Home > General Topics > Trading > Why do more than 90% of traders lose?

Why do more than 90% of traders lose?

  1. Here is an interesting article i came across.

    http://articles.latimes.com/2011/apr/03/business/la-fi-amateur-currency-trading-20110403

    Think real real real hard if you want to pursue trading. Your dream of making money, your dream of getting rich quick, your dream of driving a Ferrari are all a myth. Movies u watched how traders get rich quick are all a myth.

    The reality is, more than 90% of small traders lose!! They just lose!!!

    I am looking for the best answers
     
  2. A quote from the article above

    Jeff Goodwin, a 23-year-old Internet entrepreneur in New Hampshire, said that after a few years of losing money in the market, he recently found a strategy that has been turning a steady profit. But the potential for big losses is what makes it fun.

    "Is it gambling? Yeah," Goodwin said. "You easily get addicted."
     
  3. Everyone has to pay their dues, for some it comes earlier, for some later.
     
  4. The irony is the answer on how to make money in any probable statistical based venture lies in that very same article posted to discourage neophytes. If can't spot it then it answers also a lot of questions without asking. :D
     
  5. L.E.V.E.R.A.G.E.
     
  6. I thought this was particularly sleazy: (from the article) ...""The majority of people today are on a quarterly basis not doing well," Drew Niv, FXCM's chief executive, acknowledged in an interview. "There's lots of education showing, 'Here's how to do it right.' … Do most people heed the advice? No, of course not."'

    He makes it sound like everybody should be making money
     
  7. you are right about that. I missed that part. Looks like i may create a scam brokerages list. I heard FXCM and Gain are not good. They are ripping off their clients on slippage.
     
  8. Just a stupid question, but why is it bad (or unusual) that there is a high turnover in this business?
    Imagine if those losers quickly left the industry. Wouldn't that dry up liquidity?

    So the OP's crying about high turnover rate is like whining about having too many fish/newbies at a pokertable. Simply put, stupid.... They bring fresh money, and if most trader were winners it would be much harder to make money....
     
  9. CHANGE IT TO 99% OF ALL TRADERS LOOSE IN THE LONG RUN.

    No diff between casino and 99% of all trading. its the same. atleast in VEGAS , u get drinks while u r getting ripped off. ha ha.
     
  10. I'll take a stab at that.

    It's not necessarily 'bad' in and of itself. But couple the statistics with the advertising about 'how easy it is' and 'quit your day job' type marketing, and it's pretty sleazy.
     
  11. Many years ago, I would fly into Vegas each weekend, I "gambled" like it was a business, just like trading. You develop a skill or a plan, I played wherever casinos had one deck shoes, just me and the dealer very late at night. I had set bets, but when I knew the deck was heavy in face cards, I increased my bets. I never became a hog or overstayed my welcome, I only played during certain hours, very disiplined. Once I got the hang of it, never had losing weekends, some breakeven though. I never stayed long enough at a casino to get comp rooms as they are handed out to those who lose consistently.

    I have friends who gamble for a living who live in Vegas, play video poker or poker games, they never have losing years, whether it is gambling or trading, one has to master skills and themselves to succeed and those who don't have the skills is our profits.

    Only people who get ripped off is themselves cause of lack of education. There is always something else you can get better at, if you get good at reading the charts, start learning how to read the Dome and volume, try getting that extra tic, to many, extra tic is hardly worth the effort, but a ten lot or 100, it is.

    I had brain surgery twice last year, I made sure doctors were highly skilled and been doing it many years and not just graduated out of med school yesterday. trading is the same, more skilled you are, you business does well, if you are a newbie and open an account to start trading, you are bait.
     
  12. I don't why emg keeps on humming and drumming about failure rate of traders.

    There is nothing unique about start up traders failure rate - its same statistics with any other entrepreneural business start-ups - noone gets hung up about it.

    Why continue being consistently negative. Let the noobs try who knows what could happen, all self-made sucessfull traders also started out as noobs losing money consistently.

    The personal attributes that build and make succesful traders are probably no differeent to other attributes that make entrepreneurs successful in other business activities.
     
