Why Johnny cant trade..........

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xianokie

So lets hear it from the peanut gallery. Why do you think most traders are losers? Stats will tell you that 90%-95% of all traders never cut the mustard, except here of course. Everyone here is rolling in the mooo-la. So whats the number 1 reason traders fail.

PS: The good news is money just keeps flowing into those trading accounts. More me and you to plunder.
 
Originally posted by super_ego
Very important, since I will be showing you all that EVERYONE is making the same mistakes and that is what the market is counting on!

SE
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#1. Undercapitalized. Not prepared for fluctuation in equity curve. As a result will let emotions interfere with trading when losing, or get overconfident and inappropriately increase size when winning.

#2. Negative expectancy method. Do people actually validate their techniques? It doesn't have to be 100% mechanical in order to validate that you have a winning method. Even if it is systematic with discretion or fully subjective, do traders who are losing actually load up 10,000+ bars of data and look at each bar one-by-one on that hard right edge? (Obviously some methods requiring tape reading or intermarket/correlation analysis is much more difficult to test in this manner.)

#3. Psychological mumbo-jumbo. I've personally never had a problem with it, but it should be included. I guarantee you if Johnny had a real positive edge and he proved it to himself (say he watched a successful trader use the same technique day-in-day-out) then the psychological aspect would be minimal.
 
Why not ask why Johnny can't:

Start a dry cleaner

Run a restaurant

Be a building contractor

Run a day care center

The fact is, 95% of all businesses fail in the first 5 years.

Why?

Lack of Capital

Lack of Knowledge/Experience

Failure to plan for contingencies

Competition gravitates to profitable areas


Now, I think that we can add MARGIN to the reason traders fail. No Lender in the world would give you 4:1 margin (read credit) unless you could write and explain a solid business plan. How many traders have a business plan?
 
Trading is a serious business but its not my only one. I don't need the money I make from trading to live and so that makes trading a lot easier for me. Not the pressure many others feel. I trade about 1 hour a day and in that one hour I can confirm whether my plan is correct or needs refinement.

What i don't take serious is most people who post here. Saying they make tons and tons of money. Offering newbies advise that is outdated or just plain bad. The reason Johnny cant trade is he makes the same mistakes everyone else has made and he or she keeps making them. Another reason is because maybe Johnny is best suited to do something else. But most people here wont tell Johnny the truth, the brutal truth. If trading was easy everyone says it is then everyone would be doing it. Trading is hard work and always will be. Gordon said it best:

EVERYONE is making the same mistakes and that is what the market is counting on!
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And dottom you make more sense than 99% of the people who post here.

When I make my trades at 09:30 I have positive expectancy for all of them. That is based on past experience and tons of papertrading. I also have an entry and exit point written down. Not some nebulous one in my head that is easily adjusted. My plan is very simple and using what most would consider very primitive TA. But it works and works consistently. When it stops working I will refine it or develop another plan. But what ever the next plan is I will have a firm set of rules that I trade by and I will do my best to learn from others mistakes. That sure saves alot of cash, time and frustration.
 
Originally posted by xianokie
Stats will tell you that 90%-95% of all traders never cut the mustard...
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Examine your assumptions. That's a bullshit premise.

It depends on how measure profitability and on what time frame you do so, among a myriad of other factors.

Take Gekko from example, he says that he was profitable from 98-99 but he sucks eggs now. Where does that fall into your 90-95% non-profitability range. And if and when he comes back to the world of living, where is classified then?

What about the Credit Spread option traders who makes bank when the market does squat by trading in a limited range. But these same guys tend to get spanked in a powerful trend as we saw in the late '90's.

The gray area in your premise is a mile wide and twice as deep. To have a respectable grasp on the issue requires a background in market history and an acute understanding of various market styles.

Other than that I don’t have a F-ing clue.


Regards,
Dr. Zhivodka
 
Originally posted by trdrmac
Why not ask why Johnny can't:

Start a dry cleaner

Run a restaurant

Be a building contractor

Run a day care center

The fact is, 95% of all businesses fail in the first 5 years.

Why?

Lack of Capital

Lack of Knowledge/Experience

Failure to plan for contingencies

Competition gravitates to profitable areas
More...


I started trading full-time several months ago knowing full well that I would most likely lose some money, at least initially.

My wife and I sat down and came up with a certain dollar amount for drawdown (much less than it usually takes to start a business or get a degree) - I refuse to lose everything even once.

Let's look at the reality of losses trading (but learning, too) vs. dumping $40,000 +++ into a University degree.

Assuming that the field a college student chooses is even relevent or lucrative by the time they graduate, how many of them can expect a 6 figure + income? Most are lucky to start at $35,000 to $50,000 per year or even much less if they choose their education poorly.

If I can survive learning to trade without blowing up completely in the first few years, I have an opportunity to learn a skill that no one can ever take away from me, tell me what to do with, etc.

So far I've had some net positive and net negative months but I'm improving all the time. At this pace I'll probably be consistently profitable in a matter of months or maybe a year.

And no student loans to pay back like most people who keep furthering their education to keep up even with new grads. No four year investment of time before I even start doing what I love.

And no working 6 1/2 days per week and losing sleep over starting and running a business with higher overhead. No big business loans to worry about or throwing away life savings on a failed venture.

So you see, I know that it is possible for me to trade successfully because if someone else can do it, so can I.

For me, the potential freedom is worth the risks involved.

$10,000 or $20,000 to learn how to trade successfully is the best investment I'll ever make IF I SUCCEED. That is an absolute bargain in my book.

It is up to me to face the truth about my own mistakes and adjust my thinking and actions to those of a consistently successful trader.

Paul

PS I haven't lost this much yet nor do I plan to but if that's what it took to learn how to make 5 to 10K monthly trading it would be worth it.
 
Slapshot,

Your almost as smart as me. Good post and with that attitude you will succeed. Just stay away from the psychology forum. Once they get their metaphorical mitts on you its all over.
 
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