Why most traders are losers

"Although I only read through his initial message, the poster made no mention of a methodology. Where is his edge? All he said was that he makes high probability plays --that's not a methodology. It's like me saying that I only make trades that make money."

I don’t have a methodology, I have a thought process. On the trade on the Q’s, if I see the volume on the ask drop from 20,000+ to 0, I believe it is very probable the bid will move up to the next price level. If it happens twice in a row, I think it is probable it will happen a 3rd time . When it started to do the same thing a 3rd time I bought calls. To my way of thinking it makes sense to buy something as it is going up in value, especially after it had been driven down to low levels.
Now, if I had said that I had bought 10 calls at $30 and sold them at $275, no one would think anything about it because thinking small and cautious seems to be the name of the game for many here. If I had said that I bought them 2 weeks before when they were at $160 and had lost my money when I cashed out of them at $20, no-one would question that because after all 90% are losers right? But because I took a small amount of my IRA -$50,000 and set it aside to gamble with, gambled and won, you think I’m full of shit. As I said before in my opinion it is all gambling, just with different amounts of $.
 
After reading this Q's trade post a second time, I realized I had been trading options on the Q's at that time. I looked at my records and I had bought calls at $130, $60, $40 and $25. Then on the day the market ran up I sold everything I had when I broke even on the trade. Then I went back to my system of going contrarian after 3 and 5 day runs and loaded up on puts. What a smuck. I lost $3,000 on the puts and and missed one of the best bull runs up to that time. I remember seeing an order for 500 calls on the OEX execute right after I bought puts on the Q's. Should have followed that boy instead, I think those calls finished about $3-4,000 in the money.

Nice call Tom.
 
Quote from Petsamo:

1% or less are winners? Where do you get your numbers from? I've been only day trading for 1 year and I'm doing fine. What worries me is whether or not I'm beating the buy and hold strategy. For the most part, I am.
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did not say 1% are winners. Said less than 1% are big winners - meaning longterm, can easily live off your winnings

If you are 1 year then you are not there yet, and we only have your claim. Post your big winning account statements, otherwise you are irrelevant.
 
"I remember seeing an order for 500 calls on the OEX execute right after I bought puts on the Q's. Should have followed that boy instead, I think those calls finished about $3-4,000 in the money.

Well hopefully he didn't post that trade here on ET, they would still be laughing at him. Funny, I'm sure most posters here have read the usual books on trading -Market Wizards, Livermore etc... Got psyched to pull $ out of the markets, then laugh at people who take the same risks the icons in those books did.
 
Quote from tomsmith:

I’ve looked at this forum over the years but have never bothered posting before. But after reading the nonsense on a recent thread about why 90% or more of traders are losers decided I would. To the original poster of that thread- if you listen to any of these people you will be one of the 90% losers. Trading is EASY, these people work their butts off to make it as hard as possible. Spending hours looking at spreadsheets and charts to see if a fast thingamadickie has crossed a slow watchyamacallit, or if the stock has hit a point it retraced to 8 years ago and other nonsense. Here is how you can be successful trading:

1. Understand trading is gambling. If you don’t want to risk your money don’t trade.
2. Only gamble your money when there is a HIGH probability of success.
3. High probability opportunities are few and far between, limit yourself to no more than
a couple trades per year.

Here is what I have traded over my 6 year career:

Took $50,000 from my IRA and it put into a trading account. Watched the market start to come off it’s bottom in 2003 AND WAITED for a HIGH PROBABILITY TRADE.

1st trade- Day after Memorial weekend I’m watching the screen at the open and the QQQ’s go from red to green within minutes and start to run up (.20 to .25 to .30 on the bid on SP 29 calls I‘m watching) . No, I don’t know if the Q’s have a flaming doji or an inverted hammer coming out of their arse on the stock charts or not, but I know that if the price is going up that fast there is a HIGH PROBABILITY I can make money buying. I buy 1000 of the near month 29 strike price calls for .30 and immediately pull up an order to sell 10,000 Q’s at market if the trade suddenly turns and I want to make money on the drop. Well the Q’s run all that week and Mon-Thurs of the next week and I cash out with the calls at $275+ and over $250,000 profit.

2nd trade- Unlike most traders, I’m in no rush to give my money back so I look and wait awhile before risking any of that $250,000. Looking through the WSJ one day I notice that 2 new companies have been added to the Nasdaq, one of them is Taser. I figure being added to the listing is going to raise the price of the stock so I take a look at it, like what I see, and risk about 15% of my now $300,000+ war chest and buy 1500 shares of the stock at the open in the low $30’s since it doesn’t have options yet to buy. Taser runs up to $127 before falling down and I get out at $108. I clear over $100,000.

3rd trade-Some people are winners, some are losers. I think people like Steve Jobs and Martha Stewart are winners. I thought that when she was dealing with the Feds before going into the pokey and the stock was down to $8, that she would be a winner again. I put my money where my mouth was and bought 1000 of the $10 strike price LEAPS for the next year at $50 each. I sold them with MSO in the high $20’s and I made $2725/ contract, 1000 contracts. Do the math on that .The stock went up further to the mid 30’s in Feb before turning, but I’m not a pig and was happy with what I made.

So, my point is that you can slave like a fool looking for the holy grail of charts and systems that will allow you to sit glued to your screen day in and day out hoping to grab a few points here and there, playing the game that is stacked against you from the start, or you can learn to read the market and use your head to reach in and take out in enough quantity to make it worth your while. It mainly just requires patience and intelligent thought. Don’t let these “pros” discourage you.
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Making one or a few trades per year works for fundamental traders like Jim Rogers. Not my thing, but I like to keep an eye out for those rare opportunities. e.g. if Oats hit 100 again I'm going to load up the boat and average down if it goes lower etc.
 
"Most traders are losers primarily because they don't cut their losses short."

I've had this discussion before so won't repeat it. I'll just say that if you are trading options, which often have a spread of 10% or more, and don't buy at the exact low point, your option will more than likely get stopped out at a loss even if the trade is an evantual winner. Buying options 2-3 months out means you will see them go up and down, sometimes 50% a day. Hard to use small loss stops on them.
 
Dontcha just love these idiots who claim not to be either traders or investors and yet have the balls to lecture to other traders that their "gut feeling" is far superior to any system?

This surely demands a standing ovation...and another round of applause. Bravo! Encore!

Oh, by the way, I too bought Goldman Sachs, Citi, and BOA on the day they hit the bottom! I will continue to buy everything when it hits the bottom. Just don't expect me to tell ya until long after the fact!!
 
This thread has certainly caught the attention of many of us here and inspired a lot of responses in a short time!

I agree that trading is relatively easy, as ways of making money go. Unfortunately, it's also very easy to lose money if you trade with borrowed money, borrowed shares, or terminal contracts. That's why I never trade on margin or take outright short positions or trade options. If I'm right, I'm a trader. If I'm wrong, I'm a buy and holder. Either way, you can't lose.
 
Quote from stevenpaul:

If I'm right, I'm a trader. If I'm wrong, I'm a buy and holder. Either way, you can't lose.
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That is what people were saying at the peak of the stock bubble of the 90's
 
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