Why do 98% of traders fail???
- Thread starter womblevader
- Start date
This is probably the biggest hurdle in trading.
Normal draw downs are longer and deeper than most new traders are prepared for emotionally and financially.
Thansk for all the interesting comments
FYI I've still got my old M3, which is still very good for going from A to B. But I had my big drawdown [I believe that this is the less emotional term for loss] before the new one was released.
I actually went 3 months without having a losing trade [I don't think it was all luck] but I was determined to keep my perfect record intact and when the trade went against me I doubled up, the market dropped, I doubled again and ouch.
I was pretty naive but very confident, I'm almost the opposite now and am happy to take small profits every day.
I used to trade individual tech securities, but I'm of the opinion now that they are way to volatile, played, and gap too much. I now only trade the non gapping instruments eg gold, oil, FX and the indexes.
The following is is pretty much how I trade now:
Don't use indicators
Keep up with the economic news to reassure myself that their is a good chance the various instruments could either go up or down
Look for areas of S, R and congestion
Look at momentum [not using an indicator] using the steepness of the slopes on the line to determine entry direction ie steeper moves up go long, steeper moves down go short [I've found this to be better than trying to identify the trend as the trend often is specific to the time frame your using]
Identify a position for a stop and then identify 2 target prices.
Identify a price range for entry that gives acceptable risk reward.
Enter and watch the price action occasionally mainly to watch the momentum of the swings.
Exmaple of a recent trade on Friday
Short on S&P at 1289
Stop 1307 around strong resistance
Target 1253 Just above strong support
2:1 RR ratio
Reassessed trade after seeing upwards price action following 8:30 annoucements
Closed out at 1281, will probably try a similar trade on Monday
Cheers
FYI I've still got my old M3, which is still very good for going from A to B. But I had my big drawdown [I believe that this is the less emotional term for loss] before the new one was released.
I actually went 3 months without having a losing trade [I don't think it was all luck] but I was determined to keep my perfect record intact and when the trade went against me I doubled up, the market dropped, I doubled again and ouch.
I was pretty naive but very confident, I'm almost the opposite now and am happy to take small profits every day.
I used to trade individual tech securities, but I'm of the opinion now that they are way to volatile, played, and gap too much. I now only trade the non gapping instruments eg gold, oil, FX and the indexes.
The following is is pretty much how I trade now:
Don't use indicators
Keep up with the economic news to reassure myself that their is a good chance the various instruments could either go up or down
Look for areas of S, R and congestion
Look at momentum [not using an indicator] using the steepness of the slopes on the line to determine entry direction ie steeper moves up go long, steeper moves down go short [I've found this to be better than trying to identify the trend as the trend often is specific to the time frame your using]
Identify a position for a stop and then identify 2 target prices.
Identify a price range for entry that gives acceptable risk reward.
Enter and watch the price action occasionally mainly to watch the momentum of the swings.
Exmaple of a recent trade on Friday
Short on S&P at 1289
Stop 1307 around strong resistance
Target 1253 Just above strong support
2:1 RR ratio
Reassessed trade after seeing upwards price action following 8:30 annoucements
Closed out at 1281, will probably try a similar trade on Monday
Cheers
My experience is with day trading. I think that most people fail because of the inherent difficulty of day trading. Day trading is so difficult because the market is never the same from day to day or even throughout the day. If the market remained the same, most people could devise a strategy that worked. However, what works one day will be a disaster another day or at another time that same day. It takes years of experience to be able to recognize what direction the market is trying to go, where support and resistance are, when it is better to sit on the sideline and how to absorb losses and keep trading. Because the market moves in one direction and then retraces, you will inevitably get stopped out if you donât know what you are doing. The odds, if you are guessing, are not 50/50 but something like 30/1 against you. Most people do not have the financial resources or mental stamina to put in the years that are required to be successful at day trading.
I do not think the poster is a day trader. His doubling down strategy makes me believe this. BTW, that is almost always a losing proposition in the long run. When you are wrong, just get the hell out.
