(Why) do most traders lose?

Why do traders lose?

  • Undercapitalized

    Votes: 23 8.5%

  • Trading Strategy: Entry

    Votes: 20 7.4%

  • Trading Strategy: Exit

    Votes: 26 9.6%

  • Psychology/Discipline

    Votes: 137 50.6%

  • Money Management

    Votes: 65 24.0%
  • Total voters
    271
So ok question for everyone here

You used to be an ex-trader. You made some lost some, but overall in the end you lost. So you try trading your own money, agn same pattern.

After the trading job, you decide on some stable work, that brings in a lot more money, but the same amount every month. The job is undoubtedly much more mundane and there is no career in it.

Now you are unemployed for whatever reason. You are offered this opportunity to trade again for a company for a min basic wage plus commision. By mininum i mean very low! there are other jobs out there, standard office work, brings in a decent amount of money in. The monthly wage is 3 times of the basic wage for the trading job, but potentially the trading job can bring in much more, should you be sucessful. The commision, is 30-40% for you.

Now - do you take the trading job? or do you take the other jobs (office type normal no-career type)?
 
I think one reason people lose is something Ive been thinking about for awhile now. I have always made adjustments on my trades. Say I put a trade on with a 10 pt stop and a 20 pt target. It goes 15 polnts my way then starts reversing and I bail. When I put the trade on I had a 2/1 reward/risk ratio. However if I continually fail to let the trade run its course I am reducing my reward/risk rather drastically, often risking 10 pts. to win 1 or 2. and over the long run this can be a killer, I think. A few weeks ago I started putting the trade on and not looking at it again until I get a signal that it is closed one way or the other. This seems to be working pretty well. I'm sure someone has studied the math of this situation and I would like to know what you think.
 
Quote from Bearbelly:

I think one reason people lose is something Ive been thinking about for awhile now. I have always made adjustments on my trades. Say I put a trade on with a 10 pt stop and a 20 pt target. It goes 15 polnts my way then starts reversing and I bail. When I put the trade on I had a 2/1 reward/risk ratio. However if I continually fail to let the trade run its course I am reducing my reward/risk rather drastically, often risking 10 pts. to win 1 or 2. and over the long run this can be a killer, I think. A few weeks ago I started putting the trade on and not looking at it again until I get a signal that it is closed one way or the other. This seems to be working pretty well. I'm sure someone has studied the math of this situation and I would like to know what you think.
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Personally I think you're dead on the nut. While there will always be a certain amount of nuance in ones trading system, it's easy to get carried away with it. So much so, that your original system is no longer in play at all. If I find myself continually making those "judgement calls" mid trade, then I need to take a serious look at the system itself, especially if I find the drawdowns getter longer and larger. I've just done that in the past couple of weeks with the result being a entirely new system, which so far is working quite well, albeit two weeks.
 
Hello , I haven't taken the time to read the previous posts but I would have to say they might lack patience to wait for setups (observation is lacking)and they might also be influenced by others in some way ie:opinions or even envy, putting a time limit on your learning.
If enough people tell you that you cannot trade and that odds are against you then there is a chance that failure may be accepted in a short period of time - But if you can hook up with people that trade for a living then chances are improved-
I think it requires serious effort , plenty of study and depending on aptitude much time devoted to observation and application of a self developed system. No one can do this for you - but they certainly will try to make a newb call it quits before they do damage to savings accounts.:eek:
 
Quote from keentoknow:

So ok question for everyone here

You used to be an ex-trader. You made some lost some, but overall in the end you lost. So you try trading your own money, agn same pattern.

After the trading job, you decide on some stable work, that brings in a lot more money, but the same amount every month. The job is undoubtedly much more mundane and there is no career in it.

Now you are unemployed for whatever reason. You are offered this opportunity to trade again for a company for a min basic wage plus commision. By mininum i mean very low! there are other jobs out there, standard office work, brings in a decent amount of money in. The monthly wage is 3 times of the basic wage for the trading job, but potentially the trading job can bring in much more, should you be sucessful. The commision, is 30-40% for you.

Now - do you take the trading job? or do you take the other jobs (office type normal no-career type)?
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go trade
 
reasons:

1. some one said easy entry to trading. even kids trade stocks. no qualification needed. trading stocks is like having a bank account.

2. most people get excited. they confuse trading with gambling. they get scareing when in red, and get out early.

3. generally, they don't understand the product they are trading. commonly they want to make money over a night. have no patience.

4. you need to be good at maths - at least to calculate your P/L. most people hate maths.

5. most traders do not trade real time. it takes 0.05 seconds for human eye give information to the brain. systems make calcuations in less than 0.001 seconds. so they are much faster. point being, most traders, don't trade instantly, some trade hours lagged. a whole wave of others trade days end, or days later. its like a race, with only the few at front making the money, others getting caught up in the wave.

6. passion. whatever you do in life, you'll do best in that you are passionate about. alot of people who trade have no interest in the markets.
 
Quote from Batman28:

6. passion. whatever you do in life, you'll do best in that you are passionate about. alot of people who trade have no interest in the markets.
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I couldn´t agree with you more... if you´re passionate about your job, then money is just a possitive side effect.
 
Quote from eusdaiki:
I couldn´t agree with you more... if you´re passionate about your job, then money is just a possitive side effect.
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Really .. sweet.
:)
 
I'd say the main reason is that they have no edge - meaning that they have not identified some market inefficiency/predictability that can be reliably exploited for profit. The second main reason is poor risk management. The third is simply that mistakes, lack of rigor, insufficient aggression, effort or talent mean that what edge exists is not enough to offset the avoidable losses from bad trading decisions.

Clueless newbies fail because they don't manage risk. The more savvy or conservative people fail because they don't have an edge. Experienced people fail because they profits they realise from their edge are smaller than the losses from their mistakes - either they don't have enough of an edge, or (more common) they don't trade it aggressively enough relative to their bad trades.
 
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