Tell me about the 95% that fail

2. I've read books and threads to gather ideas - reversion to mean, buying pullbacks, scalping the ES, using MACD-histogram, etc.

These are "cookie-cutter" thoughts. You need to study the market. Dr. Steenbarger wrote that he studied and made notes of various patterns of the market for 6 months before placing his first trade. You need to study deep and hard.

One problem with starting off right on the bat and trading is that trading is a performance activity. It is about executing what you know to do. If you don't know what to do then it is hard to know if you are executing well. You need a way to develop your knowledge of the market. I like to run simulator and real money accounts simultaneously to judge my decision making under both conditions.

You need to be constantly working on goals. Constantly introspecting what you're doing.

Now, I'll tell you also that scalping the ES is the hardest thing for me to do. I completely dominate when trading the ES except for scalping. I haven't did a lot of scalping but I can tell you that for me it is extremely difficult to even make a money before any commissions are factored in.
I'm willing to try the hard game because I know I can win at other games. You need to find the game where you can win at.

Personality is important but also remember the market doesn't care about about what your personality is. And if anything what most people want from the market; certainty, small risk with great reward, no overnight risk.. whatever it is the vast majority want will be in short supply simply due to competition demand.

The greatest thing that will hinder the novice is the desire for certainty. That's the greatest thing. If you can get over that then you've probably saved yourself 1 to 2 years of work.
 
Quote from Lucias:


These are "cookie-cutter" thoughts. You need to study the market. Dr. Steenbarger wrote that he studied and made notes of various patterns of the market for 6 months before placing his first trade. You need to study deep and hard.
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This is what I've always been hearing - one needs to study deep and hard, one needs to put in thousands of hours of screen time.

Does that mean watching the markets live/going through historical data bar by bar and making notes?

My "cookie-cutter" way of learning felt way too passive.


Quote from Lucias:



The greatest thing that will hinder the novice is the desire for certainty. That's the greatest thing. If you can get over that then you've probably saved yourself 1 to 2 years of work.
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I know there's no such thing as certainty in the markets besides price fluctuates. Every trading system deteriorates and fails over time because every successful trading system is exploiting an inefficiency in the market in the beginning. As more traders exploit that inefficiency, it becomes efficient and the system no longer works.

Acrary posted about system development and how to test if a system is about to fail before it actually does. I still can't wrap my head around how to do his tests though.
 
Discovering that consistenty profitable trading is harder than thought. There is no kick to it like gambling.

Dreaming the dream of making it rich and constantly searching for a way to achieve it. It may not be "get rich quick thinking" but it is stopping and restarting several times without realizing that the way to trade is right in front of you. It does not fullfill your dream.

ES
 
Quote from sneakoner:

Were they trying to get rich quick and just jumped in too early?

Did they just blow out their accounts and decided not to keep going?

Did they put in thousands of hours of screen time and yet still fail?

Did they backtest their strategies and still failed?

If you're now consistently profitable but you blew out one of your accounts before, then does that place you in the 95% group or the 5% group?

I'd really like to know how much effort those that failed put in before they finally gave up. Can anybody shed some light?
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Most failed traders wash out and quit before they find an edge.

Some edges are transitory, some are permanent.

Depending on market conditions, some profitable traders will lose as the market changes. Others, will continue to profit.

Most traders need anywhere from 1 to 5 years to discover a permanent edge, and achieve consistent profits.
 
Quote from Lucias:

There are many ways to fail in this game. EMG is very annoying and acts ridiculous and says some ridiculous things too. However...

So, let's look at this. Let's say you have 5k to start with and let's say you can do 100% net returns, I mean net of all costs, which would be outstanding. At the end of the year, you've made measly 5k and to make that 100% you had to a lot more risk then a guy trying to make just 30%. Let's say you have 10k and make 100%. At the end of the year, you've made 10k which is only $50 per day.

Let's say you have 25k and you make 200% return. At this rate, you're only making about what the average joe makes. So, we can see that even with more capital then most retailers have and outstanding returns that the amount of money isn't enough to both support the trader and grow the account.
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I read somewhere most people overestimate what can be achieved in a year and totally underestimate what can be achieved in a decade. With regard to trading, if you are capable of making a 100% a year, and can do so for 10 years, that's a 1000 times your initial capital. Someone starting with $10k would have over $10 million after 10 years.

Of course that person would be wise to take a job or have some other income whilst building his/her capital. Maybe once they've hit say half a million, they could quit their job and go full time trading. This plan would also mean day trading would be out of the picture, which is good!
 
Quote from sneakoner:

This is what I've always been hearing - one needs to study deep and hard, one needs to put in thousands of hours of screen time.

