(Why) do most traders lose?
- Thread starter kiwi_trader
- Start date
Or is it that the "iWant it now!" babyboomers do not have the patience, determination and painstaking attention to detail required to build a proper system?
And then the "iWant it now!" are starting to trade with real money. In a hurry to start banking the profits, yeah right (not!).
Holmes
We want lots of those guys. They help paying for your gains.
Excellent Commentary....
Holmes said...
I chalk it up to lack of skill and the inability to learn the tools of the trade.
Best Regards,
Steve
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Or is it that the "iWant it now!" babyboomers do not have the patience, determination and painstaking attention to detail required to build a proper system?
And then the "iWant it now!" are starting to trade with real money. In a hurry to start banking the profits, yeah right (not!).
Holmes
.....................................................................................................
Excellent Commentary Holmes
Totally agree....
Another reason is that you have quite a few small businesses that sell advise but really do not have viable trading systems themselves....They are really in the business of selling cds...books...advertising...hotel seminar rooms...etc..
A cd costs 50 cents...you put crap on it and sell it for $19.95 to $300....
A book costs $2.00...you put crap in it...and sell it for $19.95 to $50.00...
A hotel seminar room for two days costs $1000...you put crap in it and resell it for $10,000....
An internet site costs next to nothing...you attract people ..they hit advertising...and the host gets paid...
These services have absolutely nothing but nothing to do with real...successful trading....
None of them have the most simple proof of performance...a simple set of brokerage statements....Most have hypotheticals or some form of test exhibitions...
Thus when an interested person looks around on the internet for solutions...they are going to be mislead....unfortunately every time they buy any of these services....
Thus the vendor business contributes heavily to failure rates....
......................................................................................................
Thus if everyone knew how to properly approach trading...they would more properly address their entry into the business...and perhaps the numbers would be better....
Holmes said...
I chalk it up to lack of skill and the inability to learn the tools of the trade.
Best Regards,
Steve
--------------------------------------------------------------------------------
Or is it that the "iWant it now!" babyboomers do not have the patience, determination and painstaking attention to detail required to build a proper system?
And then the "iWant it now!" are starting to trade with real money. In a hurry to start banking the profits, yeah right (not!).
Holmes
.....................................................................................................
Excellent Commentary Holmes
Totally agree....
Another reason is that you have quite a few small businesses that sell advise but really do not have viable trading systems themselves....They are really in the business of selling cds...books...advertising...hotel seminar rooms...etc..
A cd costs 50 cents...you put crap on it and sell it for $19.95 to $300....
A book costs $2.00...you put crap in it...and sell it for $19.95 to $50.00...
A hotel seminar room for two days costs $1000...you put crap in it and resell it for $10,000....
An internet site costs next to nothing...you attract people ..they hit advertising...and the host gets paid...
These services have absolutely nothing but nothing to do with real...successful trading....
None of them have the most simple proof of performance...a simple set of brokerage statements....Most have hypotheticals or some form of test exhibitions...
Thus when an interested person looks around on the internet for solutions...they are going to be mislead....unfortunately every time they buy any of these services....
Thus the vendor business contributes heavily to failure rates....
......................................................................................................
Thus if everyone knew how to properly approach trading...they would more properly address their entry into the business...and perhaps the numbers would be better....
I completely agree with taowave,
Why traders fail?
From my experience:
1. Lack of self-discipline.
2. Not understanding charts, patterns, trendlines, price-volume relationship.
3. Ego. "I bought this stock, it can't possibly go down on me, after all I'm a smart guy. Wait, why is it sinking? Oh my Gawd it's down 50%, 60%, 70%, it's got to rebound, it's just got to!!"
4. Lack of solid use of "stops" and "trailing stops." (Remember those two words, Martha. They can keep you out of jail).
5. Not paying enough, or no attention to the very subtle chages that take place in a price chart days or weeks before a stock blasts out of the gate and heads for the moon. This was my biggest problem because the changes were so subtle I was bored to death watching. Like watching paint dry. It became much easier after switching to candlesticks.
