Why do 5% of Traders Win?

Which is exactly why I said scared money doesn't make money. It is a fear issue. You just said you couldn't replace 500k, so you would be scared to lose it. I also don't see how having less money means you should be more risky with it. This isn't being the small stack in a poker game. If you 1k, do you just deposit 100 ten times or use the 1k? If you don't deposit it all at same time, do you really feel you have that bad of self discipline that you'd lose it all.
 
Quote from ExchangeBonds:

Okay, so your average loss when you first started that mini account is 10%. Would you be willing to do that same risk at 10k? At what point do you lower that risk tolerance? You can't continually risk 5-10% of your account per trade and be consistently profitable as a day trader imo. You will have those bad days where you just can't get it right.
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When I first started the average loss was only $12/$2000 or 0.6% of the tradable account I keep seperate from my trading account. :D

Therefore, scaling that, with $10,000 you can earn $75/day with 0.6% risk. $150/day with 1.2% risk. $300/day with 2.4% risk.
 
Quote from ExchangeBonds:

Which is exactly why I said scared money doesn't make money. It is a fear issue. You just said you couldn't replace 500k, so you would be scared to lose it. I also don't see how having less money means you should be more risky with it. This isn't being the small stack in a poker game. If you 1k, do you just deposit 100 ten times or use the 1k? If you don't deposit it all at same time, do you really feel you have that bad of self discipline that you'd lose it all.
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Do you not value $100 more than $5? I certainly do. This isn't scared money; this is common sense.
 
Quote from bhardy307:

Do you not value $100 more than $5? I certainly do. This isn't scared money; this is common sense.
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I think the best way to get used to trading bigger is start small and gradually increase little by little, so that you adapt to the bigger size without too much stress.

There are two ways to achieve this:

1) Start with the bigger capital and add contracts trading something like ES. But that requires one to be wealthy already.

2) Start with currencies, binary exotic options or similar instruments, which allow microscopic position sizing.
 
Quote from cornixforex:

I think the best way to get used to trading bigger is start small and gradually increase little by little, so that you adapt to the bigger size without too much stress.

There are two ways to achieve this:

1) Start with the bigger capital and add contracts trading something like ES. But that requires one to be wealthy already.

2) Start with currencies, binary exotic options or similar instruments, which allow microscopic position sizing.
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I went with 2), currencies. At any given time, in my trading account, I have only slightly more than what I am willing to lose on a couple of trades. If I lose it, out comes my credit card for a reload. This has allowed me to double my $2000 account since the beginning of November. I am taking very little risk, averaging between $15 and $30 per day. This compounds very quickly. As my balance increases, and my skill increases, I can afford to take greater risks.
 
Quote from StarDust9182:

A true story:

I submitted several months of trades to a fellow who offered to coach me to get better. He analyzed them and did a tremendous job with lots of complex computer analysis. We went over all the measurements carefully. He noted only one specific oddity about the trades.

At the end of his discussion of his report, I asked him for a big picture comment. He said that he was puzzled by the results. He said that my method produced almost double the return of the best system he had ever tested of hundreds. He was on a website board where they test everything they can think of and he is a successful trader himself.

I asked him if he believed the trades I supplied him were honest trades. He said yes, but his hesitation made me wonder if he really refused accept the answer that a good discretionary trader had demonstrated that he could beat the best system this programming fellow had ever found testing everything.

He harped on the oddity since he had never seen it before. I thought about it a lot after I hung up and realized that this was part of my edge. I intuitively had a pretty good idea what had caused it. I decided that he was not the fellow to coach me.

I used to play chess very well. A certain amount of skill was needed to understand the rules and the game at a deep level. The rules were simple but the game was complex and chaotic. A little psychology was needed to understand the opponent and adjust to them.

However in chess, the most powerful opponents were the creative types who adapted the principles and knew where the exceptions lay. One had to play tactical for the tacticians and positional for the positional players. Endless memorization didn't win in the end. Trading is very similar to IGM level chess in my view.

RN - you and I agree.
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For once in my life I agree with opinion of others.I have 44 profitable automated systems working together but I abandoned them for human bots ,in hindsight I can see how out of whack the bots are in their execution.

A human brain can see and process information about trading , much more accurately than written codes .The bots process words , and not enough words can describe a picture of context and set up seen by the naked eye.
 
Quote from oilfxpro:

For once in my life I agree with opinion of others.I have 44 profitable automated systems working together but I abandoned them for human bots ,in hindsight I can see how out of whack the bots are in their execution.

A human brain can see and process information about trading , much more accurately than written codes .The bots process words , and not enough words can describe a picture of context and set up seen by the naked eye.
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Agree. Our brain is much more complex than just conscious conclusions, which are possible to be written down as words.

Our adaptive abilities include a lot of subliminal factors we just "know", even if cannot put them into ideal logical chain.

No computer algo can do that. Such an adaptation is only prerogative of live organisms... So far. :)
 
Less than 1% win enough to compensate the hassle, so really it's like 95% lose, 4% breakeven or win small, and 1% WIN BIG.
But let's answer the question:
Why do 1-5% of Traders Win?
Because the other 95-99% don't know any better.
 
Lucias, a couple of other comments for you:

I think I have mentioned this before, but one of the things you can do with forex, is deposit only the amount you're willing to risk on a given trade. It forces you to follow your own stop rule, and eliminates the effect of a "black swan" which takes away much more than your intended risk.


So here's the math:

I have a $4000 account right now. The amount I risk varies, but let's say that I only risk 1%. That's $40. So, deposit $40 in your trading account.

Again, this varies by trade, but let's say that I chose to set a stop $10 away from the current price of gold. $40/$10 = 4. This means that I can trade a maximum of 4 ounces of gold. At $2/ounce deposit, I immedately use $8 of that $40 just to hold the right to trade that gold. So, I am left with $32 of leeway. So, gold can move against me $8 ($4*8 = 32), and I'll be stopped out by the broker.

Look at that 75/25% win loss ratio again. If 1 ounce of gold of risk has a win loss of $5/$12 and a daily payout of $15, what does a 4 ounce of gold risk pay?

The other value of only depositing your risk is the "luck" of a sudden change in price at worst will cost your deposit, but at best will benefit you substantially more than what your loss would have been.

Yesterday, I was angry that I had been profitably kicked out of trade that I had been arguing with GrandSuperCycle. Emotional trading, not wise, I know. I'm not proud of this, but the size of my deposit protected me. I left $100 in my account, and risked 20 ounces of gold. In less then two minutes ( that may be an exaggeration; it all happened rather quickly) I had gained more than $200, 5% of my savings account, but my potential loss was always only 2.5%.
 
Quote from bhardy307:

Do you not value $100 more than $5? I certainly do. This isn't scared money; this is common sense.
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No, in trading I do not value $100 more than $5. If you value money too much, you make less money. If you haven't noticed, common sense doesn't help in trading all the time, as there is a reason the vast majority are unprofitable. If you do, your account will reach a certain size, and you will stop making the returns you deserve. If people are fine with that than whatever, but I'm not in the trading business to just get by in life.

I also think it says something that you actually argue with supercycle as that guy is complete moron/troll that should be ignored.
 
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