  13. Sure. But how many newbie would sign up if the ads were saying:

    "You most likely will lose, and it will take years to get profitable, and you can forget about making a living. But come and try!" :)
     
  14. Best answer so far!
     
  15. The work is solitary, it attracts people that are introverted. The ones with intuition backed up by gut feel can get some kind of a game going in a few months or a year or two but they are lame... the ones that back up intuition with thinking take much longer to get a game plan and they are somewhat less lame... extroverts with intuition backed up by thinking will take FOREVER to get going but once they master the game they pile up the cash like crazy...their biggest obstacle is implementing their plans, they have to master themselves and undergo personality change in order to get their trading implemented properly but when they do it's 80% wins and winners much bigger than losers all day every day...
     
  16. This thread is on the repeat topic of endless threads on the same subject, namely why most people lose.

    The unrealised fact behind losing is that they are all amateurs and they lose. I have a professional and executive background in this business. And undoubtedly stocks and futures markets put you at the heart of world capitalism.

    However my previous posts have repeatedly shown my view that there is still no bar to an amateur becoming a winner. I attempt in my posts to bring new and existing players at ET to the nub of what they should be doing.

    But I am not a teacher, mentor, trainer or instructor to anyone (other than to past or present employees). I would not detail and send the systems I use to any outside person. Your success can only ever be your own personal achievement. So you must do your own study and problem solving. I like to see amateurs make themselves rich. For sure, it can be done. It is a good thing and there is plenty of room for amateur traders to make themselves securely rich on a big scale.
    :)
     
  17. The short answer is that if it were easy everybody would be doing it. Most markets are zero sum games (or very close to zero sum) which means that anyone who is regularly pulling large amounts of money out of the markets is getting that money from somebody else, often retail traders like yourself. In fact, if you throw in commissions and fees most markets are negative sum, with the only sure winners being the brokers collecting their steady stream of nickels and dimes.

    It is also a fact that most markets are efficient. In quant speak that means that the prices are very close to being martingales. If they were true martingales no trading strategy would work. Successful traders find deviations from efficiency and make that their edge, unsuccessful newbies see patterns in random data that aren't there and trade thinking they have an edge but don't. Most traders are in the unsuccessful newbie category. Because markets are so efficient it is very hard to find an edge. And because markets become more efficient over time edges go away, and you have to find new ones.

    You are competing against a horde of quants at places like Renaissance Technologies, and against hard core traders with every inside edge possible at banks like Goldman Sachs. Are you surprised they keep ripping your face off?
     
  18. +1
    From time to time you will find some edge (aka market inefficiency or loop hole) and you indeed will make money out of it in a short while. However, the market is so efficient and "they" will find out very soon and this edge will be exploited by them and it will disappear very soon. "They" - refer to the platform provider that you used to develop and back test your strategy, your brokers, MM, HFT tracking system, the group that re-pack your edge and re-sell to smart money. This consequence will leave those "edge finder" wonder why the edge disappear after a short while, even it is working fine for the past 15 years based on the back test.

    This sound familar, right ? :confused:
     
  19. Look at my record: 302 - 70. Compounded gain of almost 400%. And those are only the trades I'm able to verify with documents on my site. My stats are even higher otherwise.

    It's not gambling at all.
     
  20. Call me crazy, makethesetrades, but your trade recommendations are one-sided, so they don't qualify as trades at all.

    You make a entry trade recommendation at 8:30 am, for instance, to buy F at 17, but you give no exit advice. If Ford ranges between $16.50 and $17.05 that day, closing at $16.50, you still get to make the claim that you sold at $17.05 when you post your result at the end of the day.

    Quoting your site, "The chances are that this (trade recommendation) post will not provide the details of my exit strategy. After all, my advice is free, and I don't want to give away my strategies."

    You're just telling people to open a trade without giving them any advice on how to manage that trade. I don't see that as helpful at all, and it raises questions about the results you claim.

    I'm sure you would debate my conclusion, so I await your response.
     
  21. diogenes,

    your information is false. My site clearly explains the strategy.

    For records purposes, I tell traders EXACTLY when to buy or short (live on twitter). It's very unlikely I made a recommendation at 8:30 in the morning in premarket. That's only happened abotu 5 times out of the 99 trades Twittered so far.

    When it's time to close out the position, I tell them AGAIN on Twitter, at that exact moment.


    I don't provide them with details of my exit strategy because the whole point of my site is that I do the work for them...they simply need to wait for my Twitter message stating to close out the position.

    However, I can provide them with updates to say something like "I don't plan on closing out the position today).

    There is no way for me to game my results: I post pictures of my Twitter predictions, along with pictures of the real time streaming quotes bid/ask price within seconds after I make the predictions.

