99.5% fail because trading is too simple, easy, and too boring

traderdragon2 · Dec 11, 2007

Nonsense. If beating the market were so easy, most people would be beating the market. Fact is, most people who actively trade do not beat the market. I read a good analysis of trading accounts a while ago that statistically showed, the people who traded the most lost the most. Only a very tiny percentage of people on the end of the bell curve made a lot of money who actively traded. If it were so easy, it wouldnt be just the tiny number of active traders on the end of the bell curve.

People need to stop saying its easy. Thats sorta like saying, becoming a top gun jet fighter pilot is easy (after you are a top gun jet fighter pilot). Well guess what, 99% of people cant make it to where you are. Calling it easy is just ignorant. The stats prove it is not easy. Saying it is, doesnt make it so.

hajimow · Dec 11, 2007

Quote from traderdragon2:

Nonsense. If beating the market were so easy, most people would be beating the market. Fact is, most people who actively trade do not beat the market. I read a good analysis of trading accounts a while ago that statistically showed, the people who traded the most lost the most. Only a very tiny percentage of people on the end of the bell curve made a lot of money who actively traded. If it were so easy, it wouldnt be just the tiny number of active traders on the end of the bell curve.

People need to stop saying its easy. Thats sorta like saying, becoming a top gun jet fighter pilot is easy (after you are a top gun jet fighter pilot). Well guess what, 99% of people cant make it to where you are. Calling it easy is just ignorant. The stats prove it is not easy. Saying it is, doesnt make it so.

Are you a top gun jet fighter?

FerdinandAlx · Dec 11, 2007

Making money is not boring. It never will be.

maxpi · Dec 11, 2007

Quote from chewbacca:

good trading so easy and so boring that people fill their NEED for excitement and ego involvement with:

fundemental analysis
technical analysis
indicators of various sorts
changing brokers repeatedly
changing trade software repeatedly
changing strategies repeatedly
changing monitering parameters repeatedly
making forcasts and predictions

good trading (following the ancient principals of good investing) feels like taking a nap all day long.......but most people can't handle that counterintuitive fact because all their life they are told that they have to be right, they need to work hard, they need to beat themselves up to deserve their sucess, they should never give up and double down by working harder etc...............all the convential wisdom fail you........you know you're a good trader when trading feels like sleeping on the beach all day long.

I'm almost there, especially if I can offload a bit of the more functional stuff to the computer. Andddd... if I might ask, whose version of "ancient principals of good investing" are you referring to there, that would be a good read for sure..

Steelhead · Dec 11, 2007

trading for a living is the best job in the world

rdencpa · Dec 19, 2007

Quote from traderdragon2:

If it were so easy and boring, any joe blo could spend an hour playing around with a backtester and find a working set of rules.

Too bad that aint the case.

In fact, 95% of money managers fail to beat the market over a 10 year period.

More proof its so boring and easy. Right?

Give me a break. These posts are ridiculous. Trading is one of the most difficult challenges anyone can take up. The failure rates prove it.

I completely agree with you!

I am a system trader and when things don't go well, I just blame my dumb systems for it and go on.

Another reason trading is very difficult is that there are no rules that one has to follow-there is too much freedom. So when you have too much rope you are bound to hang yourself with it or at least get really tangled up.

And another reason its difficult, is that there is a lot of noise and randomness in the markets and nothing repeats in exactly the same way. This tends to kill all that optimized back testing some of us do (including me).

alex.samant · Dec 20, 2007

i agree with the original poster, and many of you have actually missed his point.

Trading is HARD because we make it HARD!

There is an ancient chinese proverb:

"He who thinks all day about money, goes to bed tired"

Hahahaha

Shagi · Dec 20, 2007

Quote from alex.samant:

i agree with the original poster, and many of you have actually missed his point.

Trading is HARD because we make it HARD!

There is an ancient chinese proverb:

"He who thinks all day about money, goes to bed tired"

Hahahaha

Agree - To those that have missed the point - i will give you some homework to help you understand the original poster's comment. Re-read and Reminiscences of a Stock Operator. If you still dont get it after that then we cannot have a meaningful discussion.

pairsarbtooo · Dec 20, 2007

Quote from traderdragon2:

If it were so easy and boring, any joe blo could spend an hour playing around with a backtester and find a working set of rules.

Too bad that aint the case.

In fact, 95% of money managers fail to beat the market over a 10 year period.

More proof its so boring and easy. Right?

Give me a break. These posts are ridiculous. Trading is one of the most difficult challenges anyone can take up. The failure rates prove it.

Well once you have a system, however you get one, trading is kinda simple and the tough part is that it can be boring.

It goes against what the middle and lower classes are taught to make money by "sitting there" "doing nothing" but watching your screens (even day trading is boring for me). Its hard to work out sometimes.

I think 90% or more of the time there is nothing to "do" as a trader. Aleksandr Elder points out in his book "Trading for a Living" that this is an interesting psychological issue. You don't do a lot all day, but you need to be able to respond to what the market is giving you (my theory). So, while you can be rocked to sleep in boredom, you need to respond whenever the market shows you you need to do something.

That is the biggest challenge in trading for me.

pairsarbtooo · Dec 20, 2007

Quote from oddiduro:

Most fund managers cannot beat the market over a decade because their strategies are static, and the market is dynamic.

Most fund managers cannot beat the market over a decade because the money they manage is like steering the titanic, compared to our speedboats.

Most fund managers cannot beat the market because their investors cannot tolerate a drawdown and pull funds so they are taking a parabolic loss of capital, which makes it very hard to come back.

Most fund managers cannot beat the market because they are aware of the fact that if they start taking losses, the capital loss will be parabolic, and this will affect their emotions, which in turn affects decision making ability.

Beating the market is easy. Managing funds?

Good luck with that.

Best Regards
Oddi

Great points. You gotta find backers or investors with the same tolerance for heat as you have as a trader, if you choose to have backers or investors. That's also why there exist agreements where capital is locked up for a year or more. You don't want capital pulled out when there is a normal drawdown, and you also probably want to trade and live a good life, not spend time on the phone placating worried investor.

Ed Seykota reportedly had fewer than 10 clients or 5 when he started his miraculous runs of running 10K accounts into the millions of percent returns. When I learned from him, he paid special attention to the importance of understanding "heat" (yes a gambling term) meaning the volatility of your particular method (system) of trading. The times when most people want to pull out are exactly the times when they need to stay in, in order to reap the rewards of a trading run.

I had one backer once. A local hospital owner who backed me with 10K. I took only 5K. That was a long time ago and I have run that money into an excellent return for him and created a trading business for myself, from my percentage return on that. The first year we traded that small amount our return was 750%, most of the year losing money and staying around 5K but That included a drawdown of nearly 70%.

Because it was such a small number we were able to observe and not worry about this trading system's operation (I say system becuase I have software I write but I execute the trades in a discretionary fashion). The ability to execute without worry, I have found, is one of the most important aspects of trading. Also has honed my outlook that trading is the most important thing, trade small numbers at first, build trading skill. Your positive equity curve lets you know when you can go bigger and start really making money.