Why Trading is so Hard

[sle]

Playing the violin at concert level is hard, some get there easy, most never do.

I doubt anyone gets there easy (I know a few professional musicians). It's the "swan effect" - while it looks like the swan is gliding effortlessly, his legs are paddling frantically under the surface.

Trading is hard because you are making predictions. That's hard enough.

Trading is hard because you are predicting how the crowd is going to react to the future, which is even harder.

Trading is hard because, unlike investing, it's naturally adversarial. You are competing with a bunch of other players that are all trying hard to separate you and your dollars.

Trading is hard because even if you have a statistical edge, the path dependency might knock you out.

What did I miss?

 

[pengwu550]

Most trading, except those that have an arb strategies, are trying to predict the future based on the the past and present data sets of information. Then you are making assumptions that what happened in the past, will repeat that pattern over the same time period that happened before. The problem is that the future is unpredictable. You can't be right all the time and the past does not repeat in the same way all the time. You need to find a process to use the past to be right more than wrong and manage your risk, to be around to be right again. That requires good information, a good process to use that data, discipline and enough money to be wrong. Too many trader do not have enough of each to make it.

I can not agree with you more, unpredictable, manage risk, for me, I try to keep inside a pattern of myself, have the profit when I win 2x bigger than when I lost, raise my stretagy winning rate, so that is easy, my system stably bring me money, trading is every workdays rutine I go to work but a hobby.

 

[panzerman]

Most trading, except those that have an arb strategies, are trying to predict the future based on the the past and present data sets of information. Then you are making assumptions that what happened in the past, will repeat that pattern over the same time period that happened before. The problem is that the future is unpredictable. You can't be right all the time and the past does not repeat in the same way all the time. You need to find a process to use the past to be right more than wrong and manage your risk, to be around to be right again. That requires good information, a good process to use that data, discipline and enough money to be wrong. Too many trader do not have enough of each to make it.

Absolutely that's why it is so hard. When I suggest that Random Walk is still the best description of price movement, even with it's well known flaws, people get pissy. I do concede that there is just enough non-randomness in markets that it might be possible to exploit with TA methods. However, as PistolPete has pointed out, you should empirically prove your approach results in a positive expectancy method before committing too much of your life or your hard earned money. Prove it to yourself, not me or this board.

 

[FreakofNature]

You must have the discipline of a computer, yet it's near impossible to program computers to trade like a competent trader. Need the best of both worlds, and in there lies the difficulty.

Either you make a computer trade like a good trader, or you make a good trader trade like a computer.

 

[comagnum]

Meditate on this nugget of Zen brilliance from one of the real masters.

"A losing trader can do little to transform himself into a winning trader. A losing trader is not going to want to transform himself. That's the kind of thing winning traders do."
Ed Seykota

 

[Scataphagos]

What do you think makes trading so hard?

Back in my bowling days, an old-timer used to often say, "The mind is the devil's weapon".

Probably even more so in trading.

 

[fordewind]

stop losing, keep rising to the top

 

[Peter8519]

It's hard because one has to do the exact opposite of the majority. In another forum, I posted one of my January trades when the stock was on its way to peak. Others in the forum bashed me for showing off. But I was trying to show them when others are buying, that's the time to sell. Use simple tools and be hard working, make it a habit and read the stock charts.

 

[rallymode]

What did I miss?

I always found the emotional aspect the hardest, especially if you are risking your own hard earned capital. Too much complacency in the good times and too much fear in the bad times can wreck some havoc in the best of us and that’s in isolation from social or family pressure. Add those in and you virtually have to become a robot.

 

[SimpleMeLike]

Hello John,

I believe trading is hard for the following reasons:

1. Because the lack of time the trader may have to study the charts and find a profitable strategy over X amount of trades. Assuming everyone works a full time job, it will take a very long time study charts and test different ways to make money.

2. Trying too many different trading methods and getting confused.

3. Trading real money with out any proof of making money in demo.