90% of traders loose. Trade against yourself !

Discussion in 'Psychology' started by tntneo, Feb 27, 2002.

  1. tntneo

    tntneo Moderator

    I posted this as a reply in the futures forum. but it is really about trading and not only futures.

    I am usually puzzled by the statement that 90% of traders loose. It is a vague and rather meaningless statement.
    traders? there are all kind of traders, trading all kind of things. are we talking online private investors trying to trade ? hedge fund managers ? currency traders ? floor trader for that matter..

    the word 'trader' is so overused.

    don't get me wrong. most reader of this forum are not making money (not even a buck). they should consider themselves lucky if they are break even (it's a big achievement already). but that's no reason to use 'trader' as a catch all to say we all loose.

    now if most amateur traders (or junior pro traders) fail, it's in part because they have the wrong idea about what trading is about. I learned that lesson along with so many when the nasdaq collapse caught me while I used to think i knew what trading was (fool!).
    It cost a lot. 30% before I even started to understand and a little more until I turned the corner.

    that's usually when you'll know if you will ever get it or not (when you loose a lot).
    the problem is the wrong perception of the market. that's why psychology is often mentioned as the most important thing. it is not, a sound system is, then psychology. but anyway. psychology is important because the perception is so difficult to change.

    I remember someone here mentioned something very interesting about trading your own equity curve. It was a very nice way to put it.
    Think about it (I tried already to write about this but let me try this new way) :

    if you are always loosing, it means your equity curve is going down. why not short yourself ?
    (what?! that's it, tntneo lost it! :eek: )

    no, no, think about it. you would make money if you or someone would trade against yourself. YOU ARE ALWAYS GOING DOWN : I just short you and I will make money !

    that's the idea about doing the opposite of what you are doing, then you will make money.
    my experience is just that. I became successful when I (finally) understood what I was really doing and why. since that was not working, I started to do the contrary. from another thread I wrote "the edge is about removing what does not work, not ask for what works".

    let's say you always fail (90% of you, if I must believe the word on the street). why don't you do the opposite of what you do ?
    yes, it is very difficult (psychology prevents you to do it). but that's the only way !

    that's also why, success is very personal because each trader fails in a very specific way. that's the very way he must reverse.

    Also, I know, sometimes some strategy are difficult to reverse. my strategies were not that easy to reverse because of very active time trame. I slowed down and reversing the logic was indeed possible. the point is you can always reverse what you do. it is just hard to do. that's the price to pay.

    if you constantly do the wrong thing, you have within you to do constantly the right thing. And the only person preventing that is you. not the broker, not the market, not your best half or whoever.
    people fail because of their perception of the market and what they are supposed to do. Also, a big side effect of trading against yourself is that you see the market in a totally different perspective. You dissociate yourself from the trading, you can become more objective and in a way you become a bit the market.

    you know each time you say 'they' when trading pointing to the supposed people taking your money, 'they' becomes you (since you trade against yourself. You might see better the market dynamics with that perspective because, again, you dissociated yourself from the trading. and that, instead of projecting your view, wish, hope, fear or greed on the market, which could not care less.

    anyway.. just think about it.

    PS : guys, don't get me wrong. you need a methodic approach. my suggestion here is to consider that this approach might be simply the opposite of what you are doing now. it can be something else and what you are doing now (if it works! why change? you made it already). if you have no method, no plan, then you are just chasing random trades with probably a bias in a direction (long probably). this pseudo random will never work. at least to have a chance to succeed you need a method (probably based on technical analysis or tape reading). once you have a method (the proof is when you can write all the steps down) then my post above makes sense to you. it might even open the door. if not, well.. anyway.. you did not even pay me 2 cents so... :)

  2. stevet


    When i was learning, i did try doing the opposite of what i had wanted to do, and it worked for a day. But then i started second guessing myself - so i wasn't sure what i wanted to do, so could not decide what to do.

    Then I went back and looked at those winning trades, and learned some important position entry facts. After that I didn't need to do the opposite, since I was able to get it right - more than i got it wrong - but undoubtably using the reverse to what i had planned taught me to be humble to the market and caused me to learn a valuable lesson.
  3. Neil


    Well spoken tntneo... that was well put I thought and definitely struck a chord with me anyway.

    'that's the idea about doing the opposite of what you are doing, then you will make money.'

    Over a period of time.. almost with no conscious effort.. I seem to have done precisely that myself. I moved from early scalping style to my more considered steady approach bit by bit... from realising that even tho I was losing each month the biggest loss was the commish to IB.. so I might as well lose the same amount but in fewer trades.. that helped.. lol

    and so on.. until I now find myself actually knowing what a stock that I am trading does for a living... instead of being blissfully unaware of all facts other than its ticker symbol.... I spend time on research and planning... instead of a belief that all I had to do was leap about like a demented flea on the back of a qcom to make money... I used to make up to 60 trades a day.. now my average is 2 trades a day..

    I used to feel as if I 'needed' to be in a trade.. would feel anxious and have a sense of lost opportunity if I was out of the market... now I feel relaxed when not in a position.. but still calm when in a trade.. because I know my stop.. never ever miss my stop... believe that over all it will work out.. etc etc... all the exact opposite of how I used to trade..

    I still have a long way to go.. but at least my personal chart is now in a firm uptrend at last.. net positive for the year so far and up 10pts for feb.. which may not be much to some of the experienced fellows who post here... but is a massive amount to me.. and finally makes me think.. maybe just maybe.. I can make it in the end.. I started in june last year.. so not sure how that compares as a learning curve to others experience..

    As allen said in another thread.. about the elusive edge I think.. trading should be work (to paraphrase) .. I now spend a lot more time than ever before on the planning etc.. and am also gaining more.. the two facts may just be related.. or not.. might just be coincidence of course damn it... lol Only time will tell and the one thing I do not believe I shall ever have.. nor desire... is overconfidence!

    All the best from Ireland
    (are there any other traders at all in ireland.. or am I the only poor fool?)
  4. Banjo


    I don't take a trade unless the opposing position looks absurd, it keeps me from cherry picking charts/indicators of potential setups.
    I f memory serves that 90% loser # came from some very limited study at a prop. firm. The media picked it up and ran with it. Who knows what the reality is.
  5. The problem is that the trades that do loose don't usually go completely the opposite way, they instead often take out your stops and then go sideways or trade back in your direction.

    Betting against your original position would not work.
    The difficult thing about trading is not predicting the direction it is pinpointing the exact timeframe and magnitude of the move also the volatility of the stock that’s why it is so hard.

  6. I don't take a trade unless the opposing position looks absurd.

    I agree with you completely!!
  7. stevet


    personally i have never seen a set up ever where the opposing position seemed absurd, and I have also never ever known which way the market will move - but i personally take trades where I believe there is a percentage chance of the trade going my way within a minute of me taking the trade - and if it goes against me or does not move within the minute - i exit

    but this is at critical support resistance levels only
  8. mgkrebs


    ......so you could place an order to take profits where you were supposed to have gotten stopped out.
  9. So if you are not exactly right you exit, thats what I call absurd, you must miss out on so many good trades.:)
  10. stevet


    i only care about minimising my losses, my wins can take care of themselves
    #10     Feb 27, 2002