95% of traders fail???
- Thread starter oddiduro
- Start date
...from a relaxed feet-on-the-desk plain stupid money-flowing-in system trading liar, will you please take the other side of my systems' NQ trades? I do so love brilliantly intuitive non-technical traders who have never designed a system with unambiguous rules, tested it, optimized it, and traded it.
20 cents:
Perhaps trading in the financial markets would be basically already a non-zero-sum game:
When majority of traders are making even small profits, then who is going to support not only the very large sum and operational costs that are to support a number of firms (exchages, brokers, service providers, etc.) and their infrastructures (datafeed, computer, office, salary, etc.), but also the good profits earned by many firms (funds, banks, etc.) and individuals (including probably all ET posters).
Perhaps trading in the financial markets would be basically already a non-zero-sum game:
When majority of traders are making even small profits, then who is going to support not only the very large sum and operational costs that are to support a number of firms (exchages, brokers, service providers, etc.) and their infrastructures (datafeed, computer, office, salary, etc.), but also the good profits earned by many firms (funds, banks, etc.) and individuals (including probably all ET posters).
hypostomus,
it seems that you 100% identified with my description of some system-traders. I did not say that all system-trading is losing in itself but I wanted to point out that a balanced approach (fundamental and technical) to trading is essential.
The big problem with systems is that they work for some time and suddenly start losing money. This is in the nature of markets otherwise everybody would trade systems, where would then the money come from that you claim to make with your system. Another warning to beginners is that most of the technical-analysis promotion-industry is somewhat corrupt and making false claims.
The fact is and has always been in financial markets that supply and demand is determined by fundamental factors. The one and single exception is daytrading and even there I would bet that >90% of system trading will fail over the long term (which would mean that even in daytrading, systems-trading does not fare any better than any other approach).
hypostomus, say whatever you like, but even you need to admit that your positions are fully exposed to news, reports, economics, and politics (should you be trading >1 day). Without sound money management techniques (and this is where I agree with you) you will be dead in no time, whatever system you trade.
Financial Markets (especially futures markets) follow to the largest degree a random walk and this makes system trading not at all better than any other approach. In the end it comes almost always down to money management and statistics. Its a win-lose game (at least in futures). Its a game to take away money from those less informed. That's it in a nutshell.
So, please do not try to make a science out of it as some funny guys like Gann and the like did. They died without a single penny in their pockets having survived through marketing their questionable techniques. Those, who really made it big time have NEVER been system traders. Tell me a single guy who really made it trading systems, I want to hear it.
Anyway, good luck to you, should you be purely daytrading then you could have an edge with a system but I make any bet with you that it will only be temporary. Markets have become too efficient to not soon remove any imbalances.
it seems that you 100% identified with my description of some system-traders. I did not say that all system-trading is losing in itself but I wanted to point out that a balanced approach (fundamental and technical) to trading is essential.
The big problem with systems is that they work for some time and suddenly start losing money. This is in the nature of markets otherwise everybody would trade systems, where would then the money come from that you claim to make with your system. Another warning to beginners is that most of the technical-analysis promotion-industry is somewhat corrupt and making false claims.
The fact is and has always been in financial markets that supply and demand is determined by fundamental factors. The one and single exception is daytrading and even there I would bet that >90% of system trading will fail over the long term (which would mean that even in daytrading, systems-trading does not fare any better than any other approach).
hypostomus, say whatever you like, but even you need to admit that your positions are fully exposed to news, reports, economics, and politics (should you be trading >1 day). Without sound money management techniques (and this is where I agree with you) you will be dead in no time, whatever system you trade.
Financial Markets (especially futures markets) follow to the largest degree a random walk and this makes system trading not at all better than any other approach. In the end it comes almost always down to money management and statistics. Its a win-lose game (at least in futures). Its a game to take away money from those less informed. That's it in a nutshell.
