Why are there so many losers?

Quote from Donkell:

Nana Trader
"I will quite daytrading today, if someone can
prove to me (reliable source with data) that it's 5%
that make money over long term?"

I have never seen a broker put out those statistics, but from what I gather it's probably true.
As for proof, what brokers, who makes their money from your trading, are going to tell you, 95% or even over half lose money, and expect you to sign up. I don't think you're going to hear it.

There probably is a place or places that have those statistics but they'll be darn hard to find.
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http://faculty.haas.berkeley.edu/odean/papers/returns/returns.html
 
Quote from Nana Trader:

24% a year? i hope you never become a fund manager.
Fund managers make 24% of the trading capital, not on
the trading equity.

If he makes $1200 in a year, that's around 2.5% return
, better put money in bank CD than to trade.
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Trading capital or trading equity doesn't matter, the bottom line is what matters.
$1200 a year on $5000 is still 24% and in my opinion a good achievement. I can think of another person who makes 30% a year, Warren Buffet.
 
Most people fail at trading for the same reason they fail at everything else. They are not 100% commited and willing to pay the price.

Brandon
 
Quote from Diamondtrim:

I think the main reason people are losing is the law of large numbers. You need to have a big enough bank roll to weather the storm. Most people do not have that luxury. All other factors matter like skills, money management but at the end of the day you have to be able to weather a storm.
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Well said and agree completely. Again, thats one of the reasons why I believe so much more in proprietary trading, in general you can survive a storm when you're not dealing with your own private account.

I think any good strategy/method always has a backup plan for that major move against them.

Personally, every month I experience 1 or 2 storms and the key is to survive, ie not lose your whole months hard work in 1 or 2 days trade. This boils down to proper money management again.
 
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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You lack imagination. That is not a pretty place to be, but unlike that song about the California hotel you can check out at any time and even leave if you want.

You can start by asking better questions, which you have yet to do.

You might start with something like this: With the vast wealth flowing every day, how do I direct some of that through my life?

Do a little exercise.

Take any market; I trade the emini s&p futures so that might be one example. Figure out how much money flows daily in this market. Just use a crude measure you can come up with. Write it down on a piece of paper. Determine for yourself how much you require for the life you want. Write this down also. You've already done this part in your post; unfortunately for you your number is a shitty one. Compare the two figures you came up with. You will notice one dwarfs the other by many magnitudes. Maybe this will give you ideas. Maybe your imagination checks out of the cheap dump you have placed it in. Some good questions might result.
 
Steve -- I only had short period of time stepping it up. I had five or six nicely profitable years trading. Then my edge faded rather quickly.


Now I trade part time.
 
One might ask two questions:
1) WHY did your "edge" lose favor ?
2) WHY are you only trading part-time instead of finding a "new edge" ?
 
rules should be:

1) expect to lose in the beginning
2) start VERY small
3) learn from mistakes (best lesson you can ever get)
4) do not give up
5) money management !!!!!!!!

take this as an answer from fellow newbie trader - i washed 50% of my starting account (I expected that), but think I used it to learn from it and now I'm at 170% of m starting value and slowly getting up.
Still staying smaller, than I maybe could, but risk is not worth reward.
 
Take any market; I trade the emini s&p futures so that might be one example. Figure out how much money flows daily in this market. Just use a crude measure you can come up with. Write it down on a piece of paper. Determine for yourself how much you require for the life you want. Write this down also. You've already done this part in your post; unfortunately for you your number is a shitty one. Compare the two figures you came up with. You will notice one dwarfs the other by many magnitudes. Maybe this will give you ideas. Maybe your imagination checks out of the cheap dump you have placed it in. Some good questions might result.
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Well I'm not so sure this "shoot for the stars" approach is the best way to go. As someone else suggested how about I aim for $100 a month (a lofty goal with my account size) Then maybe when I prove to myself I'm a profitable trader aim a little higher. How high? I'll measure that in terms of what my account can afford to risk, not what I want.
 
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