    If you would've reviewed just one day's trading results you would've seen that.
     
  22. And one more thing...

    even if I WASN'T telling traders exactly when to exit their trade...and was instead using the day's closing price...that wouldn't guarantee me a profit at all, b/c it could just as easily end the day lower.
     
  23. http://in.reuters.com/article/2008/06/12/china-banking-trading-idINPEK33998520080612


    I posted the following article on the 95% lose topic. I did not receive a single reply to my post. Posters who posted just their opinion, with no facts, received multiple posts. I think this shows why so many people lose money. People want to believe they can make easy money trading. And, they choose to ignore facts which say otherwise. They think that they are "only" investing $3000 in it. But to the brokers/dealers those $3000 accounts that lose add up quickly.
     
  24. The answer is pretty simple and has been discussed to death:

    1. Most start up business goes down, so why trading would be any different, when the start up cost is very minimal (can be 2-3K) unlike other businesses? Also, no experience or licence necessery. Try to start a restaurant or a plumbing business with 3K or without experience.

    2. Under capitalization. That....

    3. Lack of a plan or consistent approach.

    4. Psychological aspects of trading.

    5-10. Blah-blah-blah...etc.etc.etc....

    By the way congrats to emg for making his 1 ES point in April! You da MAN!!!

    I wonder who is going to start a thread: Why only 5% of pro poker players make it???? Oh yes, I guess it is me....
     
  25. Great post.

    I can go out with friends and everyone is having a good time but I am in my head thinking how corn compared to sugar from 1870 to 1880. And why?

    It's more of a disease or a dissorder I would say but that's just the way it is.

    The only way to stop it is get totally wasted.
     
  26. Consider the implications of what you are saying. You are implying that some "edge" existed in the market for 15 years with none of the institutions you mentioned finding it, then you (or some other retail trader) found it, then those institutions noticed you trading it profitably and stole it from you.

    That's pretty preposterous.
     
  27. Perhaps the forex article is being misinterpreted. One paragraph says:

    "...
    At FXCM, 75% to 77% of customers lost money each quarter last year, according to newly required disclosures to the Commodity Futures Trading Commission. At Gain, which operates through http://www.forex.com, the number of unprofitable customers hovered between 72% and 79% every quarter last year, according to its filing.
    ..."

    The article puts a spin on it that 72% to 79% is a big bad scary number, but that is interpreting it out of context.
    An alternative spin: According to the title of this thread, 90% of traders lose. Yet according to the forex broker stats, only around 75% of their clients lose money. It sounds more like the forex brokers must be giving their clients some kind of advantage, given they have reduced the loser rate so much. If 90% lose, then 10% win; with the forex broker, around 25% win -- a 150% improvement !!! (or maybe it's not "lose vs win" but more like "lose vs. win/breakeven/hold account but don't trade").
     
  28. You should check your math. It is ~75% per quarter which is much worse than 75% per year. ~25% make money one quarter. But, due to the overlap, the next quarter some of those 25% will lose money, the quarter after that some of the remaining part of the original 25% lose money, and so forth. By the end of a year, probably over 90% are down money for the entire year even though many had a winning quarter or two.
     
  29. These constant posts from emg are very old, very quickly.

    FACT: Trading is hard.
    FACT: Many get into this thinking it's a get rich quick scheme.
    FACT: Some treat trading as a hobby, while others treat it as a business.
    FACT: Entry costs are incredibly low and just about anyone can 'give it a try'.

    When you can open an account for $500 with a credit card, just about anyone out there can give it a shot and see. Most of those will fail, but were they even trying or just buying a lotto ticket?

    These numbers and stats that emg has fallen in love with (misery loves company?) include all the people opening a mini-fx account with a few hundred bucks taking a shot to the guys that do this full-time as a living. Think there's a difference in mindset when you treat trading as a lotto ticket vs. an income stream? Think the numbers would change if cost of entry was $100k+ (like just about any other business out there)?

    It's a bit pathetic that emg feels the need to say how bad trading is over and over on an anonymous message board but if you are one of those failures, you want to know you are not alone, right emg? And if emg is going to say he's one of the few making it, why the hell would you be spending your time posting the same message over and over?
     