6. Not knowing the night before what stocks to buy the next day. I always analyis all of my stocks in the evening away from Market pressure (I hate being forced to think on my feet) and pick out the ones I want to buy tomorrow. All I have to do the next morning is fire-up my console, trading software, trading page and place my order. The nano-second I know I'm long I type in my stop and send it to the Market. I don't wait. All of my info; entry price, number of shares, both commissions, stop price and break even point, is written down on a yellow legal pad in big bold print.
Of course all of this goes back to the beginning; Self-discipline. Without it I would not be able to trade for a living.
-1bigsteve (o:
From my experience:
1. Lack of self-discipline.
2. Not understanding charts, patterns, trendlines, price-volume relationship.
3. Ego. "I bought this stock, it can't possibly go down on me, after all I'm a smart guy. Wait, why is it sinking? Oh my Gawd it's down 50%, 60%, 70%, it's got to rebound, it's just got to!!"
4. Lack of solid use of "stops" and "trailing stops." (Remember those two words, Martha. They can keep you out of jail).
5. Not paying enough, or no attention to the very subtle chages that take place in a price chart days or weeks before a stock blasts out of the gate and heads for the moon. This was my biggest problem because the changes were so subtle I was bored to death watching. Like watching paint dry. It became much easier after switching to candlesticks.
6. Not knowing the night before what stocks to buy the next day. I always analyis all of my stocks in the evening away from Market pressure (I hate being forced to think on my feet) and pick out the ones I want to buy tomorrow. All I have to do the next morning is fire-up my console, trading software, trading page and place my order. The nano-second I know I'm long I type in my stop and send it to the Market. I don't wait. All of my info; entry price, number of shares, both commissions, stop price and break even point, is written down on a yellow legal pad in big bold print.
Of course all of this goes back to the beginning; Self-discipline. Without it I would not be able to trade for a living.
-1bigsteve (o:
I only read through about half of the posts but didn't see anyone mention the real answer.
First of all the statistic itself is kinda flawed in that, when it says 90-95% of day traders lose money and quit, they define day trader as someone who makes 3 trades or more per week. So for starters that throws a bunch of non professionals into the pot.
Second, and most important, you don't have to know anything about markets and how they work, news and how to interpret it, the certain company you are trading and how much they made last quarter or what their PE is, etc. I have seen good traders who know none of this. It all comes down to this...90% of people have a Gamblers Mentality; meaning when they are losing, the additional pain of more dollars lost becomes less and less the more they lose. Example: I am already down $1000, I might as well go for broke or might as well double down here. On the flip side these people when winning become reserved and start scaling back and taking profits when they are doing well, for fear of losing what they have made. In order to be good at day trading you have to be the 10% of people who have a Non-Gamblers Mentality. I know this seems weird because trading seems like gambling and gamblers are attracted to it. Non-Gamblers Mentality people start scaling back when they are losing money and the additional pain of 1 more dollar lost becomes more and more and they cut their losses quick. On the other hand, when things are going in their favor they double up or scale up their size instead of taking profits.
That's why people say money management is crucial. Money Management is a term designed to help Gambler Mentality people become Non-Gambler Mentality people, whether they know it or not.
First of all the statistic itself is kinda flawed in that, when it says 90-95% of day traders lose money and quit, they define day trader as someone who makes 3 trades or more per week. So for starters that throws a bunch of non professionals into the pot.
Second, and most important, you don't have to know anything about markets and how they work, news and how to interpret it, the certain company you are trading and how much they made last quarter or what their PE is, etc. I have seen good traders who know none of this. It all comes down to this...90% of people have a Gamblers Mentality; meaning when they are losing, the additional pain of more dollars lost becomes less and less the more they lose. Example: I am already down $1000, I might as well go for broke or might as well double down here. On the flip side these people when winning become reserved and start scaling back and taking profits when they are doing well, for fear of losing what they have made. In order to be good at day trading you have to be the 10% of people who have a Non-Gamblers Mentality. I know this seems weird because trading seems like gambling and gamblers are attracted to it. Non-Gamblers Mentality people start scaling back when they are losing money and the additional pain of 1 more dollar lost becomes more and more and they cut their losses quick. On the other hand, when things are going in their favor they double up or scale up their size instead of taking profits.
That's why people say money management is crucial. Money Management is a term designed to help Gambler Mentality people become Non-Gambler Mentality people, whether they know it or not.