I like to chat with retirees, particularly those who used to work in a job where they need to be a bit of a snake oil salesman. It is after they retire that they can be completely honest about their past. A few years ago, a retired stockbroker revealed to me that most of his retail customers lost money. I asked him why. He was in a good position to know the answer since he had access to the buy/sell transactions of his clients. This was what he told me. They patiently held on to losing stocks and impatiently sold winning stocks. If you have several years of experience in the stock market and are still a loser, please check your own past transactions and verify for yourself if this is true. Years ago, I spoke out against contra-trading because I suspected this practice was harming most Singapore stock investors. Someone was not happy and said something like "you don't know, don't talk so much and misinform". In contra trading (a special feature in Singapore and Malaysia stock markets), stock punters buy and then sell the same stock before settlement day. Punters do not have to pay in full for the stocks they bought but settle only the difference in losses, or take the profit. It is similar to taking zero-interest, zero-collateral, ultra-short-term loans from the broker to buy stocks. The credit risk taken by brokers caused some remisiers to suffer massive losses during market crashes when their contra-trading clients could not pay up. Contra traders used to contribute greatly to the liquidity of the Singapore stock market but it is no longer popular today thanks to the shorter settlement time (T+2). I learnt from the retired stockbroker that many of his clients who lost money were active in contra trading. I commented about the self-destructive behaviour of customers who contra-trade and that they should have been better advised. The stock broker honestly replied, "I made most of my money from contra traders". Thank you so much for your honesty. Now, I understand the strong reaction from the person when I spoke out against contra-trading. Contra-trading was probably one of his primary sources of profits during bull markets. Don't expect the casino to advise their customers on the evils of gambling.
One thing that most retail traders miss is that you have to control your losses. You have no control over the size of your winners. However, you can control or minimize your losses. That is why hard stop losses should be part of your trading arsenal. It puts your trades on auto pilot if you are trading stocks. It does not leave it to your discretion and most traders exit at the wrong time, including me. Even if you have a trading edge, if you allow your losses to balloon, it will eat into your profits. Small losses is what retail traders want. It is far easier to recoup a couple of small losses than, one very large loss. A large winning trade can wipe out all those small losses but, one large loss will wipe out that large profit. Do the math yourself and do not take my word for it.
Easy and popular thing to say, but I think it has to do more with the lizard brain takes it over. A lot of wise and smart people make dumb decisions from time to time, it is not easy to be always on guard and never use generalizations (using generalizations makes life easier but some cases will slip)
Academically, and professionally, most would say I'm a dumb person, or average person. And I would fully agree with them. But trading wise, I look like a genius compared to most professional people with masters and doctorates and bacherlors degrees. The vast majority of human beings....if you can secretly observe their private lives, minds, and thoughts....you would indeed witness how dumb and impressionable and unrealiable and wishy-washy their personalities and minds are. And that's compounded with their personal lives, and financial lives.
It is also revealed in the usernames they pick when joining a message board such as ET. You do have one of the stupidest damned nicknames on any forum, everywhere.
Reality is that the majority of stockbrokers themselves also have no clue and are gambling too. I had daily contact during about 5 years with a tradingdesk (around 10 stockbrokers), I visited them regularly and we had many conversations about their own trading. Not a single one of them ever made enough money to live from their trading. They all needed their job as stockbroker financially. If they would be so good and know what you should do and what not, they would be traders, not stockbrokers. They are snake oil vendors (like you told yourself), and adapt their stories in function of the commissions they want to generate.
https://tradeciety.com/trading-failure-psychology/ "Conclusion: Humans Are Not Made To Be Profitable Traders Psychology and research show that humans are not made for trading and second, that our belief system can be used against us by smart trading marketers. The takeaway message of this article is that being aware of how your brain works when trading is a key element on the way to becoming a profitable trader and it helps you avoid some of the most common trading traps." I would not call them dumb, I would say they (or rather their brain) miss the needed knowledge to become successful. The human brain has millions of automatic reflexes, which is a problem for trading, as humans are influenced by their environment and what happens around them. They react impulsive, emotionally, non logical...). All these things have a negative impact on their trading. That's why I never read any books, never studied any existing indicator or any trading system. These things pollute your brain and makes it difficult to "reprogram" your brain so that it would react on logic and objective things, not on what others say or publish, not controlled by your emotions or anything else. Your brain should be immune for your environment and just follow the rules of the trading system, which are purely mathematical. I read articles about the working of the brain instead, and that helped me alot more about where the problems is situated. So I tried first to define the problem, and then to solve the problem. Your brain, by default, is programmed for self destructive behavior (when it comes to trading). You should reset your brain to zero (the part that is used in trading) and train it to do what it has to do. One of the most famous errors is the "fear of missing out" that pushes people to act at the wrong moment. I have no FOMO, so I wait till my system tells me what to do. And if I miss it, no problem, as I have several signals each day. Missing some trades has less negative impact on my return than entering because of FOMO and losing money. Training in any activity (football, tennis, basketball, rally or F1 driver...) is always focusing on doing what you should do for optimal results, not what your brain would do by default. That training should learn you how to automatically react optimal instead of using the default reaction of your brain. I trained for months my brain before I started to trade, and when I found an improvement I had to replace part of the previously learned automatic reflexes by the newer version. In daytrading, when you have to react fast, it takes a lot of time and energy to get to that point. I had a few periods that I had to train hundreds of hours to adapt my brain's reaction to the newest version of my trading plan. It was very costly as I could not trade the old version anymore, but not yet the newest version too. So I had to stop trading a few weeks to do the "upgrade" as still trading the old version would train my brain in doing something that I should not do anymore. So that was a conflict in my brain caused by the two different versions. The conflict was the result of discretionary trading. If everything would be automated I could switch from one system to another in seconds by reprogramming the rules or formulas.
Exactly. I am sure that the majority on ET is smarter than me. I read many things on ET that I don't understand, not because I am too stupid, but because I refuse to learn it as it might pollute my "trading brain". I do however think that only a very, very small part of ET can beat my returns. Smart and stupid is used in a general way for a person based on all his qualities and defaults. But any stupid person can be a bright one in just one specific area. And any smart person can be a total stupid in one specific area. Nobody is smart or stupid in all areas.