Why do newbies lose?
- Thread starter ninZa.co
- Start date
Bunch of reasons:
I wrote a little post about my old prop trading desk and why so many people dropped out and struggled back in 2012: https://churningandburning.com/2023/06/low-morale.html
- Sometimes no edge
- Sometimes you get a bad market.
- Sometimes the strategies youre taught are outdated.
- Sometimes you're not vibing with the strategy youre looking at and it might something else (e.g. youre trying to do equities momentum but youd be better as a futures algo guy, idk)
- Sometimes youre just not cut out to be a trader, you have other things meant for you in life
I wrote a little post about my old prop trading desk and why so many people dropped out and struggled back in 2012: https://churningandburning.com/2023/06/low-morale.html
Yeah, noobs make it personal, pros interpret it as cost of doing business.
It's extremely hard to trade correctly because it is against human nature. You want to kill a profitable trade quickly since you want to lock in the profits before it possibly reverses and turns into a loss.
You have a profitable trade but try for too much profit to make back your losses instead of using a more standard risk vs reward.
You keep moving the stops down or averaging into a losing trade because you don't want to take a loss.
You over trade or revenge trade to try to make back a loss. For example, you might do 1 winning trade in a day, but the next day 5 losing trades.
You don't set a total loss amount or number of losing trades in a row for the day where you need to quit trading for the day.
You don't have the patience to wait for a real setup based on your trading plan and try to just go long or short for no good reason.
You have a profitable trade but try for too much profit to make back your losses instead of using a more standard risk vs reward.
You keep moving the stops down or averaging into a losing trade because you don't want to take a loss.
You over trade or revenge trade to try to make back a loss. For example, you might do 1 winning trade in a day, but the next day 5 losing trades.
You don't set a total loss amount or number of losing trades in a row for the day where you need to quit trading for the day.
You don't have the patience to wait for a real setup based on your trading plan and try to just go long or short for no good reason.
These are the reasons a person needs a TA method with enough mathematical exactness that it can be programmed into an algorithm. The algorithm can then be back tested to provide some assurance of positive expectancy once the method were to be used live. The algorithm could be as simple as using Excel spreadsheet formulas or VBA, but at least the exactness is there.
Subjectivity, such as drawing trend lines, has never worked well for me. To each his own is guess.
if you follow simple set ups like reversal bars , two bar reversals, inside bar/s , double bottoms and double tops....you cannot lose. These have been used by traders for hundred years
if you see the write up by Brooks concerning set ups and follow what he says strictly you cannot lose: why traders have problems with Brooks is that brooks talks about a lot of things which are subjective.
study what Brooks says about set ups and what is the context, in which they are valid, you will never lose.
the main important thing about this is that it gives you a clearly defined stop loss which is extremely tight and small :many traders us methods which do not give these same critical advantages.
If you do not have tight stops it does not matter if you have the best system in the world or if you have perfect market knowledge.
this is my personal experience: i lost because i did not focus on the set ups and trade them:
all of the set ups give the opportunity of a one bar risk and profit relatively huge so even if you get the context wrong sometimes you will still not lose.
set ups give you a system and remove the emotional and subjective aspects from your trading.
it took me a long time to figure why i was losing : focus on non subjective aspects of trading. I found Brooks good personally.
but there a hundred others who describe the same thing as Brooks, so it does not matter, who you refer to, wrt to these simple, time tested concepts : reversal bars, two bar reversals, inside bar/s, DB, DT, are all defined in the same way by all hundreds of teachers .
Brooks goes a step further by defining micro DB, DT .....and a few other things so this is why i prefer Brooks
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There has to be more than following set-ups. Where is the risk control, position size and exit strategy.
If those set-ups have been used by traders for 100's of years, why is the failure rate so high.
i told you risk is built in the set up one bar. exit strategy simple exit half at 1:1 and swing rest for 1:2 or 1:3
Brooks explains these
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the failures do not follow these set ups alone......they go for all sorts of things like trend lines wedges patterns fib elliot wave all high failure rates and subjective