  30. Simple answer


    Because they quit before they became profitable either due to low capital, laziness or just did not have the perseverence because they were looking for instant gratification. 90% of people can't handle losing so that is why they fail at trading. The let one or a few losing trades cloud their mind and alter their emotions which leads them down a path of self destruction. It's not until you learn how to lose small and gracefully, that you can truly become a successful trader.
     
  31. If you know how those institutions are function, you know the answer.

    I talk too much today and I should keep my mouth shut down.

    :D
     
  32. +1
     
  33. While it is possible that brokers or other players will see your successful trades, decipher your trading strategy, and then run your trading system until the edge disappears, it is not necessary to assume that this is what happens. Most of the time if you come up with an edge it's the sort of thing that other smart people could have discovered on their own -- and eventually they do. So most of the time what happens is that several other independent traders discover the same edge on their own and then trade it until it doesn't work anymore.
     
  34. So, basically you've uncovered some big conspiracy of financial institutions to steal strategies from retail traders? If that's how they make their money, why hire high-priced traders when they could just hire people who could find profitable retail trading accounts and then steal the strategies from them?

    What you are saying makes no sense at all in light of what those institutions do day-to-day. Why do they put up the elaborate (and expensive) facade of developing their own strategies if all they need to do is steal them?
     
  35. I feel like its more likely the brokers will to reverse enginneer the strategies of profitable quant firms rather than retail traders. Clearly the quant shops already have something worth stealing
     
  36. I have a difficult time believing even that. How would a broker know if the particular trade wasn't part of a multi-part strategy executed through multiple brokers and if the entire multi-part strategy needed to be executed for the overall position to be profitable, e.g. a pairs trade or some elaborate correlation trade involving dozens of instruments, each of which played a different role within the strategy? Seems like only if the broker knew the entire context of the position would it make sense to reverse engineer anything. Also, brokers are in the business of broking, not stealing their customers' strategies. If a broker wants to be a trader, they would become a trading firm.

    Does intellectual property theft go on? Sure it does, but it's more likely that it occurs between competitors within the same segments of the market, i.e. one bank tries to steal the intellectual property of another bank, than between segments, i.e. a broker stealing a client's intellectual property. If it happened as frequently as you guys imply, then we would see more trading firms vertically integrating to own their brokers, wouldn't we? No one would ever trust a third party to act as their broker.

    Also, if this happened as frequently as the guy who made the initial comment I responded to suggests, wouldn't we have seen a lot of people caught and prosecuted for this? Surely not everyone who tries to do this is successful and gets away with it, right? Where are the guys who tried it and failed?

    There is just so much conspiracy-mongering on this site.
     
  37. I break my strategy into 3 different brokers so that none of them can figure out what I am doing.
    A lot of novince traders only have one single account, mainly due to the limitations of capital.

    It is much harder and complicated to impeach any wrong doing in this industry, too many grey areas.


    Good luck and safe trading :cool:
     
  38. +1 was for logic man's posts.
     
  39. Hello,.. the edge was there for the past 20 years and no one know about it, then suddenly "several more smart people" find the edge ?( only AFTER you find out the edge and use it with profitable for a short while, such a coincidence ??)
     
  40. My quick answer to why 90% (or 75%, a high proportion!) lose.

    Costs are too high in proportion to the profit expected. Consider the crude oil market, CL. I see traders looking for 10-20 pips profit with say a 10 point stop loss. However, they are ignoring the the cost of trading. Commission at at IB is approx half a tick, with spread say 1 tick. So 1.5 ticks divided by 10 is 15%. Alarm bells should be ringing.

    Usually I look for at least 100 ticks profit, but I was guilty of looking for small amounts last week (the ranges was v small in the first few days). Not surprisingly I lost money intraday trading last week.

    Something similar is happening in the forex market as quoted in a post above.
     
  41. You get confused about the edge from small traders and IP from institutions.
     
  42. OK, so let's run through the math on trying to steal an edge from a small trader. Let's say I know that 90% of small traders are going to lose. That means only 10% of the small traders who trade through me have anything worth stealing in the first place (maybe that percentage goes up a bit if I were to steal their strategy and implement it with my own cost of trading structure). On the flip side, I know that the traders I hire to trade my capital have a 50% success rate, once they get through my hiring process, since I only hire 1 out of every 100 people who apply, making sure I get the best people I can.

