Why are there so many losers?

Strange, I disagree with everything that has been written on this thread. I believe 100% of the people make it, if they do three things:
1) Have enough money.
2) Start very small.
3) Do not give up.

I have trained some people and the only reason why some make it and why a lot don't is 'staying' power.
Everybody can make it in this business but what will you do if it takes ten year before you make it? (I'm not saying it takes ten year but for some will) What will you do if your losing streak is so big and long that you will need additional capital? Most people just give up... and look for something else they can do. What is fine. Only the people with the hart for the 'trading' business will survive this 'challenge' that every wannabe has to go through.
 
No edge. You need to go into every trading day with some kind of plan at least. Even if it is as simple as a maximum daily draw down expectation; anything to add some sort of structure to your trading helps.
 
I gave a presentation at the Chicago Traders expo on this very subject. I have had the unique opportunity to peek over many, MANY losing traders shoulders over the last 5 years as I have sold my knowledge as a consultant, coach, seminar host, stock picker, etc.

On the face of it, you would assume that a trader fails because of flaws in their trade acquisition system. (they are lousy trade selectors) But my experience says no...Everybody seems to spend all their time on trade style and selection when the real reason they fail can be traced to one of these flaws...

1: No Trading Plan
2: Initial Trade Risk Not Justified By Gains Taken
3: Improper Position Sizing
4: Inability To Accept Risk
5: Lack Of consistent Approach

I think you can still get a recording of my presentation from the expo folks, or if there is enough interest maybe I will turn this into an article for my blog


In any case, the bottom line is don't worry about your picking skills as much as you do on your trade plan, and edge analysis!
 
Trading rules are very simple, whether you follow 10 of them or 100 of them. Problems arise when you have a position(s) on and you freak and freeze and can't pull the trigger. Everything gets screwed up, you liquidate winners and ride losers. Your wiring gets crossed due to panic and lack of a well rehearsed game plan to get back on track. It is a confidence issue and you have to be skilled enough to get out of a bad situation post haste and move on.

I have met some of the BEST market callers who never made it as traders, as well as some of the WORST market callers who made fortunes, because of their approach to money management and emotional control.
 
Quote from T/A_Bo:

...I think you can still get a recording of my presentation from the expo folks, or if there is enough interest maybe I will turn this into an article for my blog


In any case, the bottom line is don't worry about your picking skills as much as you do on your trade plan, and edge analysis!
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love to see it and I also enjoy your book, thnx (a friend recomm it).
 
Quote from AshanD:

Hey guys, after browsing around I see that the large majority of traders end up net losers (95%+) This sounds incredibly high, are we counting only daytraders or all types of investors in that number? I would think the number "should" be around 75-80% are net losers.

Whatever the number, I want to be on the side that wins so its necessary to know why the other side loses.

Is it because
-They aim too high? Trying to make 1000% a year as a daytrader

-They lack proper knowledge and play the game at a severe disadvantage

-Improper bankroll management, trading too large relative to account size

Right now I fit all 3 of those categories, my goal is to make enough trading to pay all the bills which I'd estimate to be around $1,500 a month. With only $5,000 to start that goal is entirely unreasonable (for now at least) I hope to hear other common trading pitfalls so I will (hopefully) avoid them and learn to trade as cheaply as possible.

Thanks
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imo the big ones are:

1-correct trading is opposite of human nature (risk:reward decision making, bad emotional decisions)
2-technical skills like programming and statistics help a lot and most people don't have them
3-people don't have enough $
4-people are vulnerable to bs (stock market tv shows)
5-too much information. there's so much information about trading, it is especially hard when you first start to determine what is good/bad information.
 
Quote from spyderman:

I have met some of the BEST market callers who never made it as traders, as well as some of the WORST market callers who made fortunes, because of their approach to money management and emotional control.
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Great post.
I strongly believe that you can still make money flipping a coin at the opening, if you use a good money management strategy. In my opinion, most of the people lose because they are lazy. Being a trader requires you to study, and study a lot. There are no classes, and no exams. And you have no idea if you're ready, until you hit the markets. But people are spoiled. They want to be catered to. They want the fast, easy way. They think that you can become rich in a matter of months. But in this field, there is no such thing. You have to figure it out, and you have to do it yourself. What do you need to make it? Same things you need for other things: passion, dedication, and time. That's the way I see it. Good luck.
 
Quote from Akavall:

If only 2% of the people make real money doing it, this means you have to be better than other 98%, I never been better that other 98% in anything I've done so far. So maybe I should reconsider my decision to start day trading (I havn't started yet). I am glad I came accross this thread early. Maybe I am wuss.
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Totally think that is the wrong attitude although on the surface it would appear to make sense. Many people who have finished High School, college, SAT scores, careers, in the top 2 or 10 % of
their peer group have failed at trading. On the other hand we have all seen great traders who are lucky enough to be doing it because they are absolutely hopeless at anything else. I gotta say tho....you have to LOVE and have a BURNING DESIRE for this to make it succeed.
 
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