I hate when people say most traders fail because they are undercapitalized

A fellow Norwegian, Idar Vollvik, lost his entire net worth of $179 588 000 in the financial markets and racked up debt on top of that.

I don't think he can blame "undercapitalization".

:p
 
Quote from Ol' Yella:

I agree with the original assessment.

Aspiring traders fail because they don't have a profitable method.

This is why I think aspiring traders are wasting their time reading Mark Douglas and other psych books.

That stuff only matters if you have a profitable method. Otherwise you'll be calm, patient, and disciplined and still lose all your money.
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+1

I've long contended that the Psychology forum here is primarily for traders with no edge. Who else would need all that pep talk and ego stroking?

If you don't have an edge, Mark Douglas can't help you win. You'll just feel better about losing. Maybe.

If you do have an edge, you don't need Mark Douglas.

Simple.
 
Under capitalization is all relative to the size and strategy that you are trading. If you are only trading 1 lot of hogs $5,000 could be more than enough capital. Risk management is probably a better way to put; it just so happens that most people who have less capital also have poor risk management.

For me personally the hardest thing starting out these days would be the higher relative costs of a new / small trader in terms of exchange fees, clearing fees, commissions, software, etc. Looking back at the markets and the ways I use to trade just a few years ago I would never have been profitable back then which helped get me to where I am now. I am glad I got in when I did because things have gotten much more competitive in just a few years.
 
Quote from daniel33:

It's not, it just means you need to less percentage returns to make a living.
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So if that means less psychological pressure, that is a good edge. But tell me, between 2 traders one with 10K, the other with a 100K account, both trading the same size, which one has the better chance to eventually make it?

Thanks....
 
Quote from kut2k2:


If you don't have an edge, Mark Douglas can't help you win. You'll just feel better about losing. Maybe.
If you do have an edge, you don't need Mark Douglas.
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This is also not true. What if I have an edge but for whatever reasons I am only utilizing it by 30%? A good trading shrink can help to overcome the obstacles and even if my utility level is only 60% after the sessions, that is still double than what I was making before.

Just read what famous traders say about good coaching lessons... Trading is a mind game....
 
Quote from bootize:

Absolutely don't GAMBLE with money you cannot afford to loose! To me, gambling and trading may seem like similar concepts, but are very different things...
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How, pray tell, is trading "very different" from gambling?
 
Quote from Pekelo:

So if that means less psychological pressure, that is a good edge. But tell me, between 2 traders one with 10K, the other with a 100K account, both trading the same size, which one has the better chance to eventually make it?

Thanks....
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The only edge that matters is the mathematical edge. The 10K trader and the 100K trader each ought to trade a size that is dictated by the individual's respective percent edge. It is possible that the 10K trader should be trading a larger size than the trader with 100K equity if the 10K trader has an edge that is many multiples of the 100K trader's edge. For example, if the 10K trader has a 6% edge and the 100K trader has but a .5% edge, then the 10K trader should likely be trading a larger size than the 100K trader.

A large equity is not an edge. An edge is the mathematical expectaion that capital will grow a positive rate over time. Trading 100K with no edge will just cause the trader to lose more than the 10K trader without an edge as they both go broke.

Edge is a mathematical concept. You can either execute your edge or not. The ability not to go full tilt is not itself an egde. It is, however, a desirable quality in anyone who is attepting to profit from a system that makes an independent series of bets on uncertain outcomes.
 
Quote from cygnetnoir:

The only edge that matters is the mathematical edge.
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Because there is no such a thing as psychological edge? Everything being equal, who trades better, the one who has to win for a living, or the one whose living doesn't depend on his profits?

The 10K trader and the 100K trader each ought to trade a size
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Ought to is the operational word. They ought to, but they don't. Most of the time the guy with the bigger account over trades and over sizes...
 
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