If the odds are 50/50 why do most people lose ?

@OT :

If you want to take trading seriously, do not forget to include your expenses in your P&L calculations, i.e. the cost for your computer (has to be renewed every 4-5 years), data subscriptions, charting software costs, heck the list goes on and on.

As stated above, trading is NOT a 50/50 game, it's a LOSERS game. Commissions, slippage and expenses put you behind the game even before the first tick of your trade comes your way.

The only way to come out on the positive side of things is to

- pick your trades (you DO NOT HAVE to trade if there is no good setup)
- set up decent money management rules (do not take risks that can wipe you out, if the setup is too risky then don't take it)
- push winners (i.e. add to them) and drop losers FAST. The first loss is always the best loss.
- plan your trade BEFORE you put it on.

Hope this helps,
Aetey
 
If you put on your best pair of basketball shoes and try to jump over the Empire State Building, either you'll make it or you won't. If you buy a Powerball ticket, you'll either win or you'll lose. A binary choice does not equal 50/50 odds. The point of having an edge in trading is to increase the odds in your favor, but many winning strategies have odds less than 50/50. Why? Because you'll let your winners run and cut your losers as soon as you know you were wrong, ergo you will have fewer big winners and many more small losers.

There are many reasons traders fail which are discussed in agonizing and repetitive detail on ET, but one of them is ignorance of elementary trading concepts.
 
Thanks guys.

I see my biggest problem is letting my winners run... I tend to cut my profits quickly... Like yesterday shorting CL @ 76.12 and getting out for a .25 tick gain...

Today shorting euro @ 1.300 getting out for .22 pips out of a 120+ pip move...
 
Quote from neveral0ne:



Today shorting euro @ 1.300 getting out for .22 pips out of a 120+ pip move...
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Is this a typo? How can you have a fractional pip? Isn't by definition a PIP is the minimum movement of an instrument?
 
Quote from Bolimomo:

Is this a typo? How can you have a fractional pip? Isn't by definition a PIP is the minimum movement of an instrument?
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Well, no. A few brokers now offer trades at fractional pips.

Further, when you are using an ECN (that is you trade against other traders and not a single broker), an order may be split into a few parts and executed against different traders at different prices. So, the average price would be fractional.

Finally, the poster may have included commission paid (which likely reduces any gains by a fraction of a pip).
 
Quote from Douchealmighty:

Cool question never thought about it.... Everyone is right though it comes down to commissions and human nature :)
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Pretty much this.

People have emotions, and that applies to their trading. I'm guilty of this as well. When there's a panic, people panic. When the news is all gloomy, it looks like next monday will be completely gloomy.
 
Sorry for the confusion, I trade currency futures ( 6B and 6E )

Well its not really fractional < i just wrote it down wrong,

Entry Short:
USD 1 May 14, 2010 S JUN 10 EURO CUR UNIT 1.24950

Exit:

USD 1 May 14, 2010 B JUN 10 EURO CUR UNIT 1.24770
Trade



and it droped to 1.23xxx

so instead of making 1,500$ today.. I made like 225$ .... coz PNL controled me when to get out...not the action P/A I need to work on this....
 
Well I am a total newbie. Started trading like 4 days ago and already lost half of my deposit. It was about 4k. I am trading ZN futures, 1 contract. So when I thought it was going down and was short it immediately retraced back. I was using 3 tick stops so it triggered my stops, then I though it would go up now and immediately went long but then it again went down - as a result loss about $200. It was one of my rule never do like this and I broke it on my first trade lol. Many times my problem was that as soon as I go short or long it goes against me, triggers my stops and then goes back. Now I put something like 6 tick stops so that it could go forth and back, but if I am wrong with the market direction I am wiped, it will be a big loss. Also I decided to trade ZB futures as it is not so fast as ZN. Yesterday I could take back about $500 but I hoped It will go higher and finally took about $100. I am definitely feeling like I am on my way to lose, just a couple of bad trades and I am done.
 
Just for Shits and grins

You're at the mall, and you have just finished shopping. You walk out to your car and as you put your key in the door you notice, a one hundred dollar bill laying on the ground by the left front tire......

What are you going to do ???

Bend over and PICK IT UP ???

Or, are you going to go back into the mall,,,,,, shop for another hour or so ,,,, return to your car,,,, and hope there's two hundred dollars laying there !!

Let's get real..... If your a NEW TRADER and ( discretion ) is an element of your plan, system, or edge... Your role in the market WILL BE to provide profits to other traders.

Your system must prove to you, me,,,,,, your mentor,,,,, your brother-in-law, your sister,,, your ex-wife, and your ( cat ),,,, that,,,, ( mechanically ) it works.....

Simple when your indicators align .... you enter When your indicators align you exit ..... Discretion will come later .... when you know your market ( experience ) ...... if you're jumping from market to market you will never know ( your ) market.

Bean traders,,, don't trade oil..... Currency traders,,, don't trade the " meats " Only the PUBLIC trades this way...... Why does the ( new guy ) think he can ( take on ) the Pros in any market he (wants to trade) and win ????

Good trading
<*)))><
 
Quote from Twinsen:

Well I am a total newbie. Started trading like 4 days ago and already lost half of my deposit. It was about 4k. I am trading ZN futures, 1 contract. So when I thought it was going down and was short it immediately retraced back. I was using 3 tick stops so it triggered my stops, then I though it would go up now and immediately went long but then it again went down - as a result loss about $200. It was one of my rule never do like this and I broke it on my first trade lol. Many times my problem was that as soon as I go short or long it goes against me, triggers my stops and then goes back. Now I put something like 6 tick stops so that it could go forth and back, but if I am wrong with the market direction I am wiped, it will be a big loss. Also I decided to trade ZB futures as it is not so fast as ZN. Yesterday I could take back about $500 but I hoped It will go higher and finally took about $100. I am definitely feeling like I am on my way to lose, just a couple of bad trades and I am done.
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classic! You want to buy weakness and sell strength. Not the otherway around like you are doing. Sell the buying. Buy the selling is the only way a retail guy has a chance. There are a couple caveats to this. See Connors short term trading strategies that work for more information. Good luck
 
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