majority traders really lose money??

Discussion in 'Trading' started by ttowntrader, Jan 10, 2008.

  1. That was an interesting one. So does that mean studying the trade through books and other experiences does not work? Does one have to find out ways to make money on his own? Can everyone think of ways?
    #41     Feb 25, 2008
  2. Cheese


    Let me inject some every day facts. The YM, Mon 2/25/08, had 37 'legs' of over 15 points, following each other in sequence. That is a gigantic offering of points in one day. Some of those 'legs' can be very big point scorers but they don't need to be. And do you know what, those gyrations are self evident - right there live, right up your nose, on the daily chart in front of you every day, day after day. Do newcomers observe this? Do they see what is overwhelmingly self evident? No, they do not. They want to disengage from the market and go hunting for something called a 'trend'.

    So 90 or 95% of daytraders fail. And you can put it in one word. Stupidity.
    #42     Feb 25, 2008
  3. Why does this thread even exist?

    Is it some kind of group therapy tactic for losers to make themselves feel better?

    Does it really matter how many % of people who trade lose money?

    Most important thing is this:

    "Do you believe you can make a good/great/comfortable/etc living as a trader?"

    It all starts from there. Forget this nonsense about what % survive and what % blow up.

    You keep believing those figures and all you're doing is subconsciously programming your brain that you are NOT going to make it.

    Self-sabotage is not a novel concept. It happens every day though, and the ultimate cause always starts within. It's not the market, not manipulation, not bad luck, etc....
    #43     Feb 25, 2008
  4. The chart you are showing is misleading, future contracts do a bad job of estimating what a buy and hold customer would actually do, because they wouldn't buying and holding the futures. If they bought IMW (iShares Russell 2000 Index) in Nov04 they would be up 15.5% ((70.80-61.30)/61.30) if you include dividends, even more if they reinvested those dividends. Thats not too bad....

    #44     Feb 25, 2008

  5. Sweet link

    Best words ever written there

    "From Successful Anonymous Trader:

    You simply cannot have any confidence if you do not have a method or way of identifying trades along with money management guidelines. You're lost in the woods, so to speak. I was there for many years. What did I do? This may help a lot of you:

    I threw out 99% of all the crap I learned about oscillators, divergences, Elliott Wave, cycles, timing, seasonals, Gann, pitchforks, volume, Fractals, RSI, stochastics, overbought/oversold (this is a good one--the stock indexes, currencies and cotton for example everyone said were overbought and topping in February and March this year). Look at what they did. Needless to say, I don't pay any attention to this anymore either, etc., etc. The list goes on to infinity almost. I went back to the basics. I went back to simple chart patterns, (a simple moving average and trendline now and then for a visual aid.)

    I came up with a low risk money management plan and put it together with trading with the trend and, presto, an effective and time tested trading plan. The plan is simple and has worked since trading began and will last me a lifetime. What a relief not to have to spend countless hours every night trying to find a new way to trade. I am sick and tired of that after 7-years.

    I believe at becoming an expert at one stock or market and its behavior and then putting all your skills and energy to work in a concen(traded) manner. Get good at that market and trade the heck out of it. Increase your size over time and you'll make more money with less effort. There are lots of professionals that do this. Look at some floor traders or locals that stay in the pit for many years trading one market exclusively.

    One thing that I have learned this year, is that I am trying to cut back on the number of trades I take and be more selective and not trade in congestion as much as I did before. I miss some good trades out of congestion, but I save myself a lot of mental energy, buy myself some more free time during the day, and get better and more profitable trades.

    My attitude is changing now to one or two good trades, and that is all I need to make my week ( a triple or a home run, so to speak). There are plenty of them during any given week.

    Trading is fun. Once you have a method and money management in place, it allows you to concentrate on trading and not on searching and researching. That gets old and frustrating. Make it your goal to find a simple method for next year. One thing that you can hang your hat on will last you a lifetime. Trading is simple. Remember that it's the Execution or Implementation of your trading plan that is the bigger challenge.

    Most people make finding the method a big challenge. That is because there is so much junk thrown at traders. They feel like a child in a candy store and have to try every doodad in the place. When they are done, they are sick and never want to see another candy store (trading gizmo) again. They could have had the plain piece of milk chocolate at the front of the store (simple method price patterns) which would have done everything they desired and fulfilled all their needs.

    I wish to all a great new year. I hope some will be able to end their journey in search of the holy grail or indicator that will turn their life around. Search for simplicity. You will be surprised what has been right under your nose all the time, right there in front of you on the chart or price bars. Pay attention to what they say...they will tell you everything. You need to listen and get to know them. It can be that simple. "
    #45     Feb 25, 2008
  6. Sorry what I am about to write may hurt, but please read it slowly and think about it.

    If only 90% lose that is actually an excellent number . My own guess was/is that only 1% (or a smaller number in that area) may make money. If the stock does not pay dividend, over a large enough period of time, trading and investing is a negative sum game. Gains has to be paid by someone. If it is not a set of current fellow losers, the guy who wins is paid by a new holder, who, if he is not a loser, gets paid by another holder, etc. This continues till prices go the other way. After sometime, if somehow you were allowed to visit the accounts of all holders of all shares of a given stock, you should be able to see that 99.999% have a big red number in the P/L column. Those who would have a green number would be a tiny minority who would have held stock only recently, and if they do not take gains sooner or later they would also become losers.

    The ultimate destination of the prices of the majority of stocks is the rock solid floor represented by the price name:


    All the waiting at that floor is over as the stock is no more and all accounts are closed.

    Manage your trading business under the assumption of a negative sum game, and you should be fine. I am sorry but it is true (unless you buy stocks that pay you back somehow, then you will get money back in the form of dividends and the overall result may not be a negative sum game).

    Also, consider finding trading opportunities where you can never lose your invested capital. Forget the opportunity cost, just focus on not losing your capital, because the name of the game is to plan for the negative sum game.

    Do not be concerned with the return ON your money, be concerned with the return OF your money.
    #46     Feb 25, 2008
  7. The post from Soveras Khan is great. All I can say is WOW. Absolutely amazing how true it is.

    Anyone who is on ET struggling to succeed should cut and paste his post and read it, over and over again. At first it won't make any sense to you, but once you are there you will know what he is talking about. He is literally letting the genie out of the bottle for you.

    #47     Feb 25, 2008
  8. ehsmama


    You are showing the mentality of a Losing trader. Are you a winning or losing trader?
    #48     Feb 25, 2008
  9. There is some truth to that some traders and also long term investors make big money on inside information.

    I had one very small bit of inside information back in 91 from a girlfriend at the time. Her brother had graduated college and starting working at a company (APCC). She told me to buy the shares of the company as "something big was going to be announced soon." The news announcement came and the stock jumped up from $31 to $37 on the news. The stock dropped down over the next 9 months, but if you had the inside info and traded on it, you could make a hefty profit.

    Martha Stuart did it, and many others do as well all the time.
    #49     Feb 26, 2008

  10. That should be a standing reading requirement for all who wish to learn trading the markets in a successful manner. It's sad how few will actually see the value of the wisdom embedded within the message given. Best post ever indeed. Thanks for sharing.

    #50     Feb 27, 2008