Why do 5% of Traders Win?

[Handle123]

"WHAT IF"

Most of the 95% spend no time doing a "What If", brainstorm ever possible event that can happen after you enter a trade, whether trade goes in your favor or against you, or what happens if Price just sits there. Cable goes out, ice on satelite dish, are broker numbers on speed dial, secondary account on DSL, you did a buy when you meant sell. Some of these are Money management rules, some deal with equipment. Do you have a "SOP" Standard Operating Procedure? Do you have a manual with what trades are supposed to look like?

So when Price, Equipment or You has a problem, you know the answer. Nothing is a surprise cause you have an answer for whatever comes up. Any successful business has a manual of "What If".

 

[emg]

It's not psychological problem small traders are losing. The reason they are losing are:


1) Under Capitalized
2) Low Educated


For example, this person must be extreme lower educated to trade in the futures market with a starting capital $5000



The minimum capital to trade in the futures market is $500K. If you don't have that kind of money, work in the "House"


More than 90% of small traders lose! They just lose!!

Reload that account until u are dead broke. RELOAD

 

[SimpleTrades]

Quote from emg:

I
The minimum capital to trade in the futures market is $500K. If you don't have that kind of money, work in the "House"

More than 90% of small traders lose! They just lose!!

Reload that account until u are dead broke. RELOAD

Excuses. Excuses. That's why you're broke and belong with the 90%. Take responsibility for your mistakes. Learn from those mistakes. Stop blaming the system.

 

[cyoungmark]

Quote from emg:

It's not psychological problem small traders are losing. The reason they are losing are:


1) Under Capitalized
2) Low Educated


For example, this person must be extreme lower educated to trade in the futures market with a starting capital $5000



The minimum capital to trade in the futures market is $500K. If you don't have that kind of money, work in the "House"


More than 90% of small traders lose! They just lose!!

Reload that account until u are dead broke. RELOAD

I believe the psychological problems stem from having a under capitalized account and being uneducated

 

[Lucias]

EMG posts the most ridiculous garbage around..

First, I have never payed any attention to this argument. For one thing, its not well defined.. what does it mean to win or to lose? Many small traders "quit" because they can make more money in other endeavors. This is true of most small businesses. This doesn't mean they "lose".

What is true is that there are very few (to none?) small traders "trading for a living".

Even granted the question is ill defined..

Why do the traders win that win? Its basically that we've been able to find our comparative advantages, areas where we excel, and pursue that.. The traders that win have found where they are strongest.. what they do best and they work at it over time.

There have been many cases of small traders who've made a larger fortune over time. I don't know of any cases of small traders trading for a living. Again, I think that most people have equated "being unable to trade for a living" as losing. So, success also requires some re-adjustment in the way one looks at things.

I also think that I've a big "edge" because I'm interested in trading because I've already seen my ability to excel at it. Let's think about the person who comes into this field with just the idea of getting rich, he may not even like it or not really find where he can win. I've met people who are passionate about market/trading/etc but they don't really study it. I mean they're not really passionate.. they like to read the stories or they like the news programs or something else about it.

I'll give you an analogy as best I can. I've an interest in video games before market and so will use this analogy.. let's imagine there are 2 kids. One kid loves to play games and plays lot of games. He likes the artwork and dreams to become a game artist. Another kid loves to draw/paint and spends his time painting but plays games as a hobby. I'm hear to you tell you that the one who studied painting is more likely to be making game art.. The other kid has a dream of becoming a game artist but none of the skills. He might get a job as a game play tester or as an editor for a magazine. The problem is that he's associated "his dream" in a way that doesn't align with his talents.

Its easy to make this type of mismatch mistake. In my case, I've predicted market successfully. I enjoy the trading aspect, and so I've correctly identified my skills. Dr. Steenbarger wrote that often the "traders" that failed found they were stronger or had another interest that was more compelling. It wasn't always "weakness" but "strength".

Now as to how Dr. Steenbarger could have missed my talent.. that will be one for the books.

 

[Handle123]

Quote from emg:

It's not psychological problem small traders are losing. The reason they are losing are:


1) Under Capitalized
2) Low Educated


For example, this person must be extreme lower educated to trade in the futures market with a starting capital $5000



The minimum capital to trade in the futures market is $500K. If you don't have that kind of money, work in the "House"


More than 90% of small traders lose! They just lose!!

