I've delegated myself to option collars, while looking for a weak link in weeklies.
Why do traders lose more money on their losing trades than they make on their winning trades?
- Thread starter Lloyd W. Coutee
- Start date
Why do traders lose more money on their losing trades than they make on their winning trades?"
There should be no logical reason to, except for inferior trading skills or management
It's logical to try to limit number of small losses a trader can incur, due to the expense of commissions, logically this results in larger losses due to the wider stop.
Don't worry, you will soon have your "A-ha" moment. Let me just stress that risk management, while important, should be secondary. You first need to learn WHERE and WHEN to enter and exit. A good trade ALWAYS begins with proper entry and exit. That means getting in and out at the right place at the right time. Some practical terms to think about: Price, Momentum, and Time (or timing). Lastly, be patient. Never chase the price. Let it come to you.
I am guessing you learned a "niche" of trading certain kind of volatility, being just long or pattern but didn't learn how to read charts? If you trading daily charts, we are making tops in many markets so if you strictly trend trader, tops goes against your whatever method you are doing and you don't have enough in your Trading Plan to stop you from either continually doing the same or not extensive enough to know how to profit a different way in times where trend trading offering losses.
Monkeys can make money in a bull market.
You would have to say exactly timeframe, instruments and duration of trades to have enough info to suggest change.
Why do traders lose more money on their losing trades than they make on their winning trades?
Pretty easy to know why now, but back in the day..... Most men are horrible as accepting when they are wrong, to say so, instead of taking couple hundred buck loss they cancel stops and it gets BIGGGGGG before the pain gets too great.
This is how MY brain use to work. I was losing often long ago, "brain" got very use to losing often and got happy with that. It got happy with me losing $300 bucks, and I was good at losing, so much so my eyes joined forces with brain that they would find the best losing trades together for me to take so I could lose more often, brain and eyes were happy with me losing $300, losing was like breathing for me. Now if I cancelled stops and losses got above $300, brain didn't like this as it was untrained to know what to do and caused me great mental pain till pain too great and I took losses, brain and eyes happy again. Now if I by error was in winning trade, brain and eyes again didn't like this as it was untrained to know what to do and caused me great mental pain till pain too great and I took small profitable trades.
Now over twenty years later, brain is use to opposite, brain and eyes don't like losing trades but now have automated to take care of managing the trades after my entry, so now brain and eyes been trained to look for profitable trades.
It is a Process of making Trading Plan then trading Plan(extremely hard to do), but if you accomplish to do for a month, gets much easier to not violate the Trading Plan. So Trading plan is either one that looks for smaller profits but much higher winning percentages or home run profits and much lower winning percentages.
Pretty easy to know why now, but back in the day..... Most men are horrible as accepting when they are wrong, to say so, instead of taking couple hundred buck loss they cancel stops and it gets BIGGGGGG before the pain gets too great.
This is how MY brain use to work. I was losing often long ago, "brain" got very use to losing often and got happy with that. It got happy with me losing $300 bucks, and I was good at losing, so much so my eyes joined forces with brain that they would find the best losing trades together for me to take so I could lose more often, brain and eyes were happy with me losing $300, losing was like breathing for me. Now if I cancelled stops and losses got above $300, brain didn't like this as it was untrained to know what to do and caused me great mental pain till pain too great and I took losses, brain and eyes happy again. Now if I by error was in winning trade, brain and eyes again didn't like this as it was untrained to know what to do and caused me great mental pain till pain too great and I took small profitable trades.
Now over twenty years later, brain is use to opposite, brain and eyes don't like losing trades but now have automated to take care of managing the trades after my entry, so now brain and eyes been trained to look for profitable trades.
It is a Process of making Trading Plan then trading Plan(extremely hard to do), but if you accomplish to do for a month, gets much easier to not violate the Trading Plan. So Trading plan is either one that looks for smaller profits but much higher winning percentages or home run profits and much lower winning percentages.
What if I'm looking for 6 ticks on the ES? A 2-tick stop is a losing solution.
Exactly, and that explains why 90% lose. They use their brain as it works instead of reeducating it.
Because your brain(=Handle123) is working opposite to their natural behavior, the result is opposite too. So you became part of the 10% winners. Whereas before you were in the 90% losers.
Study behavioral fiance.
Really? What if you trade breakouts ? Surely a 2 tick stop is doable if you are only going for 6 ticks. If you have a 3-1 reward/risk ratio and hit at a 50% win clip you will make a fortune. It's actually a great strategy if implemented correctly.
I can see why you failed as a day trader. Funny how you refuse to answer any of my questions directed at you. Very weak.
No, the ES has a tendency to retrace breakouts by more than two ticks and has a tendency for breakout setups to fail at a somewhat high percentage as well, not to mention the issue of executing order entry properly and quickly enough when competing with HFT, your purely hypothetical strategy has a high risk of ruin.