Does that mean watching the markets live/going through historical data bar by bar and making notes?

My "cookie-cutter" way of learning felt way too passive.
More...


You need a framework for success. You can develop multiple frameworks and paradigms as time goes. I recommend that you read my The Logics mini-book here first. It is, I believe, in the psychology section. Those are "steps" along the way. An analogy would be someone going to medical school, they'll take studies that give then a broad based general science background and then they'll study more specific classes that all doctors should know then they do rotations and eventually they choose an specialty and eventually go into practice. As part of that journey, they take notes, they take tests, they do lab experiments. But, you can't just point to one aspect like taking notes that but it is the whole process: they develop a framework for success. A similar process takes place for many fields: it is knowledge that is layered upon knowledge built up over many years.

Another analogy would be learning a martial art. There are many types of martial arts and many different philosophies and many techniques. Anyone can go and learn to throw a kick but that would in no way prepare you for getting into a cage to fight someone. It sounds like you've learned to throw a kick or a punch but you don't know footwork, you don't know how to apply that in different situations, you haven't been tested in the ring or pressured, and you don't know how to train. This is where most people start.

You need basically a plan for success. It has to help you build your knowledge, gain skills, etc. The problem for the trader is that you have to develop your own. The task would be like the beginning medical student with no knowledge of medicine attempting to develop a multiple year curriculum that would make them proficient in medicine! So, you have to plan this stuff out with the knowledge that it may not work and you may have to go and backtrack or choose a different path. However, it is possible provided you are constantly working and are clear about what you want to achieve.

You'll need to develop a framework for working with markets. I recommend you read Traderfeed. Dr. Steenbarger, also, wrote a book online about beginning trading which you can go and find. It is not his blog but an introductory course to a paradigm he presented for trading. In his paradigm, everything is either a breakout or a reversal trade and you just have to figure out which it is.

Other examples of frameworks would be Rob Hanna's. He basically runs historical studies on the market to weight the probability of something happening. This is another framework that another trader built. Another framework would be Ray Barros, he has a very complex framework built on swing patterns.

Another example of a framework would be look at what Jeff Miller does at a Dash of Insight. His framework is based on a deep knowledge of fundamentals and public policy combined with systematic strategies, presumably some variation of trend following.

You can go to my site, as well, themarketpredictor.com and read my blog and look in my products section. I haven't fully revealed my framework and have kept key elements absolutely secret. However, my general thesis is to create a superior synthesis that combines the best of my discretionary ability with technology or human performance improvement through purposeful application of technology.

Consult the dictionary for the differences in tactics and strategy. Learn the differences. Most people fail because they never develop a framework for success. They just pick up one gimmick or one thing that works but they don't understand or develop it for multiple market conditions. Many system developers fall into this category. Yes, I have very good gimmicks. But, I also have a framework for making sound decisions. I develop my gimmicks to a much higher degree then the typical. Exactly what makes something a framework versus a gimmick can be a bit tricky but a key criteria is experience using and applying the method over a long period of time.

You'll need to do a lot of work. Look over the frameworks of others and do your own work to find what works for you. But, remember, if you don't have at least 50k and preferably 100k then you find yourself in my position: highly skilled with little ability to apply and profit from that.
 
Quote from Visaria:

I read somewhere most people overestimate what can be achieved in a year and totally underestimate what can be achieved in a decade.
With regard to trading, if you are capable of making a 100% a year, and can do so for 10 years, that's a 1000 times your initial capital. Someone starting with $10k would have over $10 million after 10 years.
!
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I like that! Of course, a serious trader will not trade a million dollar account the same way he would a 10k account. There is no need to take those kind of risks.

Even if one isn't day trading they are spending a lot of effort in studying the market, placing trades, etc that could be spent toward other activities such as gaining education or putting in extra work at the job to get a possible raise.

10k compounded at 100% grows to 320k in 5 years. This is remarkable. However... we know 100% compounded net return is a very steep return to fulfill and anyone who achieves that is likely to gave up many educational, promotional, and other opportunities. And just dropping it to 50% which is still remarkable makes for only 75k.
75k over 5 years ends up being only making 15k per year!

The point is that there are many other ways to get a bonus of the same magnitude which would have a much higher probability of working such as going back to school or taking night classes or getting an advanced degree, putting in more time at your office and maybe getting a raise/bonus, or starting a business venture. You can also take a second part-time job and probably make as much. You might get your employer to pay for the classes too. My point is that several of these alternatives don't require for you to risk everything and often they don't require that you risk anything.

It is clear why most people in this field are selling trinkets and I don't care what anyone says. They sell trinkets because they can't cut it. And, there are brokers and educational firms out there selling themselves as proprietary firms. The whole "industry" is a joke.
 
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