I wish I had a clue to just part of the trading puzzle.. Believe me I've broken my head with many possible strategies, charts, intermarket patterns and theories. The more I read and learn, the more I realise that the odds of me being successful are awfully stacked against me. Cheers.
What puzzle, you can make trading as easy or complicated as you like. Buy or sell. If you're wrong then close, if you're right then stay with it. Manage your money and control your risk. How simple is that? You've built it up in your own mind as some incredibly difficult task even before you've tried so you expect to fail, in reality there's really nothing difficult about trading.
How does one explain the failure rate in this business? If it really were that simple - ie. buy low sell high - surely 95% people wouldnt fail at it?
The simplicity isn't in buy low sell high, it's how trades and risk are managed which matters. To make any sense of the 95% alleged failure rate you'd need to know who makes up the 100%. If you excluded from the whole the people who had little or no aptitude, discipline, common sense, along with the underfunded, the unemployed and unemployable, the hapless and hopeless, the gamblers and the desperate I suspect the stats would change significantly, this business attracts them all like moths to a flame. The idea that trading profitably is elusive and exclusive is a perpetuating myth. Forget for a moment the 95% stats and look at the actual proposition logically, is it really that perplexing?
In that case he's got more problems than just underachieving, he can't spell either, maybe there's a connection?
It isn't your motivation. It isn't in the books. It isn't the instruments you choose. It probably won't even be a mentor. Most people who provide you advice do not know what they are doing. The 95% rule is as much bad money management, overleveraging, mistakes, trading costs and other things. Your biggest problem is going to be impatient. Few traders are going to be successful in 6 weeks or 6 months or even in a couple of years. Often, because they I will give you ONE piece of trading advice. UNTIL you can make money on paper regularly, don't go anywhere near your trading capital. Some will tell you just to trade small at first, but again, UNTIL you can make money on paper regularly, don't go anywhere near your trading capital. I will repeat again: UNTIL you can make money on paper regularly, don't go anywhere near your trading capital. The thing most people do NOT have but need most, is a trading edge. They are not easy to find. They also sometimes disappear on you when the market structure/geometry changes.
Ok I understand that one needs a solid and reliable (more often than not) trading edge before even risking any real money. My question to you is, can one find an edge of this sort WITHOUT having studied physics, behavioural finance, advanced mathematics and the like? Does a person which relies solely on price and volume stand a chance in todays markets? I feel intimidated with all the available cutting edge software related to automated trading, algorithm programming, etc. etc. as they are not fields which I have much knowledge on. Sometimes I feel that I can detect certain patterns in price and volume, but then I reflect and ask myself: "why would hedge funds and big institutional traders invest in expensive software and engineering if they could exploit an edge which is available through watching price and volume alone"? Does a retail trader, which uses nothing but charting, price / volume patterns, intermarket relationships and discretionary conclusions stand a chance in today's market environment? Seems like wishful thinking from my part. Cheers.
The two biggest 'edges' that a full-time individual trader can have (IMO) are a) Proper capitalization. Enough money to pay mortgage/rent/health care/insurance/living expenses/kids/wife shopping sprees etc. for 12-18 months even if one goes through a 30% drawdown in capital. I think this is where most want to be traders fail, and fail miserably. They're under-capitalized. b) Ability to control ones emotions and remain disciplined and stick with money management rules even in situations of high stress (those dreaded drawdowns again). All charts, trading skill, market knowledge, data feeds, dozen monitors etc. won't help if one of the above is missing IMO.
I thought as much. I have always been a believer in the KISS principle (keep it simple stupid). That is why I feeel overwhelmed with all the trading tools which are offered: ie. news feeds, programming software, multiple screens, etc. etc. so I get it that one needs a good financial buffer AND the ability / discipline to master one's emotions? This sounds more like what I thought - they are the key ingredients to success and everything is either complementary to this or a total waste of time, money and effort.