    So, why would I go through all of the trouble of setting up the infrastructure to monitor and reverse engineer small traders' accounts and strategies, especially since I don't know in advance which 10% of my small traders will be successful, so I have to track every single one of them, when I could spend that money interviewing and hiring my own traders? How in the world would a person who brought that idea up to the CEO be able to convince the CEO to go along? If I were the CEO of a brokerage firm and someone brought this idea to me, I would fire them. Not because I'm some highly-ethical guy, but because it is a stupid idea, with almost no payoff and huge risk.

    As for "grey areas" in the law, when has that ever stopped class action lawyers before? The amount of money they could make successfully prosecuting a broker who did this would absolutely give them an incentive to find cases.
     
  43. Lack of two things - Experience and Patience

    Some will say capital size?? It all works out if "one" moves away from $$$ to %% .
     
  44. You don't mind if I point out the logical and mathematical fallacies of your post?

    Logical: They don't have to figure it out, if you are profitable, they can just back your trades with more money, or simply front run them. As long as you are with them, they are golden.(assuming they give a shit about your trades, what they don't)

    Math: You are supposed to be profitable, so even if you have 3 accounts, all 3 are going to be profitable in the long run. Since you can't select which type of trades go to which broker (winners here, losers there), they will have only 1/3 of your trades, but those trades will still be representative of your strategy, thus if they really want, they still can reverse engineer them.

    So your precaution is freaking WORTHLESS.

    Was it too complicated or should I explain it slower???
     
  45. If you really want to be in the winning ten percent you will seek answers to the following:

    1)Trade Selection- How do you decide what to trade for the day?
    2)Trade Entry: what are the signals that triggers a buy?
    3)Trade Exit: Profit exit and/or signal Sell?

    Most traders are constantly paying tuition for learning how to trade. Once you go through the learning curve and you learn how to lose money the rewards are limitless. Below are other factors for the high failure rate(my opinion):

    lack of strategy: You have to do the same thing everyday.
    Lack of risk management: Maximum lost per trade and per day.
    Over Trading: waiting for the right trade is part of trading.
    Lack of confidence: Virtual trade your strategy, gain confidence.
    Lack of Records: You need a trading log to reflect upon.

    Match you personality with your strategy! Put in the time, review trades(biggest losers). document any mistakes then avoid those mistakes. Do not complicate trading with indicators, trade the chart. The holy grail of trading is yourself.
     
  46. This reply explain why you are neither rich nor CEO
     
  47. I am too dump to understand you-LOL

    Wrong, there are always easy way is to "break" your strategy into different brokers(ideally under different account holders if possible). Let say after applying your super crystal ball, you know that an iron condor with wing will make you ton of money, and you can easily "split" the legs of this strategies into 3 different brokers, and this will appear to each of them as a simple call or put spread, strangle and not your actual strategy -got it?

    Can't believe you have 7000+ posts.
     
  48. Really? Explain how it does that? You are good at making unsubstantiated claims, less good at substantiating them.

    It's all very well and good to insult me personally, but I doubt that anyone but you really thinks that my reply explains why I am not rich nor a CEO. In fact, a normal person reading my reply is probably more likely to think, "Yeah, that makes more sense than what the other guy is saying".

    Anyway, I find the whole "your broker is going to steal your strategy and then it won't work any more" line of thinking pretty stupid. The market is going to do what it is going to do. If my strategy calls for me to go long, even if I'm trading 1,000 ES contracts and my broker trades 1,000 along with me, our 2,000 contracts aren't going to stop the market from doing what it was going to do anyway, whether that means go up and I profit or go down and I lose. Why? Because the market is too big for any one or two players to matter. You've got hundreds of thousands of traders making decisions and you think that you and the strategy your broker stole from you amount to a fart in a hurricane in that context? Get over yourself. Your (and my and almost everyone's) trading is a pimple on the back of an elephant relative to the whole market.
     
  49. I must agree.

    Crazy A
     
  50. It's entertaining to read about the conspiracy theories regarding the so called edges, I can't confirm or deny them as I honestly have no clue as to what really goes on in brokerage firms, as long as they provide good customer service, a good commission system and my capital is fairly safe with them, I honestly don't look beyond that.

    My suggestion is to build your edge around understanding price and market structure, then fact or myth no one can ever take your edge away.

    Once price is understood the next hurdle is discipline and psychology, and that could take a lifetime to master, so obviously I have no time for fairy tales and science fiction, perhaps that's why I don't think about such theories, because I think I got more important things to learn from.