Day trading patterns are no different than longer term patterns, but you do need the correct instrument to trade whereas you can position trade anything. It also takes lots of intense mental effort throughout the day until you become comfortable and skilled with a certain approach. I think day trading leads to faster failure because the trader has more opportunities to fire off trades before he knows what the hell he is doing. I don't think its inherently harder or easier. Also, a higher percentage of newbies may be attracted to day trading because of the low risk up front (a $100 stop on ES for example).
I am biased of course as I've been mostly a day trader my entire career. And yes, I blew out my first account! Would have done it no matter what given the crazy shit I was doing.
Jay
Day trading patterns are no different than longer term patterns, but you do need the correct instrument to trade whereas you can position trade anything. It also takes lots of intense mental effort throughout the day until you become comfortable and skilled with a certain approach. I think day trading leads to faster failure because the trader has more opportunities to fire off trades before he knows what the hell he is doing. I don't think its inherently harder or easier. Also, a higher percentage of newbies may be attracted to day trading because of the low risk up front (a $100 stop on ES for example).
I am biased of course as I've been mostly a day trader my entire career. And yes, I blew out my first account! Would have done it no matter what given the crazy shit I was doing.
Jay
As Bruce Lee said,
"Empty your mind, be formless, shapeless. Like water.
Now you put water into a cup, it becomes the cup.
You pour water into a bottle, it becomes the bottle.
You pour water into a teapot, it becomes the teapot.
Now water can flow or creep or drip - or crush!
Be water, my friend.
----------------------------
Adapt
"Empty your mind, be formless, shapeless. Like water.
Now you put water into a cup, it becomes the cup.
You pour water into a bottle, it becomes the bottle.
You pour water into a teapot, it becomes the teapot.
Now water can flow or creep or drip - or crush!
Be water, my friend.
----------------------------
Adapt
Psychology is the most overblown excuse for trading failure.
The plain fact is that most aspiring traders just have no clue what they are doing, and are just placing random bets as if at a casino table. So "issues" such as failing to cut losers or let winners run are the equivalent of a gambler having a problem deciding on which "system" to use at the roulette wheel.
Isn't it strange how many former doctors, lawyers, or engineers who try their hands at the markets all of a sudden morph from rational professionals into mental basket cases who are always "sabotaging" their potential success, since they are obviously doing everything the trading books tell them to do yet still shooting themselves in the foot? Isn't there just another, simpler explanation for failure out there besides enigmatic bugaboos of the mind? When it comes down the nuts and bolts of it, you either know what you are doing or you don't. You know, you keep doing; you don't know, you will keep flailing until you do.
The plain fact is that most aspiring traders just have no clue what they are doing, and are just placing random bets as if at a casino table. So "issues" such as failing to cut losers or let winners run are the equivalent of a gambler having a problem deciding on which "system" to use at the roulette wheel.
Isn't it strange how many former doctors, lawyers, or engineers who try their hands at the markets all of a sudden morph from rational professionals into mental basket cases who are always "sabotaging" their potential success, since they are obviously doing everything the trading books tell them to do yet still shooting themselves in the foot? Isn't there just another, simpler explanation for failure out there besides enigmatic bugaboos of the mind? When it comes down the nuts and bolts of it, you either know what you are doing or you don't. You know, you keep doing; you don't know, you will keep flailing until you do.
Most people can develope a system that looks ok but is in reality not this side of random at all... they win sometimes and they get their head beat down sometimes, eventually they abandon the system for another thing that is not at all this side of random either, and after a few systems are behind them they quit...
Money management can improve a marginally good system, that is about the limit of what it can do.
Money management can improve a marginally good system, that is about the limit of what it can do.
<b>Well, perhaps 90% of newer traders use "classical" TA, Elliot Waves, Fibs, etc. Do the math
Without an edge, the "House Advantage" plus poor money management will grind them up.
The successful ones almost invariably have figured out that price action is what they need to learn.</b>
Without an edge, the "House Advantage" plus poor money management will grind them up.
The successful ones almost invariably have figured out that price action is what they need to learn.</b>
Another quote just for you........
"The financial markets are naturally set up to take advantage of and prey upon human nature. As a result, markets
initiate major intraday and swing moves with as few traders participating as possible. A trader who does not understand
how this works is destined to lose money."
--John Carter, Financial Trader
Think about it....second thought - don't bother.
You need to think a lot more about "who is buying now".
RTS