Why do more than 90% of traders lose?

Here is another interesting article:


6 Reasons Why Day-Trading Your 401k is a Recipe for Disaster


http://www.forbes.com/sites/kensweet/2012/07/10/6-reasons-why-day-trading-your-401k-is-dangerous/



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because SMALL TRADERS are undercapitalized and lower educated, they figured trading their retirement accounts will provide greater leverage result to greater reward.
 
Discipline, Focus and Confidence

“The defining characteristic that separates the consistent winners from everyone else is their mind-set, allowing them to remain disciplined, focused, and above all, confident in all conditions. As a result they are no longer susceptible to the common fears and trading errors that plague everyone else.”

- Mark Douglas, Trading in the Zone
 
90% lose because people use to much leverage and people are not mentally built for it. i learned how to deal with leverage but the market is draining. myself as an example i will not buy this market long no matter what. i am 95% cash and waiting for a correction. i put 5% of my account in short fund and only down 2.5% on that 5% position that's nothing. i did it that way to limit my downside but its making me miserable. i was much happier in cash. i was a positive day trader for a long time never made the big money but made money almost every year except my first. the market is always right even when you see only bad. i only see one positive the fed is printing money at 5 year stock market highs that's screaming we are in trouble to me. i want to sell this fund just to get it off my mind and stop watching the markets. the s&p is up 200 points in 3 1/2 months so i know from experience it will take profit very soon and i will probably sell it. the fed scares me to much to go long or short. my point now being is i wrote this thread saying all this on a 5% trade down only 2.5% on the whole position. if we don't get a sell off soon my food will have to stop eating $50 a bag dog food. haha
 
Quote from brokerboy:

if we don't get a sell off soon my food will have to stop eating $50 a bag dog food. haha
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I heard if you add water you get a nice gravy. Just dont drink out of the toilet.

:)
 
i meant if we don't get a sell off soon my dog will have to stop eating $50 a bag dog food but thank you for the tip

Quote from brokerboy:

if we don't get a sell off soon my food will have to stop eating $50 a bag dog food. haha
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Well, hopefully you and the wife can still afford to eat it. :-)

Quote from brokerboy:

i meant if we don't get a sell off soon my dog will have to stop eating $50 a bag dog food but thank you for the tip
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Proper risk management is counterintuitive and uncomfortable. It is more comfortable to take a profit than a loss, so losses tend to be bigger than profits for most people.

If you go blindfolded, and randomly buy or sell with 1:1 risk/reward you will be correct 50% of the time, so it's easy for people to mistake luck for having an edge.

Trading is hard. Spend thousands of hours staring at a chart until you start to recognize repetitive patterns. Learn how to properly manage risk. Be as comfortable(or better off indifferent) with a trade that ends up losing as you are with one that wins.

This is just me, but I think finding a niche in the market to focus and specialize in is the way to go.

Also, the people who lose money aren't "stupid", or even bad traders like some people are saying. If the 90% was removed from the market, leaving the supposed 10%, there would still be 90% losers.
 
risk <2% capital per trade

cut losses

Let winner run

Turn into a business managing O.P.M.

(basically see what the masses do..do the opposite)
 
Quote from emg:Here is an interesting article i came across.........The reality is, more than 90% of small traders lose!! They just lose!!!I am looking for the best answers
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An interesting post on the causes and characteristics of success and failure in trading from another board.....

"Most new traders fail and so do most new businesses. While the failure rate for new traders is probably even higher than the failure rate for new businesses, the reasons for these failures are mostly the same.

The two most common causes of failure among both new businesses and new traders are under capitalization and lack of domain expertise/education/understanding.

As to capitalization, the minimum requirements for successful futures trading is full margin + maximum negative departure + one standard deviation of expectation.

That formula assumes a positive expectation. Without that positive expectation - the capital requirement for a losing trader or business is infinite.

Expectation is one of the prime determinants of capitalization and domain expertise/education/understanding is a prime determinant of expectation.

Consider the requirements in time, money and self to become a medical doctor and then note that the most successful traders make far, far more money than the most successful doctors.

As capital requirements are inversely proportional to expectation which means that the very best require the least capital, one distinction between winning and losing players is defined by losers trading highly leverage forex and ES traders with only a few thousand dollars per contract - neither has more than a pennies on the dollar chance of success.

Considering domain expertise/education and understanding, imagine in your mind a complete description of those few that make all this money. What does their shop look like, how is it equipped, what is the speed and flow of their data, what is the collective education, experience and resource of the people in those shops that design the systems and methods that produce all of those billions of dollars.

Now imagine in your mind the resource, education and experience of the average individual trader - make the comparison and you have your answer."

Jack
 
The most common reason for failure is that the system is built to cause failures. Limit trading to only the top 2% and guess what - 90% of them will fail.

Put another way - most lose because it is the only way for some to end up winning.
 
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