we've all probably heard before that a trader who loses money consistently is doing the wrong thing right. like someone else has previously said, losing money is just as hard as making money (not including commissions and the bid & ask spread, etc.). we've also heard about brokers possibly taking the opposite side of some of their client's trades. obviously, not everyone here is making money, so maybe we could learn from eachother's mistakes. i would volunteer myself, but i'm not as bad as i was when i first started. lol if there is more than one volunteer, maybe they should each start a journal in the journals area...and state that they're a losing trader. they could post some real trades and explain exactly why decisions were made. i'm sure some of the smart guys here could analyze their trading and maybe turn it around... if you're a real bad trader, please come forward.
Gordon, The problem with this is that the reason most people lose money trading stocks (or anything for that matter) is because they freak out due to lack of discipline when the market moves against them. Then, they'll sit there in a frozen panic hoping the good-natured market will decide to spare them more pain and suddenly reverse and get them back to break-even. "When it goes to break-even I'll get out -- I have to get my money back!" -- Oops! If a lot of traders burn up quickly on a few trades, then there really isn't much to analyze. As far as it being just as hard to lose money as it is to make it save for commissions, etc -- that is a neat thought. In fact, it seems to be a very true statement, too. aphie
Actually, A losing trader could cover his losses with a chatroom. He could be a "contra-indicator". He makes no market comment, no one else is allowed to post (less it would influence him). All he would do is post his trades as soon as he did them (even better, have his trading software post them automatically). Then, the chatroom members immediately take the other side (no analysis, no thinking, just do it). He could charge a $100/mo. The only potential problem is if he either starts making money or tries to build business by losing worse and ends up making money by doing that.
<i>The only potential problem is if he either starts making money or tries to build business by losing worse and ends up making money by doing that. </i> Some one told me that at one time there was a psychological study done by some guys and they found a group of losing traders, the kind who like to joke about being the worst traders in the world and if you just do the opposite of me then you will be rich, but split it with me please. Anyway, they told them that for losing money, they would recieve $25 for every $100 they lost. Most of them made money, thus did not get paid. Pretty sick, that would just have to bum you out. Brandon
i think this whole 'fade losing traders' or 'if you are a loser just do the opposite' thing is 100% myth. it is not mathematically sound in its assumptions. losing traders do not lose because they are doing the exact wrong thing. they lose because they do not do the right thing with any degree of consistency. the opposite of being a loser is not being a winner, being a loser is like the number zero, it doesn't have an opposite and there are countless reasons that feed into it. the opposite of winning is random inconsistency that ends up as net losses either through a few ugly blowups or a long bleedout from transaction costs. focused action aside everything tends toward entropy and the nonwinner's trading account tends toward zero. but there is generally not much if anything at all to learn from hackers, dabblers and other various 'losers' except that they don't really know what they are doing. also gurus are not bad because they are wrong all the time, they are bad because they are so hit or miss that you can't do anything with their advice. if a guru was 80% wrong, you could fade that guru and make dough most of the time. the problem is that the guru is inconsistent in the way coin flips are inconsistent. sometimes wrong, sometimes right, so that their opinions are essentially little more than noise.
In a similar vein, it would be interesting to see a contest where the goal was to <i>lose</i> money by trading. You'd have to limit the trading to once per 15 minutes (or hour or day) to prevent people from just using the spread to lose money, but with that restriction in place it would be interesting to see what techniques emerged for losing money. I think a study of those techniques would be very useful for learning what <i>not</i> to do.
I think the impact of commissions and spread cannot be overemphasized. I was one of those losing traders in my futures account -- I managed to pay out triple my equity (high five figures) in the course of a year in commissions before blowing out in frustration. In other words, had I not paid any commissions, I would have tripled my account in a year; alas, we must pay to play this game. . .
I think it is a myth as well...And the reason I say this is simple...Most losing traders or newbies do not lose because their entries are always incorrect, but because they fail to manage their winners or their losers well...The very same signals in the hands of an experienced trader could very well produce positive returns...
yes, I think that is more accurate...Alot of traders dont lose, per se, based on their overall winners to losers, but lose over time because of the "slow bleed" that commissions, spreads, technology failures, and other "Acts of God" as they say in the literature...Micro-managing during trend days and cutting the profits short or overtrading during congestion days are probably the other big killers...Its always easy to identify the problems, but never easy to correct them
one more thing: consider the mathematical implications of the above statement. if it were true (in some bizarro world where bad money management was outlawed), then even if all traders were allowed to trade for free with no spreads, the majority of them would finish within a tight statistical range of net net. zero gain, zero loss. entropy.