Why do 5% of Traders Win?

Quote from StarDust9182:

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Click this link http://www.elitetrader.com/vb/showthread.php?s=&threadid=222458




Day trading es requires sufficient capital. And why, because of the high volatility and leverage. "mathematical failure is a moot point" means variable. Lets take es as an example again, to minimize the "variable," (risk) is to have sufficient capital $500K minimum and $100K per contract to trade the es. that will minimize the variable.


If ones begin trading in es with an account $5000, he increases the variable.


1 + 1 = 2 how did that equal 2? eliminate the variable.


1 +1 =8 how did that equal 8? increases the variable
 
Quote from dewton:

HERE IS THE SECRET:

On a long enough timeline, every single trader will lose their entire bankroll. However at any given time, some may be profitable usually by luck.

The real winners are the ones who know when to quit trading entirely once they've become profitable and dump their money into safer investments that will be able to sustain the lifestyle that they want.

Trading is a hit-and-run arena. You go in, do your best to make a killing quickly, and quit. If you keep playing, you will lose it all- guaranteed (just give it some time and it'll happen).
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I understand partially to what you are saying. To keep disciplined to stick with your trading style and to evolve with the markets is a tough feat.

Trading definitely is not a hit and run arena. Trading is a job for many people and there are many people that have been trading for a long time profitably. luck has nothing to do with it.

As you become older and have a nice bankroll i agree there is a time to diversify your funds into safer alternatives.

The whole key to the survival of trading is to minimize your draw down through risking a small amount of your account at any 1 time. This could be 1% per trade for smaller accounts and much smaller amounts for really large accounts. This way the probability of your trading style will show you your profitability through many trades without blowing your account if your strategy isn't up to par.

Compounding this small amount can lead to triple digit returns yearly.
 
@EMG
You are on ignore so dunno if you are still here. But, NO I do not seek to slave for an investment banker, never given the chance to trade. No, I will not compete for the few slots that come open. No I will NOT get an MFE or humor your fellows at nuclear fynance.

You see EMG, I do not aspire to look successful as you yourself do-- I inspire to be succcessful. I don't inspire to keep replinshing my account and doubling down so that I can show how I'm a winner.

Neither will I entertain pairs trading methods from the pros unless shown some trading records. Look at market neutral funds and find one that hasn't underperformed the overall market. Find one market neutral fund that has annualized 50% returns.

And, EMG if you and your investment banking buddy cartel members ever did give me inside advice: I'd tear it up and throw it away. Because, you see there is something more important then looking cool driving a new sports car.. Something you'll never understand.

Something that has everything to do with prediction, winning, and glory.

My 2 cents. ;0
 
Quote from Lucias:

This is made possible by sizing larger on my best trades.
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So you average up when a trade is going in your favor?

Or do you mean that you trade larger on your best setups?

I trade the same size on most setups because they're all good setups. When I put on a more experimental trade (such as placing a limit order at a level that usually holds as S or R, CL today short @ 108.17, 20EMA touch 12:09 EST), I trade 1 lot.

Quote from Lucias:

I agree if I could scalp/get my avg risk per trade down then it could be possible. I just haven't proven any ability to scalp.
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Scalping is a very specialized art form, with very small risk on every trade. I've watched a couple micro-scalpers trade and they generally use stops of 3-10 ticks, 10 ticks being a large stop for them, this is trading CL and 6E.

I scalp a bit larger, looking for profits of .30+, min profit of .20, max loss .20, avg loss less than that.

I scaled out of a trade late today and ended up with .16 less on the 2nd half than if I'd taken off the entire position at once. I'm sure there are days when it would've been a much larger result on the 2nd half than on the 1st half, but scaling out isn't something I ever do so I don't really track the overall stats. (BTW, for those who still believe you can't make a living trading 1 contract of CL, just that one trade, one of many solid trades today, and the second leg of an already-steep selloff in progress (price had already dropped 1.58 from the RTH high), produced .70 ($700) from entry to exit.

Two words to reveal my secret:

Price Action
 
Well I didn't read this whole thread, but the fact is this. 95% of people will fail at most things they attempt, wether its getting good grades, learning guitar, starting a business, and especially trading.

People quit too soon and don't learn from their mistakes. I'm still trying to trade but I won't quit. Quitting is the ultimate failure.
 
Quote from StarDust9182:

Your comment triggered a new thought for me. The only thing a viable system has to outlast is the life of the currency that it earns. So if the drawdown system failure lifetime is less than the lifetime of the currency or the person using the system, then certain mathematical failure is a moot point. The currency or the person or the computer will fail first.
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yes, bingo -- that's why the 100-year storm is considered, because by the time the storm hits, the original designers of the building will likely be dead.
 
@NoDoji,

Again I don't focus on setups. I have setups but I prefer to focus on context and driving market forces. I size larger based on my confidence. If I'm 99% confident that my target will get hit then I add a contract... Of course, the trick is that I have to be spot on for this to work. The market has to be moving away from my stop. But it doesn't mean that I won't add when trade goes against me.. I don't add as much though when market goes against me. Its not about averaging down but just basically taking a pulse of the entire market.

My entries are very prcesise about 2 ES points on average. The reason for the bigger stop (around 12 points) is that typically I can read the tape, notice the trade not working, and get out for a small loss. If I took a stop hit, even a small one, on average itd be larger then what i typically take.. I'm typically sizing my stop 3x to 4x my target but not taking the stop hits. The leverage is typically below 5x and so the spread costs aren't too large.

So part of my adjustment is getting comfortable trading 1 contract.. I like to be typically adjusting my position. Again when trading a small account I'll already be at max leverage. I'd certainly like to learn to scalp with tight stop. Its just I've never seen this method work even though I've had easy success with many other methods. I've did very well with many other combinations. I'm more inclined to try a tighter stop then a midsize stop because I've seen midsized stops not work well.
 
Quote from Lucias:

@NoDoji,

Again I don't focus on setups. I have setups but I prefer to focus on context and driving market forces. I size larger based on my confidence. If I'm 99% confident that my target will get hit then I add a contract... Of course, the trick is that I have to be spot on for this to work. The market has to be moving away from my stop. But it doesn't mean that I won't add when trade goes against me.. I don't add as much though when market goes against me. Its not about averaging down but just basically taking a pulse of the entire market.

My entries are very pricese about 2 ES points on average. The reason for the bigger stop (around 12 points) is that typically I can read the tape, notice the trade not working, and get out for a small loss. If I took a stop hit, even a small one, on average itd be larger then what i typically take.. I'm typically sizing my stop 3x to 4x my target but not taking the stop hits. The leverage is typically below 5x and so the spread costs aren't too large.

So part of my adjustment is getting comfortable trading 1 contract.. I like to be typically adjusting my position.
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es trades with the hft's so your accurate spots are the ones they target,they let the crowd in, they run it against a point or 2 ,get the crowd to stop out , then bring it back in and cover,very tough to scalp
 
Yes, I've seen a pattern in the order flow. I call them "flurries". Its when the market moves up about 4-6 ticks, very quickly, and the immediately reverses and makes a run down. Happens too fast for me to take advantage of...

Quote from ammo:

es trades with the hft's so your accurate spots are the ones they target,they let the crowd in, they run it against a point or 2 ,get the crowd to stop out , then bring it back in and cover,very tough to scalp
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