So, please do not try to make a science out of it as some funny guys like Gann and the like did. They died without a single penny in their pockets having survived through marketing their questionable techniques. Those, who really made it big time have NEVER been system traders. Tell me a single guy who really made it trading systems, I want to hear it.
Anyway, good luck to you, should you be purely daytrading then you could have an edge with a system but I make any bet with you that it will only be temporary. Markets have become too efficient to not soon remove any imbalances.
Well, where to start?
First, LEARNING to trade is pretty challenging, actually DOING it is a piece of cake.
Marketsurfer, for those who follow him, has been very accurate over the past couple of years or so. With few exceptions, I believe, he is a Gann wheel trader. That system is mechanical.
What is program trading? Apparently, the largest firms use machines to make thier biggest money. Again, I am not certain.
So, I guess my next question would have to be, if you acknowledge the uncertainty of the number of failed traders, how can you possibly 100% certain most technical traders do?
Where is your data?
Also, useful information is very subjective. There is lots of information on ET, but many lack the ancillary skills to apply that knowledge. Harrytrader's posts come to mind here.
Many here on ET are looking for a gift wrapped system. But if you have the tools, and the basic background, this site has more than enough information to increase a traders profitability.
Regards
Oddi
...I am left speechless (almost) by the wisdom of your post. All I can say is that I believe the little fish like me can survive nibbling between the dirty toes of the fat boys intraday while they are playing (read manipulating) the market like a violin. One thing will never change: the markets will always be manipulated intraday to run counter to the trend and then return to it. I look on it as a free ride. The ramora gets to travel long distances while attached to the whale, at the small price of eating his tasty vermin.
Re the short life of intraday systems, my observation is that 90 trading days is stretching it. But that still leaves plenty of time to find it and trade it until it dies. There being only so many patterns (to me the market is anti-random), once you get them all coded up it is just a matter of grunting and retesting them periodically. My favorite this quarter is sell Wednesday.
Re the short life of intraday systems, my observation is that 90 trading days is stretching it. But that still leaves plenty of time to find it and trade it until it dies. There being only so many patterns (to me the market is anti-random), once you get them all coded up it is just a matter of grunting and retesting them periodically. My favorite this quarter is sell Wednesday.
so why do the good majority of traders at prop firms fail? Worldco, where traders where at least as good as at any other firm, fired the majority of its traders this year, and that doesn't count all the large number of traders that quit and washed out just prior to that (or even during that time). And of those that were still at the firm at the end, a large % were down or flat in their accounts (only the firm was making money).
I love the people who make it sound so easy.
1. Get an edge.
2. Money/Risk Management.
3. Discipline.
Well I for one am not sure that number 1 is ture unless number 2 is your number 1. Money/Risk Management is the only definable constant.
There are different schools of thought on getting an edge: This is not poker where most hands have a set percentage of winning.
I wish it was.
Price patterns are great untill they don't work anymore. Support and Resistance works sometimes.
I think the most important thing is keeping a favorable risk to reward ratio with a solid risk managment plan. I am not sure there is anything more than that.
I guess you can do one more thing to get a 51/49% advantage: buy on any bar that is rising and sell anybar that is falling. However if your stop is to close then the ratio gets scewed, it will not be a 50/50 chance anymore.
I would love to know how anyone can prove to have an edge other then number 2 as stated.
1. Get an edge.
2. Money/Risk Management.
3. Discipline.
Well I for one am not sure that number 1 is ture unless number 2 is your number 1. Money/Risk Management is the only definable constant.
There are different schools of thought on getting an edge: This is not poker where most hands have a set percentage of winning.
I wish it was.
Price patterns are great untill they don't work anymore. Support and Resistance works sometimes.
I think the most important thing is keeping a favorable risk to reward ratio with a solid risk managment plan. I am not sure there is anything more than that.
I guess you can do one more thing to get a 51/49% advantage: buy on any bar that is rising and sell anybar that is falling. However if your stop is to close then the ratio gets scewed, it will not be a 50/50 chance anymore.
I would love to know how anyone can prove to have an edge other then number 2 as stated.