The Real Reason Traders Fail

[Global OptionsTrades]

This.

I'm astonished that some experienced traders wonder why they lose when they cannot answer the questions:

1. why did you take the trade? without using the words "hope" "guess" "perhaps" "maybe" etc
2. what is the value of your edge?
   
3. did you price the trade and enter opening order(s) at the price you calculated would be fair value?
4. what was your expected return from the trade?
   
5. did you have a planned exit, with closing orders in place to achieve your target return?

Fail to plan & plan to fail etc

 

[Illini Trader]

Like for example I can be profitable on a trade I can even be up 40 or 50% and don’t hit the exit button. Or be negative 30% and not exit, and see it go to -80% or -100%. That is my hardwiring kicking in, Greed and Fear. To exit means I may miss out of more profit. To take loss is to feel pain and admit I was wrong. Both go against my hard wiring and do not feel right to do.

I read through this entire thread and that one sentence sums it up. I would only add that the most difficult time to hit the exit button is when you have that uncomfortable loss and it makes back 90% of the loss and you still can't exit; -- then see the loss get greater than it was originally.

 

[Sekiyo]

did you price the trade and enter opening order(s) at the price you calculated would be fair value?

Have you tried to make excess returns on fairly priced items ? You don’t beat the odds by getting a fair price.

I think it’s more about the conditions and to compute anything meaningful is really tough as we never step in the same river twice.

We can extract value if we play a coin toss but it implies unfair prices or a biased coin.

I don’t know why I lose. Sometimes it works and sometimes it doesn’t. Maybe a butterfly’s wings just flapped.

But I better recognize when current conditions are favorable, or adverse, to a setup and when the wind start to turns around.

Traders fail because they don’t beat the odds.
They spend too much for their gains.

 

[shine]

Many traders are not yet psychologically prepared. They are driven by emotions, they do not know how to wait, they are gambling, they get euphoric after several successful trades, which leads to incorrect and thoughtless actions and bad consequences for their deposits in the end.

 

[newwurldmn]

“Did we ever mention that investing is hard work — painstaking, relentless, and at times confounding? Separating relevant signal from noise can be especially difficult. Endless patience, great discipline, and steely resolve are required. Nothing you do will guarantee success, though you can tilt the odds significantly in your favour by having the right philosophy, mindset, process, team, clients, and culture. Getting those six things right is just about everything.

“Complicating matters further, a successful investor must possess a number of seemingly contradictory qualities. These include the arrogance to act, and act decisively, and the humility to know that you could be wrong. The acuity, flexibility, and willingness to change your mind when you realise you are wrong, and the stubbornness to refuse to do so when you remain justifiably confident in your thesis. The conviction to concentrate your portfolio in your very best ideas, and the common sense to nevertheless diversify your holdings. A healthy scepticism, but not blind contrarianism. A deep respect for the lessons of history balanced by the knowledge that things regularly happen that have never before occurred. And, finally, the integrity to admit mistakes, the fortitude to risk making more of them, and the intellectual honesty not to confuse luck with skill.”

-Seth Klarman

 

[shine]

To be successful in Forex, you also need a profitable strategy. Beginners often make the mistake of thinking that if they quickly find a trading strategy they like on the Internet, they will immediately start earning. But as practice shows, such a strategy will have to be created for a long time by trial and error, improved and gradually brought to a working form. And this process is not fast, it requires time, effort and patience.