is wrong…

 

All the best,

 

zdo

 

Wasn't taking credit away or trying to change them. Other things lead to one of the 4 mistakes. For example: Having a conversation with you wife before you trade could lead to mistake A, B, C, or D. So, you should refrain from speaking to her before you trade.

[zdo 20]

Wasn't taking credit away or trying to change them...

 

Nor was I... it might have seemed that way because I mixed noting the similarities in with some disagreements with other posts.

 

... Other things lead to one of the 4 mistakes. For example: Having a conversation with you wife before you trade could lead to mistake A, B, C, or D. So, you should refrain from speaking to her before you trade.

 

Good point...

wife / girlfriend and family issues needs a whole separate thread in ‘psychology’ section

[sheaphilip 10]

Yes this is true and at one place i see there were 95% was written.

[lrushing 10]

The percentages fluctuate, but mostly are accurate. As an experienced trader with 15+ years of experience, you have good months and bad months.

 

A few reasons traders struggle:

 

Smart traders have an insurance nest egg (ie., 5-10% of all profits) that they can use to pay themselves during the tough times.

 

Consistent profits can be generated from using consistent chart patterns and formations for chart analysis and execution. (KISS method.)

 

The focus is to master your style of trading and learn to always be humble with the markets.

 

For example, mastering the most repeatable chart pattern (i.e., FLAGS) in all markets can

lead to great profits ....weekly!

 

If you can learn to make just a $100 a day consistently with a small account, then you can begin to make a nice monthly living.

 

As you gain experience and success in one style of trading, then you can experiment with small risk in another. This approach will lead a developing trader down the path of multiple streams of profits.

 

Leroy

[bonchi07 10]

The percentages fluctuate, but mostly are accurate. As an experienced trader with 15+ years of experience, you have good months and bad months.

 

A few reasons traders struggle:

 

Smart traders have an insurance nest egg (ie., 5-10% of all profits) that they can use to pay themselves during the tough times.

 

Consistent profits can be generated from using consistent chart patterns and formations for chart analysis and execution. (KISS method.)

 

The focus is to master your style of trading and learn to always be humble with the markets.

 

For example, mastering the most repeatable chart pattern (i.e., FLAGS) in all markets can

lead to great profits ....weekly!

 

If you can learn to make just a $100 a day consistently with a small account, then you can begin to make a nice monthly living.

 

As you gain experience and success in one style of trading, then you can experiment with small risk in another. This approach will lead a developing trader down the path of multiple streams of profits.

 

Leroy

 

This is great advice/ Most of the time consistency is more important than anything else. Also, I think it is very important to limit your losses on a daily basis as well. As long as your losses are less than your gains you are on the right track.. Having that feeling of making your money back can really hurt you. Knowing when to stop is vital.

Thanks for the input!

[lrushing 10]

Most traders ignore the obvious "Dirty Little Secrets" that impede their progress.

 

The markets consistently provide repeatable events, so experience and profitable traders pick one or two events (ie., flags, breakouts) and learn to make money with those.

 

One of the most not-so-obvious lessons for traders is having a great SOH strategy...Sit-On-Hands that is!

[laurus12 10]

One thing I forgot to mention in my first post, #15, which probably determine the final outcome for the most, is that many people are actually not willing to do what is required. Personally I think this is the factor that determines it all. Just like with any other business idea people have, they are not willing to do everything which is needed to realize their dream. So when it all comes to it, one end up in the same convenient 9 to 5 work routine. Nothing new. Nothing new created.

 

Laurus

[henryduncan12 10]

 

So, my questions to you, the reader, is this:

 

1) Are you making money or losing money?

 

2)How long have you been trading?

 

1. Sometimes make and sometimes lose. But winning ratio is less than lose ratio.

2. Approximate 1 year.

[roztom 10]

Many trader wannabee's think they make money by "plunging." This is nothing more than gambling - flipping a coin except the probabilities are less than 50 - 50%.

 

As was alluded earlier... staying out of the market is a position. Waiting patiently for a set up and then stepping in front of it is where we create the opportunity for ourselves...

 

Somehow trader wannabees read these cliches but think they are for someone else..

 

I agree with the poster who talked about flags. I love to see a flag developing.. on a 15m chart.. I know that the stops underneath the developing pennent will get picked off on the counter rotation. I wait to position there. Patiently wait for it.. Not only can I have a measuing objective off the flag but I can align it with other targets my methodology identifies...

 

If I am long from down below I use the flag to add to my position or if not create a continuation trade... I trade ES and I find that if I give the day time to develop I do much better than plunging in during the opening range..

 

While I have other setups I love continuation trades... I do not need to buy the bottom but I can often sell near the top.. In the end it is about making $, not to trade for the action...

 

We don't need many setups to be profitable..only one initially - executing consistently is obvious. Does it really matter if we even have only one setup we have identified? If it is statistically valid just up the contracts on it.. & you will succeed.

 

I have a trader friend who made the transition from floor trader to screen trader. He basically trades one specific setup, all in all out.. he has the advantage of an exchange membership so his costs are minimal. He executes 20 - 50 lots at a time..several times a day & makes $7 Figures a year. Why? He only needs one setup to be consistent..that's all any of us need..

 

Success in trading is not obvious but having a specific plan as another poster said with entry, risk management & exit criteria that is repeatable is almost all you need. I am assuming you are adequately capitalized and aligned psycologically with it. Whatever plan you must "own" it.

Edited March 9, 2012 by roztom

[Mysticforex 13]

One thing I forgot to mention in my first post, #15, which probably determine the final outcome for the most, is that many people are actually not willing to do what is required. Personally I think this is the factor that determines it all. Just like with any other business idea people have, they are not willing to do everything which is needed to realize their dream. So when it all comes to it, one end up in the same convenient 9 to 5 work routine. Nothing new. Nothing new created.

 

Laurus

 

One should apply Malcolm Gladwell's 10,000 hour rule.

In his recent book ‘Outliers’ Malcolm Gladwell describes the 10,000-Hour Rule, claiming that the key to success in any cognitively complex field is, to a large extent, a matter of practicing a specific task for a total of around 10,000 hours. 10,000 hours equates to around 4hrs a day for 10 years. For some reason most people that ‘try their hand’ at trading view it as a get rich quick scheme. That in a very short space of time, they will be able to turn $500 into $1 million! It is precisely this mindset that has resulted in the current economic mess, a bunch of 20-somethings being handed the red phone for ... (full story)

[Williamfx65 10]

there are platforms like zulutrade thatt help newbies win as well. I am a live example of that what is it 5m and pipping some stable roi and I still have little to none idea about manual trading candles and gann lines:doh::)

[wunderlich 10]

What about that?

 

Exclusive: Q3 2013 US Retail Forex Broker Profitability Report, IB #1 | Forex Magnates

[Jean1111 10]

well forex is a gold mine if utilized with the right trading tools!

however most important is to not get out of hand with extreme greedy open position.

[ForexHunter 10]

Never make a dime? No it is not. They might be losers in the end, but I cant imagine person keep trading forex while losing time after time.