How Likely is Failure IF

Discussion in 'Trading' started by Corso482, Dec 4, 2002.

  1. How likely is one to fail at trading IF he has a robust trading system rigorously backtested over many years, will stick to the system without question, is abundantly capitalized, has all the right equipment, and most importantly, uses rigid risk control?

    I know supposedly 95% of traders fail, but I would imagine that statistic takes into account those who were completely unprepared. So just for the sake of speculation (no pun intended), how likely is one to succeed if he takes all the above precautions?
  2. If you are abundantly capitalized it would be a mistake to rely on 1 market, 1 system, 1 set of parameters. Systems break down or go through unforeseen drawdowns for the simple fact that markets change/evolve.

    Even "adaptable" systems fail given a big enough change in the structure/character of a market.
  3. trader99



    That's some good points you made! Obviously, there's always a slim chance that you could still fail at anything! hehe. BUT given all the preparations one can/should make as you stated above, then the chance of failure is very very very low I would imagine.

    I think here are some reason why traders fail:

    1) they don't have a really valid strategy! Either backtested or test in live mode. They believe in bogus ideas or whatever they "feel" is going to happen next. That's NOT a strategy.

    2) they don't have the DISCIPLINE to STICK to their system. Some people have great systems, but like to tinker or don't follow the rules strictly. I'm bad at this but still working on improving it.

    3) They are undercapitalized! So, a few bad mistakes take them out of the game completely.

    4) Proper risk mgmt. They take too much risk relative to their capital base and their experience with the market.

    If you have those 4 things down, then I can't imagine why you CAN'T make money in ANY MARKET! Obviously, you can still have losing days or weeks, but your "edge" over time will work. And you risk a little at first, then build it up. It has to work! That's how all great traders think and became great.

    Now, how one goes about 1-4 is a personal thing and through lots of experience and pain and suffering and testing and backtesting and real trading and losing money before it all clicks I suppose...

    good luck!

  4. chaos


    if your system is truly robust - that is, if you have identified an area of not just fleeting trend but persistent, enduring trend, and your trading approach effectively, consistently harvests it, you're on easy street, baby.

    if not, i wouldn't wanna be in your shoes.