My guess as to why traders fail

[shark]

Quote from schizo:

I didn't bother to read the entire thread so my apology if I'm merely regurgitatating what's already been said.

First, turn off CNBC and the newswire. Unless your primary objective is to trade momentum stocks based on news (earnings, lawsuits, FDA approval and the like), they will do more harm than good.

Second, 500 different things? Well, put on a damn blinder and focus only on those that matters to you like higher high or lower low.

Third, you write like a noob, you sound like a noob and you will fail like a noob whom you deride if you don't get your act together.

PS. South Korea? Who the hell cares. The damn news was ALREADY PRICED INTO THE CHART last week. Nobody knew why the futures took a dive within a matter of 10 minutes. It was only later when it became clear. Ya see, by the time you and I get the news, it's already over and done with.

Ever seen a nice trend just completely destroyed by a spike in the opposite direction for seemingly no reason? There's a reason to everything. Even if it's due to something irrelevant like a lunar eclipse in south korea. While the market will eventually price this in, it doesn't happen instantly. And by the time you and I get the news, thousands of other traders will also be getting the news who will subsequently act on it.

I know most of the people on this site can read a chart like a gypsy can read my palm, but I like a practical approach to these things.

 

[shark]

Quote from duhmentor:

I don't care why the market is moving just that it is and I can react to it.

You'll start caring when something else happens somewhere in the world the next second and the trend reverses.

 

[schizo]

Quote from duhmentor:

I don't care why the market is moving just that it is and I can react to it.

Yes, forget the reasons. Just focus on and react to what's unfolding before your eyes. Thinking too much can hurt you in the long run.

This applies in real life as well. In times of a major catastrophe, you will hear time and time again from government bureaucrats that everything is in order and you have nothing to worry about. I say NEVER listen to those fools. Just minutes after the World Towers were struck by the hijacked planes on 9/11, the employees were reassured by the tower management that everything is okay and were told to return back to work. Had the morons told the workers to run out of the buildings, most of them would have been saved. Hence my suggestion: don't ever listen to the fools.

 

[PatrickQ]

Quote from billyjoerob:

I suspect most failed traders attempt some kind of reversion to the mean strategy . . .

I would agree that newbies fail because they "buy the falling knife" or short strength thinking they can outlast the market --- however my experience with traders who are consistently green -- been at this game for long time --- fade market moves. granted however, they are considerably more profitable with a volatile market.

 

[charts]

Quote from shark:

I'm thinking that the high failure rate among retail traders can largely be attributed to the following.

-There is so much going on in the world at any given moment, that it becomes impossible to keep up with it. ...

I think you're incorrect on this. The same piece of news has a different impact on price depending of where the market is in its cycling. Hence, you don't have to be much (if at all) aware of the news' content, but you should be aware of the scheduled time of important releases and their volatility impact (e.g. Fed's, company meetings, etc..). Keep it simple! ...

 

[schizo]

Quote from shark:

And by the time you and I get the news, thousands of other traders will also be getting the news who will subsequently act on it.

You just answered your own damn question. News is useless!!!

 

[shark]

Quote from schizo:

You just answered your own damn question. News is useless!!!

How did that imply that news is useless? when those thousands of traders get the news, they act on it and their actions are predictable. Therefore, one can trade anticipating those trades, and be in front of the trend that is created.

 

[shark]

Quote from charts:

I think you're incorrect on this. The same piece of news has a different impact on price depending of where the market is in its cycling. Hence, you don't have to be much (if at all) aware of the news' content, but you should be aware of the scheduled time of important releases and their volatility impact (e.g. Fed's, company meetings, etc..). Keep it simple! ...

Right, the content isn't important. However, the effect on the market is very important, otherwise you get thrashed around for seemingly no reason. You may be trying to trade a trend and then suddenly the market goes in the opposite direction. This happens a lot, seeing as just about any type of news ripples through the market as a whole.

 

[Redneck]

Quote from shark:

I'm thinking that the high failure rate among retail traders can largely be attributed to the following.

-There is so much going on in the world at any given moment, that it becomes impossible to keep up with it. There is literally more news coming out at any given minute than one could even hope to read. The news doesn't even need to be relevant to have an effect. Nearly anything can have an effect on market sentiment. This makes otherwise clear market trends look like random nonsense.

Price action trading seems simple enough until one has to take into account the 500 different things that just happened in the span of 15 minutes.

.

Umm - No Sir

RN

 

[shark]

Quote from schizo:

Yes, forget the reasons. Just focus on and react to what's unfolding before your eyes. Thinking too much can hurt you in the long run.

This applies in real life as well. In times of a major catastrophe, you will hear time and time again from government bureaucrats that everything is in order and you have nothing to worry about. I say NEVER listen to those fools. Just minutes after the World Towers were struck by the hijacked planes on 9/11, the employees were reassured by the tower management that everything is okay and were told to return back to work. Had the morons told the workers to run out of the buildings, most of them would have been saved. Hence my suggestion: don't ever listen to the fools.

I agree. Reasons are not important, only the effect the news has on the market. However, isn't it a little bit difficult to accurately trade when lots of random, unexpected current events are unfolding? I like to call them miniature black swans, if that makes any sense.