I hate when people say most traders fail because they are undercapitalized

The dang reason is not because they are undercapitalized its because they don't have a damn edge

 

What`s yours?

Thank you sir!

 

Having a decent account size is also an edge.

 

What are the statistics? With easy access to insane leverage via options, $500 margin futures, and 4:1 daytrading margin, retail traders have all the rope they need to hang themselves and render their edge, if they have one, irrelevant.

One badly managed trade, regardless of your capitalization, is enough to cause failure. I would suspect risk management is more likely the most common reason why traders fail. As I asked before, some statistics would be nice. Brokers surely have access to this info..

 

Most of the time their brains are undercapitalized

 

I agree with the original assessment.

Aspiring traders fail because they don't have a profitable method.

This is why I think aspiring traders are wasting their time reading Mark Douglas and other psych books.

That stuff only matters if you have a profitable method. Otherwise you'll be calm, patient, and disciplined and still lose all your money.

 

Businesses fail because they are poorly capitalized, don't plan properly and/or have a lousy product. The "product" in trading is your edge or trading strategy. Trading is just another business. Those that treat it that way have a higher rate of success over time.

 

I don't think undercapitalization will prevent one from trading profitably, but it will probably mean that they won't survive the learning curve.

They'll run out of money before they can come up with a profitable method.

If a guy can trade profitably but is undercapitalized, there is enough leverage available such that he probably won't be undercapitalized for long.

I bet there are some seasoned futures traders who could take a 15k account and work magic with it. But what the newbs don't realize is that these guys had a lot more than 15k to live off of while they learned the craft. And they probably had a mentor too.

 

Simplified maybe, but generally agree. More specifically, I hate the comment "absolutely don't trade with money you cannot afford to loose!"... Bullcrap! Absolutely don't GAMBLE with money you cannot afford to loose! To me, gambling and trading may seem like similar concepts, but are very different things...

Yes, some think they're trading when they are unknowingly just gambling... like I did when I was a newbie

 

Under-capitalization is a perfectly valid reason to fail, though obviously not the only one, edges are small and the leverage on offer may not be enough to over come commissions.