Reload that account until u are dead broke. RELOAD

I know a guy who went thru 2 million cause he was too educated, he knew more about indicators and Price Action than me, but cause of his huge ego and stubborn, he had to go back to work. I wouldn't even try to teach him cause he wouldn't listen, he had strong thoughts of how the market moves and it was all wrong.

Where he and others that lose fail, you have to dig deeper than what books offer, they are not the bible. You can't be stubborn, check ego at the door. And if you have developed a very good system, you stll have to have to have the faith to place the trades and if you can't cause of past history of losing, you have psychological problems .

The amount you start is immaterial, but there are other factors involved.

 

[ocean5]

Quote from Handle123:

"WHAT IF"

Most of the 95% spend no time doing a "What If", brainstorm ever possible event that can happen after you enter a trade, whether trade goes in your favor or against you, or what happens if Price just sits there. Cable goes out, ice on satelite dish, are broker numbers on speed dial, secondary account on DSL, you did a buy when you meant sell. Some of these are Money management rules, some deal with equipment. Do you have a "SOP" Standard Operating Procedure? Do you have a manual with what trades are supposed to look like?

So when Price, Equipment or You has a problem, you know the answer. Nothing is a surprise cause you have an answer for whatever comes up. Any successful business has a manual of "What If".

So,what do you do,when one of the ''IFs'' occur and you are undewater?

 

[SimpleTrades]

Quote from Handle123:

I know a guy who went thru 2 million cause he was too educated, he knew more about indicators and Price Action than me, but cause of his huge ego and stubborn, he had to go back to work. I wouldn't even try to teach him cause he wouldn't listen, he had strong thoughts of how the market moves and it was all wrong.

Where he and others that lose fail, you have to dig deeper than what books offer, they are not the bible. You can't be stubborn, check ego at the door. And if you have developed a very good system, you stll have to have to have the faith to place the trades and if you can't cause of past history of losing, you have psychological problems .

The amount you start is immaterial, but there are other factors involved.

I agree with this completely.

I really don't think a large amount of starting capital is needed. In fact, to start with a large amount of capital is probably a big mistake. You're actually better off to learn with only small amounts of money and build yourself up over an extended period of time. I trade Forex with $100 to $300 in my trading account at any given time. With intelligent use of leverage, you can earn a nice chunk of money with each trade. As my account increases I'll change that to $1000 to $3000, and then $10,000 to $30,000 etc.

I also see big egos on ET who also have the expectation of huge amounts of money very quickly. This too is a trap: the get rich quickly mentality.

 

[Mr Super Trader]

Quote from bhardy307:

I agree with this completely.

I really don't think a large amount of starting capital is needed. In fact, to start with a large amount of capital is probably a big mistake. You're actually better off to learn with only small amounts of money and build yourself up over an extended period of time. I trade Forex with $100 to $300 in my trading account at any given time. With intelligent use of leverage, you can earn a nice chunk of money with each trade. As my account increases I'll change that to $1000 to $3000, and then $10,000 to $30,000 etc.

I also see big egos on ET who also have the expectation of huge amounts of money very quickly. This too is a trap: the get rich quickly mentality.

Having enough capital or not is irrelevant. In the forex market you can position your trade sizes based on your capital. I personally risk no more then 2% of my account on any trade with any capital amount. If you are truly a good trader you should be able to build a small account up through compounding.

And I assure you risking 2% per trade is plenty to become wealthy if you are constantly on the right side of the trade.

 

[Lucias]

To stress my point..

let's take Neke, I believe he started with a tiny account.. he's made a ton with his withdrawals. Let's say he blows out (hope not). Does that make him a loser? Obviously such an event is undesirable but can't say he'd be a loser because he still netted a lot of money. What if he blows out but then he comes back and makes a million? Is he now a "winner"?

So its worse then what you thought.. not only can we not even answer the question. We can't even ask it!

The usefulness in this exercise is to make one think about what is really important to them.. Obviously, one is most successful when they ause their time and do the things they desire most to do.