Losing money consistently
- Thread starter zbojnik
- Start date
No.
Here are 3 losing trades in a row (W = Win, L = Loss):
L
L
L
W
W
W
W
W
W
W
And yet the winning rate is 70%
Absolutely Visaria, it's just simple maths.
Even a 99% winning rate will guarantee you 3 or more losing trades in a row at some point in time, in the long run.
because you want to be a consistent loser. no one can help you.
when you expect yourself a winner, you will be a winner.
when you expect yourself a loser, you will be a loser.
sounds like philosophy.but it is science.
how a consistent loser created? your expectation.
Norammly your winning probability is 33.33% (you win, you lose, you win/lose nothing). actually because of commission, your winning probaility will be less than 33.33%. if you trade based on expecation of the market is purely radom.
but some type of market is not random, that is why you lose and lose in a row.
some markets behavior very systematically. overall, % of this kind of market is less than 10%. for example, if a market rallies 10%, then nextday another 10%, then next next day again 10%,...... in 10days, it rallies 100%+(more than that).
and trader like you may sellshort after two10%rallyor 20%rally, each try proves loss, even till 100%+ ortendays late. this probability of 10 days of 10%rally is very rare:0.33*0.33*0.33*0.33*0.33*0.33*0.33*0.33*0.33*0.33 that is almost impossible. but as you know, when you lose, you will find something "sure" to do. in this rare case, based on probaility caculation, this 10day 10% rally is almost sure. twoday rally probability is 0.33*0.33 (0.1), almost sure (you reason) that is a very sure short sale. to the third day, even you make more convined or more sure, so you short again, you lose, ...
First, you must admit: market can not be predicted, or someone using probability to caculate (system trading) is no logic basis there. Each moment is unique. that is wall street wisdom called "anything can happen in the market", do not bind yourself to those simplified theory/system trading ideas, otherwise you will be shocked and caught off gurad by those you think should not happen, will not happen, sure happen, sure not happen!
Second, after you admit this fact. what left is your courage. your courage to close out a promising position or flip over a position,even enter a position. when profit rises and green and green, you must have the courage to cut profit short, you must follow common sense or your hunch to close out a winning position. another side is: you must not hope for a losing position suddenly turninto falovor, not stuck with hope: maybe it will, forget about hope, based on your hunch to ride out : even againstyour 80%, you still ride it. or you do not want to ride it out, you must act decisively but not stuck with "maybe or hope".
more accurately, do not stuck with "maybe" either winning or losing. "maybe" create hopes, in a winning position,"maybe" make you greedy, make you hope more. in a losing position,"maybe' make you think it will turn around quickly.
youmust have the courage to make the best judgement. cut profit short, no big deal. ride big loser, no problem. if you do that decisively, you will find you are consistenly winning.
someone said cut loss short, I never pay attentionto that. I chose patience to deal with it, in 99% case, I ride them out successfully. days,weeks,months,even years,who care. if you canndo that, you will be a consistent winner always.
doto easily declare yourself a loser. FIGHT such as waiting/ride out.
donot trade in and out so frequently, commission one factor, another factor, chasing winners are useless, often when you get there, your chased winner is turninginto losers.
forget about day trading, look at those 401k, roth ira,ira accounts, those who bought spy/qqq,mutual funds, always winning, 90% of those accounts are growing very healthily!
when you expect yourself a winner, you will be a winner.
when you expect yourself a loser, you will be a loser.
sounds like philosophy.but it is science.
how a consistent loser created? your expectation.
Norammly your winning probability is 33.33% (you win, you lose, you win/lose nothing). actually because of commission, your winning probaility will be less than 33.33%. if you trade based on expecation of the market is purely radom.
but some type of market is not random, that is why you lose and lose in a row.
some markets behavior very systematically. overall, % of this kind of market is less than 10%. for example, if a market rallies 10%, then nextday another 10%, then next next day again 10%,...... in 10days, it rallies 100%+(more than that).
and trader like you may sellshort after two10%rallyor 20%rally, each try proves loss, even till 100%+ ortendays late. this probability of 10 days of 10%rally is very rare:0.33*0.33*0.33*0.33*0.33*0.33*0.33*0.33*0.33*0.33 that is almost impossible. but as you know, when you lose, you will find something "sure" to do. in this rare case, based on probaility caculation, this 10day 10% rally is almost sure. twoday rally probability is 0.33*0.33 (0.1), almost sure (you reason) that is a very sure short sale. to the third day, even you make more convined or more sure, so you short again, you lose, ...
