How is it possible that most traders burn their money so fast when buying stocks is a coinflip?

[java]

It's actually pretty easy...options. With enough leverage, it's possible to lose just about any amount of money in a matter of hours or minutes. Same as going to Vegas and putting it all on red.

More like all on 6 numbers. But the real answer was leverage. It would be hard to lose even 50% in a cash account.

To the rest, that's all I do is add to winners and losers. Buy low sell high. Buy any dip add to my longs, sell any rally add to my shorts, regardless of where I got in or my average price.

 

[bln]

Simple: people over leverage. They don't risk 1 or 2 % of their account balance. Why do you think so many people scream when IB raises its margin requirements for example? Undercapitalized and overleveraged.simple as that.

This, it's due to greed, the urge to make large amounts of money quickly. if people risk max 0.1% per trade if they are day trading or 1-3% then swing trading, they can make hundreds of trades without emptying their trading capital. An other thing is that psychology may get at them, failure to execute, fear, doubt, front running setups, second guessing, etc.

 

[chartman]

How can there be anything less than a 1-tic spread between bid and ask without an actual transaction? If bid and ask were the same at all points in time and no transactions occurred, a black-hole would open somewhere on earth, and we'd all die at the speed of light.

Market makers are allowed to place hidden quotes up to four digits. If you see a transaction on the tape at $6.0671 that means a hidden from the public bid/offer from a registered market maker that resulted in a trade. A quote of $6.06-$6.07 does not mean there are not quotes between these visible displays.

 

[chartman]

More like all on 6 numbers. But the real answer was leverage. It would be hard to lose even 50% in a cash account.

To the rest, that's all I do is add to winners and losers. Buy low sell high. Buy any dip add to my longs, sell any rally add to my shorts, regardless of where I got in or my average price.

" Buy low sell high. Buy any dip add to my longs, sell any rally add to my shorts, regardless of where I got in or my average price."

By the rules this is the required method of trading by specialists. Buy low and sell high. They are required to buy minuses and zero minuses, and sell pluses and zero pluses. The public trades opposite from the professionals.

 

[Overnight]

Market makers are allowed to place hidden quotes up to four digits. If you see a transaction on the tape at $6.0671 that means a hidden from the public bid/offer from a registered market maker that resulted in a trade. A quote of $6.06-$6.07 does not mean there are not quotes between these visible displays.

Asked CME risk management about this. The rep said there is no such thing as market makers making "hidden bid/offers" on any given instrument at CME. Meaning, if the min-tick increment is $.01, such as CL, there are not hidden orders at tick-increments below $.01. Market makers have access to the same information as everyone else in futures/options. He did say that those "dark pools" can exist in securities, so perhaps your statement needs to be qualified with a call to the SEC.

 

[chartman]

Asked CME risk management about this. The rep said there is no such thing as market makers making "hidden bid/offers" on any given instrument at CME. Meaning, if the min-tick increment is $.01, such as CL, there are not hidden orders at tick-increments below $.01. Market makers have access to the same information as everyone else in futures/options. He did say that those "dark pools" can exist in securities, so perhaps your statement needs to be qualified with a call to the SEC.

My posting was pertaining to securities not futures. I don't know how you read futures into the discussion. I have traded both futures and securities for over fifty years and have been a futures exchange member. I think I know what I am talking about. Market makers and specialist can trade/quote shares at four digits and it is hidden from other market participants. The public cannot.

 

[murray t turtle]

plus people usually use margin which is another quick way to burn faster, options are also another form of leverage

%%
PLUS, its not really a coin flip; but to use his ''coinflip'' illustration silver+ gold coins do not sound , trend nor are they valued the same as copper.

And trade -invest is not 50-50, bid ask spread just proved that.
Mr Trade 55+, actually markets are not random @ all-- i did huge worse than random, first year.LOL

Another reason not to ''random chose stock'' LOL] GM, C, DAL, AIG, BAC, BEAR STEARNS, LEH ,Indy Mac, they did far worse than random;its enough to make some invest, or sell in some like 30 or 500 stocks. Really, who could have predicted Bear Stearns bit the dirt in a bear market??

 

[Overnight]

...My posting was pertaining to securities not futures. I don't know how you read futures into the discussion. I have traded both futures and securities for over fifty years...

My deepest apologies. This was in the trading forum, not the stocks forum specifically. I forgot the title of the thread. I guess if you have been trading for 50+ years, you've seen it all.