Why Traders Lose

[TTT]

The jjvrat system is simple. Can you be profitable with it in the intraday? If jjvrat is a scalper, then he must be accustomed to doing many operations a day. I think Jjvrat knew what he was talking about. What do you think?

 

[TTT]

Naturally the emotional control of the trader is also fundamental.

 

[deaddog]

I think it is so obvious now that one of the huge causes of traders losing monies is a lack of proper risk management in their trading. Now, I have been teaching a doctor friend how to trade including, using risk management in her trading. She makes good monies as a doctor in her profession and has lost 7 figures in the stockmarket. That is not a typo! Of course, there are multiple reasons why she lost that amount but, a good chunk of her losses is due to lack to risk management. She also, trades options like me. When you are in a trade, you still have to manage that trade because your monies are at risk. Take her VRX/BHC (now) trade. She bought call options on VRX when it was clearly trending down. I told her to exit and close her call option trades. Now, she refused. I told her to buy some put options to recoup some of her losses and maybe, even make some monies. Again, she refused. Guess what she did next? She doubled, tripled down and bought more and more call options! Of course, the inevitable happened and she lost 6 figures in that trade alone! Now, I love her as a friend but, as a trader, she has given me so many white hairs on my head! Do not be like her! Cut your losses when you are wrong!
If not, the stockmarket will take your monies! All of it!

How does managing risk differ from keeping you losses small, having realistic expectation, having a plan and the discipline to follow the plan?

 

[TTT]

Hello dead dog, do you think that with the system of jjvrat i a correct risk management can be seen to be profitable in the intraday?

 

[smallfil]

How does managing risk differ from keeping you losses small, having realistic expectation, having a plan and the discipline to follow the plan?

Risk management is part of your trading plan. Discipline to follow the rules of your trading plan is part of the trading plan. So, the trading plan includes multiple parts to it. Keeping your losses small is part of risk management as well as proper position size, using stop losses and put options if needed. As far as expectation goes, I have no expectation. When I get into a trade, I do not know if it will work out in the first place. If it works, I do not know beforehand how much I will earn from that trade. It could be a little, it could be a lot, it could be a small loss or even a large loss. Without proper risk management, I do not see any trader succeeding because more likely, you will suffer very huge losses. Maybe, you won't even be trading anymore!

 

[deaddog]

When I get into a trade, I do not know if it will work out in the first place. If it works, I do not know beforehand how much I will earn from that trade. It could be a little, it could be a lot, it could be a small loss or even a large loss.

Where is the risk management? Hopefully you avoid the large loss.

 

[smallfil]

Where is the risk management? Hopefully you avoid the large loss.

Risk management is already built into the trade. I trade options so, cannot lose more than the cost of the premium! That is the worst case scenario. My trade size amount is equal to the 2% limit they recommend per trade. So, whatever my total capital is times 2%, the amount divided by the cost of the option. If that trade size is say $1,000 per trade, I can only buy a limited number of contracts based on that! So, $1,000 if the option premium costs $500, I can only buy 2 contracts. My maximum loss is 2%. The large loss you mention is to the cost of option premium. Of course, I can lose 5 trades in a row. Then, my loss is 10% of my capital. That is the worst case scenario! And even losing trades, say that $500 option goes down in value to $300, I can close it out and pocket that $300 for the next trade! So, I lost $200 which is no big deal because that is only a fraction of the 2% per trade loss limit!

 

[deaddog]

got ya.

Options is like casino betting, You only lose what you bet. I didn't do well trading options, the commissions and the spread killed me.

Much happier trading stocks. Same risk control 1% or less of account value.

 

[smallfil]

got ya.

Options is like casino betting, You only lose what you bet. I didn't do well trading options, the commissions and the spread killed me.

Much happier trading stocks. Same risk control 1% or less of account value.

Options trading is not for everyone. There are disadvantages like time is against you. You have to be right on the direction and by a large amount by a specific time. It it does not move and remains flat or moves by just a small amount, you will lose part or all of the option premium. On the plus side, the leverage of options increases returns. A 10% move in the stock price could be equal to a 70-80% move in the option price!

 

[Mifar]

I think most of the traders lose their money due to their wrong approach, hurried behavior, and impatient nature. So, you need to work hard on these aspects in order to improve your trading skills and abilities. I think you will agree with me in this regard!