First, you must admit: market can not be predicted, or someone using probability to caculate (system trading) is no logic basis there. Each moment is unique. that is wall street wisdom called "anything can happen in the market", do not bind yourself to those simplified theory/system trading ideas, otherwise you will be shocked and caught off gurad by those you think should not happen, will not happen, sure happen, sure not happen!
Second, after you admit this fact. what left is your courage. your courage to close out a promising position or flip over a position,even enter a position. when profit rises and green and green, you must have the courage to cut profit short, you must follow common sense or your hunch to close out a winning position. another side is: you must not hope for a losing position suddenly turninto falovor, not stuck with hope: maybe it will, forget about hope, based on your hunch to ride out : even againstyour 80%, you still ride it. or you do not want to ride it out, you must act decisively but not stuck with "maybe or hope".
more accurately, do not stuck with "maybe" either winning or losing. "maybe" create hopes, in a winning position,"maybe" make you greedy, make you hope more. in a losing position,"maybe' make you think it will turn around quickly.
youmust have the courage to make the best judgement. cut profit short, no big deal. ride big loser, no problem. if you do that decisively, you will find you are consistenly winning.
someone said cut loss short, I never pay attentionto that. I chose patience to deal with it, in 99% case, I ride them out successfully. days,weeks,months,even years,who care. if you canndo that, you will be a consistent winner always.
doto easily declare yourself a loser. FIGHT such as waiting/ride out.
donot trade in and out so frequently, commission one factor, another factor, chasing winners are useless, often when you get there, your chased winner is turninginto losers.
forget about day trading, look at those 401k, roth ira,ira accounts, those who bought spy/qqq,mutual funds, always winning, 90% of those accounts are growing very healthily!
Out of 10 trades. Out of four trades, 3:1 would be 25%.
Be that as it may, you've had nothing close to a 70% winrate for May, so, as I said, this is all theoretical. Post your trading plan and the OP will have something to work with.
Listen Dbphoenix, I respect you as a trader and I also respect your 9,000+ posts on ET, I really do.
But you keep forgetting the most important thing as far as trading is concerned: profitable trading is not a sprint but a marathon.
You geniuses just don't get that using Soros or Buffet as your yardstick is not pertinent to you, your trading, or even your arguments.
Soros is worth 23 Billion.
A norm of 2% of net worth for any single investment is 460 million.
Or maybe you'd prefer 2% of LIQUID net worth which would be less. No matter.
If Soros LOST 100% (meaning an exit value of 0) of the funds (using 2% of net worth calc) in 17 consecutive investments his net worth would be in the range of 15.1 and 16.6 BILLION, dependent on whether you recalculate 2% after each loss or not.
This would have minimal to no impact on his ability to carry on as normal going forward.
At this point in time, those numbers are not pertinent to you, your trading, or your arguments. And while you may try to mirror for percentage returns, perhaps even successfully, the nominal values involved preclude mirroring the effects. 17 consecutive losers in a row suggests something is amiss with the system or the implementation. Sorry.
Let me give you a piece of advice Tiddlywinks: Never, ever start any comment or conversation (online or offline) with "You geniuses...".
Why?
Because you are basically saying you are talking to idiots and YOU know better.
Which is comforting to a limited extent. But if one has a negligible winrate and no profits, the marathon will be over before he's had a chance to move away from the starting line.
It doesn't matter to me if one receives his trading prompts via radio signals from the moon; he must have a thoroughly-tested, consistently-profitable trading system. Unless he's a hobbyist. If he's a hobbyist, what difference does it make? Persuading the OP that it's perfectly okay to have long strings of losses because it'll all come out okay in the end is irresponsible. If you want to argue otherwise, post your trading plan so that it can be tested and verified.