Well said.
Its something you have to live through..... not read about in a book.
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Why do 98% of traders fail???
- Thread starter womblevader
- Start date
Well said.
Its something you have to live through..... not read about in a book.
Quote from womblevader:
My rationale for this is as follows:
If you can identify what doesn't work then you are well on the to finding out what does work.
I wont bore you with my life story but I made some money during the long bull run, switched to trading last year, made enough in the first 6 months to buy the new M3, but just when I was convinced that trading was esy, in the fateful month of October I managed to lose all my profits and a good portion of my initial capital as well.
I now trade conservatively but profitably with modest but consistent profits. My humility has improved a lot as well.
Cheers
wow, that wasn't a boring story, just short enough to be relevant, thanks for sharing, and 98% failure...
add in the 3rd reason and we push that percentage up to 99.3% of the reason most traders fail:
1) dumb luck, in early success instead of trained discipline success
2) arrogance of early success instead of a level headed approach (read humility)
3) inadequate risk management in stopping losing streaks, controlling winning streaks and handling the in-between times
Quote from Palatine:
Precisely that. Very good post.
Basically there are two pillars in trading. One is theory which can be learned rather quick. What is the market doing and where is the overall direction intraday or multiday? Pick a good entry to participate in that direction and manage the position.
Then there is psychology and I agree that this is where the failure rate shoots up. Emotional individuals trade with "gut feeling" believing that if they don't exit now with a small loss or profit the market is going to reverse and trigger the stop, hoping the next trade will become better. But it never does with this method! I have observed that on so many traders and it's ridiculous how self-confident men turn chicken.
Well said. Here is a quote........
"There is nothing new on Wall Street or in stock speculation. What has happened in the past will happen again,
and again, and again. This is because human nature does not change, and it is human emotion that always gets
in the way of human intelligence. Of this I am sure."
--Jesse Livermore
So, you need to ask yourself a question.... with all the selling in the market currently, who are the ones buying stock that is being sold?
If you look very closely, you will find those that are buying now are the same that were selling at higher prices when most were eager to buy.
Once you can answer that question, you will be on your way to profiting in the stock market.
Quote from rtstrading:
...
So, you need to ask yourself a question.... with all the selling in the market currently, who are the ones buying stock that is being sold?
If you look very closely, you will find those that are buying now are the same that were selling at higher prices when most were eager to buy.
You clearly do not understand how equity markets work. "Stock" is nothing but an item on a shelf. It is not a contract between 2 partys. It it not a zero-sum transaction. "Stock" can be held in "inventory" indefinately! Market-makers and specialists carry net positions consisting of longs and/or shorts (no mistake, and/or). Money making strategies by those participants, for the mostpart, are the exact opposite of your opportunities as a "retail" buyer or seller.
Quote from bstay:
Why do 98% of traders fail???
because making money is difficult. Traders are a minority in the population and if 98% of these traders made money, the rest of the population would give up their jobs.
Money management is not easy, people can't handle the volatility of stocks.
Since we know that most new trader fail, it would be interesting to develop a system that enters the exact opposite positions of a group of new losing traders. Such an experiment might make $ and answer the question.
Quote from bstay:
Why do 98% of traders fail??? The answer is so simple.
I will use an often-quoted example: if the regulations have changed and anyone can open a dental clinic or medical practice, just by self-learning or taking online courses. The attraction of course is that you can make as much money as any other dentists/doctors.
How many of these clinics will fail?
But in trading, it's so easy to just go buy a book and read over weekends. Then start placing orders on Monday and attempt to make a living trading. Will it work? Yes, trading is the only profession where a total beginner has even chance of getting the job right (that is winning on a trade or two) and make some money.
Over time, as your title suggests 98% will fail simply because too many people came on board to try their hand.
What's the point?
Quote from turdlehead:
You clearly do not understand how equity markets work. "Stock" is nothing but an item on a shelf. It is not a contract between 2 partys. It it not a zero-sum transaction. "Stock" can be held in "inventory" indefinately! Market-makers and specialists carry net positions consisting of longs and/or shorts (no mistake, and/or). Money making strategies by those participants, for the mostpart, are the exact opposite of your opportunities as a "retail" buyer or seller.
You are correct about the specialist and market makers, and I said nothing about them nor a zero sum game as in the futures markets.
Keep thinking about.... "who is buying" now. Once you discover that then you will become profitable.
Quote from rtstrading:
You are correct about the specialist and market makers, and I said nothing about them nor a zero sum game as in the futures markets.
Keep thinking about.... "who is buying" now. Once you discover that then you will become profitable.
Who is buying now? Very interesting question. Let me try to guess. Basically these people should believe that the price will rise in their trading/investing horisont.
These may be some of the following groups:
- Traders/investors who try to fade the down move;
- Some scalpers;
- Fundamental investors who believe that these prices are bargain prices and it worths buying;
- People with free money who want to invest them;
- Gamblers;
- People with mechanical systems whose parameters flash buying.
- Some insiders it may be;
- Some other groups;
What is the clue about this?
Quote from rtstrading:
You are correct about the specialist and market makers, and I said nothing about them nor a zero sum game as in the futures markets.
Keep thinking about.... "who is buying" now. Once you discover that then you will become profitable.
I thought about it...
Clearly you don't understand the equity market. When YOU stop viewing the equity market through retail-eyes, THEN *YOU MIGHT* become consistently profitable. There is little doubt as to which side of thread-title percentage you live. Alas, so much mis-information given as gospel here. It's a shame.