I took an undisciplined trade the other day and proceeded to lose. It reinforced for me - one of the fundamental truths about why so many participants lose money when they trade. I once mentioned it on another thread but now I am convinced the markets are much much tougher than random for discretionary trades. Before I give my answer which I guarantee is one of the top answers anyone will ever read...I open up the forum. Answers must be concise and no one should post more than one answer. To give you a glimpse of what I will explain - I will let you know that it is tied in to this... my 2nd reason ( no one else may post two reasons) ... bad expectancy which usually means taking small winners and taking large losses.
trading is not difficult at all for example I shorted YM and so far its not as down as I would like it so when it opens and if it shoots up to heaven, I will exit with a pre determined loss so what is difficult about that ??
I shorted the ES late Friday and it is down as much as I would like, so I have exited and look forward to the Open in a few hours with great anticipation. P.S. This counts as my one answer for this thread ... LOL
jem, looking forward to your conclusions. I guess its something related to how the human mind prefers a stream of tiny winners and just a few big losers. The more times you are right (however tiny your profit may be) you will feel better with yourself than if you had a string of tiny losses (and one really big winner). Thus, most are doomed for failure as their brain is predisposed to go for a system which intrinsically, has a negative expectancy.
My answer is time. On any given time frame you will have an abundance of opportunity and time to get in on the wrong side of the trade. Sometimes the trade will go very quickly against you and sometimes slowly. Whearas you will only have a very short period of time to get in when the market will go quickly in your direction and you will be fighting short supply and strong demand. Basically the market is worse than random because there will be very little time for you to get the easy trades and all the opportunity in the world to get the bad trades. It is not random - it is worse than random. Now does that mean you have to give up no. But, it does explain why I was very profitable daytrader for 6 years and now I can only daytrade. My old trading plan - by coincidence made the above fact work for me.