Your odds of being consistent profitable in trading

[toucan]

@TrAndy2022

If anyone is trading Gold it is hybrid of FX and commodity so should be easier than pure FX trading but more difficult than Indices trading.

Also if you daytrade you are much more sensitive to any relevant news. So you would need a newsfeed with good coverage and fast realtime feed here too.

I daytrade gold and find for the way that I trade, its easier than daytrading indexes. However, I have traded with a trader for over 15 years and he finds his style of trading is better suited to daytrading indexes. We both started out trading indexes, metals and energies. He now just trades indexes and I trade metals and energies. He trades the open for about an 1.5 hours and trades another 1.5 hours before the close. I trade the 1.5 hours prior to the equities open and another 2.5 hours after the equities open. I trade events like equities open, European close, and news (without a feed, just trade the resulting price moves), etc… any event that is likely to produce good trending price movement.


toucan

 

[ironchef]

Here is why most lose.

Traders were very good at identifying profitable trading opportunities--closing trades out at a profit over 50 percent of the time. They ultimately lost, however, as the average loss far outweighed the gain. Open nearly any book on trading and the advice is the same: cut your losses early and let your profits run. The biggest mistake is trying to win on every single trade.

Here we see the issue. Most people avoid risk when it comes to taking profits but then actively seek it if it means avoiding a loss. Why? Losses Hurt Psychologically far more than Gains Give Pleasure – Prospect Theory. Most people took more pain from losses than pleasure from gains.

It is natural for humans to want to hold on to losses and take profits early, but it makes for bad trading. We must overcome this natural tendency and remove our emotions from trading. The best way to do this is to set up your trade with Stop-Loss and Limit orders from the beginning.

Individual trade wins declined as more leverage was used.

Yes, everyone knows & practices the cut your losses early and let your profits run rules but 99% of us are not printing money.

The reality for us average day traders:

1. Entered a trade that fits the setup, the stock went down. So we cut our loss and exit with a small loss. The stock then promptly went back up and we missed the run up.

2. If after we took a small loss, the stock went back up, we next decided to buy it back. It then reversed itself again so we were forced to exit again and ended up with two losses instead of one.

3. So next time we remembered the coaching: be patient and let the trade developed. Hung on to it a little longer but this time the stock kept going down and ended up taking a big loss instead of a small loss.

4. Third time was a charm, our setup went up after entry. While we wait patiently for the profit run, it reversed itself. We were forced to take another small loss.

5. We got smarter, set a trailing stop. The stock went up, came back down and we got stopped out with no gain.

Death by a thousand cut and we became the statistics.

 

[Blitzjoker]

Yes, everyone knows & practices the cut your losses early and let your profits run rules but 99% of us are not printing money.

The reality for us average day traders:

1. Entered a trade that fits the setup, the stock went down. So we cut our loss and exit with a small loss. The stock then promptly went back up and we missed the run up.

2. If after we took a small loss, the stock went back up, we next decided to buy it back. It then reversed itself again so we were forced to exit again and ended up with two losses instead of one.

3. So next time we remembered the coaching: be patient and let the trade developed. Hung on to it a little longer but this time the stock kept going down and ended up taking a big loss instead of a small loss.

4. Third time was a charm, our setup went up after entry. While we wait patiently for the profit run, it reversed itself. We were forced to take another small loss.

5. We got smarter, set a trailing stop. The stock went up, came back down and we got stopped out with no gain.

Death by a thousand cut and we became the statistics.

So true.

 

[Blitzjoker]

This is what trading is like for most people...

 

[NoahA]

Yes, everyone knows & practices the cut your losses early and let your profits run rules but 99% of us are not printing money.

The reality for us average day traders:

1. Entered a trade that fits the setup, the stock went down. So we cut our loss and exit with a small loss. The stock then promptly went back up and we missed the run up.

2. If after we took a small loss, the stock went back up, we next decided to buy it back. It then reversed itself again so we were forced to exit again and ended up with two losses instead of one.

3. So next time we remembered the coaching: be patient and let the trade developed. Hung on to it a little longer but this time the stock kept going down and ended up taking a big loss instead of a small loss.

4. Third time was a charm, our setup went up after entry. While we wait patiently for the profit run, it reversed itself. We were forced to take another small loss.

5. We got smarter, set a trailing stop. The stock went up, came back down and we got stopped out with no gain.

Death by a thousand cut and we became the statistics.

You forgot one more....

6. This time, since you are onto their games, instead of stopping out for a loss, you double down on the position. Every single time you tried to play the trend, it never trended, but now that you double down and triple down, it turns into a never ending rally against you!

 

[ironchef]

You forgot one more....

6. This time, since you are onto their games, instead of stopping out for a loss, you double down on the position. Every single time you tried to play the trend, it never trended, but now that you double down and triple down, it turns into a never ending rally against you!

So true, it is easy for the expert traders to pontificate. For us to carrying it out in practice is hard.

Here is a perspective from an amateur retail (failed many times) newbie day trader:

After we received and read our trading bible, memorized the rules by heart (@padutrader even carry a cheat sheet), we jump head first into trading with the plan. Then reality hits. Like Mike Tyson said: Everyone has a plan until they got punch in the mouth.

I am beginning to appreciate what @SimpleMeLike said: ignore everything, just click, click, click......

Keep practice taking small losses to get used to losing. Eventually it doesn't bother you anymore. Then maybe you will start seeing light at the end of the tunnel, and maybe just maybe it is not another freight train coming at you.

 

[NoahA]

So true, it is easy for the expert traders to pontificate. For us to carrying it out in practice is hard.

Here is a perspective from an amateur retail (failed many times) newbie day trader:

After we received and read our trading bible, memorized the rules by heart (@padutrader even carry a cheat sheet), we jump head first into trading with the plan. Then reality hits. Like Mike Tyson said: Everyone has a plan until they got punch in the mouth.

I am beginning to appreciate what @SimpleMeLike said: ignore everything, just click, click, click......

Keep practice taking small losses to get used to losing. Eventually it doesn't bother you anymore. Then maybe you will start seeing light at the end of the tunnel, and maybe just maybe it is not another freight train coming at you.

I honestly have Padu on ignore because I don't want to keep reading negative posts...

The thing for me is that because I am so good at keeping a track of every trade, saving every chart, when I review, I clearly see that the trades aren't where I think they should go. In the moment, something else happens, and the trades that I took are obviously not where I want them. I have a very good idea of what I want to do, but the chart, with my entries, clearly shows a deviation.

Case in point (5 second chart on NQ). I short at A, but I know don't want to be shorting the break of swing low (yes it sometimes works, but not often enough, and there are better places to enter). It clearly fails, but you sometimes get rewarded for it, that it develops a bad behavior. I do the same thing at B, convinced its going lower, but of course the trade entry sucks. The second short close to B is better.

At C, I'm very happy with the entry, but of course its a tiny profit. You could just slide up the stop incrementally, but sometimes you miss the 10 points and have to stop out at break even or even take a loss, which might have initially been a win... but sometimes you get 20 or 30 points profit. So you have to balance out the potential for a +20 trade with just taking +10 or having to end up with 0 even if you could have gotten +10.

At D, its such a shit late entry that I exit right away. The double bottom, at a key level, is clear, and yet I wait until its so much higher to enter again. Its at least 15 or 20 seconds too late, and this lateness is exactly what sets up all the problems that you outline in your list.

So what's my point? I've been at this game long enough to see vividly that the biggest problem is me. Things have to be done consistently, and there is a huge lack of consistency that is shining right in my face. So although I do agree with your list, trading is all about accepting the things you can't control, but making sure that the things you can control, you are doing with the utmost discipline. This means that after I put my trade on, I have no idea what will happen, but if the trade is properly entered, it has a better chance, and if its properly managed, then a profit can be extracted.

I fully believe that once the right actions are taken, and you become focused on the process and not on the result, then the profits will follow.

 

[ironchef]

So what's my point? I've been at this game long enough to see vividly that the biggest problem is me. Things have to be done consistently, and there is a huge lack of consistency that is shining right in my face. So although I do agree with your list, trading is all about accepting the things you can't control, but making sure that the things you can control, you are doing with the utmost discipline. This means that after I put my trade on, I have no idea what will happen, but if the trade is properly entered, it has a better chance, and if its properly managed, then a profit can be extracted.

I fully believe that once the right actions are taken, and you become focused on the process and not on the result, then the profits will follow.

Thanks for sharing.

 

[getthatintoya]

the biggest problem is me.

Boom there it is the gold you have all been looking for. Newbies and even intermediate traders want to drink the kool aid get the hit feel like they gotta be do something all the time. Daytrading is the wrong place to be trying to punch out 20, 50 , ... trades a day. That's alot of places where it can go wrong with you driving the ship.
Stats - is where it's at. Sure you enter your position saying yep high probability so what is that 60, 70 , 90% chance of making bank? You don't really know apart from it being high chance but what happens when every entry you take in a row is in the negative camp. Like black coming up on roulette a dozen times in a row.
Make less decisions or automate and keep stats of your setups. IMHO swing/eod trading is where I think you can be successful. It's like being in the bomber whereas daytrading is like trench warfare 95% of the time.

 

[ironchef]

So what's my point? I've been at this game long enough to see vividly that the biggest problem is me. Things have to be done consistently, and there is a huge lack of consistency that is shining right in my face. So although I do agree with your list, trading is all about accepting the things you can't control, but making sure that the things you can control, you are doing with the utmost discipline. This means that after I put my trade on, I have no idea what will happen, but if the trade is properly entered, it has a better chance, and if its properly managed, then a profit can be extracted.

I fully believe that once the right actions are taken, and you become focused on the process and not on the result, then the profits will follow.

@NoahA,

What works for me is I keep a very tight reign on losses, never let them turn into big losses. I think most systems will work if you can keep the losses small.

Best wishes to all.