    Crazy A
     


  51. I agree with much of what you said, except for the part where you mention the 1000 lots ES ... and that one or two players don't matter. Obviously excluding super high vol times, like 2008, the market is on 90% of the days, if not more, dominated by 1-2 large players. Most people who try trading the ES don't understand that it is a game of liquidity... and a 1000 lot or 2000 lot buy is exactly what these dominant players are looking for. If it isn't there 1000 lot, then it's a 1000 lot they try to use to churn a profit of a tick or two. they do this all day long. study the dom, study the time and sales, observe the cancel/replaces, and you'll see exactly what i'm talking about. day in, day out. same game, another day. *that* is the game!
     
  52. 90% lose because they trade like emg: 1 point profit targets, adding to losers and no stop loss.
     
  53. How do you know the trade setup for emg ? You are his broker ?
     
  54. I'm her pimp.
     
  55. Because he posts it in the ES Journal, and yes, that's how he trades.

    Now going back to our little 3 different brokers problem, they might not be able to reverse engineer the option trades but they can still frontrun or back them, since again, in the long run those account have to be profitable, if you are profitable...
     

  56. Yes, I'm afraid that such coincidences do happen. They're more likely than that your broker was analyzing your trades, trying to decipher your strategy. Most brokers prefer to make their guaranteed money collecting commissions and leave the trading strategies to the gamblers.
     
  57. Step 1) Stop listening to news and other peoples opinions. And most of all stay away from trader blogs. 90% of these bloggers are losing traders, so if you follow their advice guess what?...

    Step 2) Don't expect to find the Holy Grail in standard garden variety TA indicators that everybody is using. If 90% of traders lose money you want to be in the 10% doing the opposite of the herd.

    Step 3) Find a robust edge (likely via countless hours of backtesting, forward testing, keen powers of observation, and applying logic/game theory)

    Step 4) Use conservative smart money management. Do NOT use excessive leverage. Pay as much if not more attention to risk of loss per trade as you do to potential for gain. Don't try to get rich quick. Approach trading like a business not gambling for thrills. If you want thrills go to Vegas.

    I have personally learnt all these lessons the hard way over the 15 years since I started trading. I figured out what I was good at, what trading style suited my personality, and found my niche. There is no substitute for hard work and experience, but even then some just will never have what it takes to succeed in what is quite possibly the toughest business there is, trading. So, if you can't hack then the alternative is to find a trading system or money manager to do it for you.

    http://pocketaces.collective2.com/
     
  58. Because trading is like other professions in the world - show me the branch in an economy where the % of successful businessmen is higher then 5%!
    Also, there is an important thing: when you become a trader = a boss to yourself = you stay with yourself on your own (not like if you were in the somebody's office, doing work for somebody, telling you what to do) - making your own trading decisions - THIS IS THE MOST DIFFICULT FOR ANY ONE - TO KEEP ITS EMOTIONS, DOUBTS, ETC, TO COMMIT A DECISION RESULTING PROFIT OR LOSS). Yeah, that is hard..)
     
  59. sound like a 3rd party vendor.
     
  60. To answers these questions and i am sure most are wondering why i am posting negative comments:

    To become a successful trader, one must know why more than 90% of small traders lose in a "spectacular fashion." Of course, a person will not have the answer to the question. The answer to the question must comes from those 90% of losers (big losers).

    To win the game, one must know and do extensive study why people are losing and not do extensive study on how to profit. I am pretty sure those 90% losers begin researching on how to profit instead how these losers lose in a spectacular fashion!

    Once your research is done, u can begin to create a successful system. The truth hurt more than 90% of traders lose. If you can't stand the fact more than 90% are losing, you should really give up and move on. 1 out of 100 newbies will survive in this game.

    More negative threads will be coming.
     
  61. Trading is easier and simpler than Pachinko.

    Practice Pachinko and become a great trader.
     
  62. Actually, no, you didn't answer why you are harping on this issue. And you are scaring away the fish, they provide liquidity and money to be taken away.Imagine if only 10% of the current lottery players would buy tickets from now on. The lottery companies would go bankrupt.

    Oh yes, and we already answered your stupid question 200 times so why don't you enjoy your life and 2 ES pts per month instead of being the Saviour???
     
  63. EMG, out of interest, would you classify yourself as one of the 90% losers?
     
  64. would I? hell no!
     
  65. There are a lot of excellent answers in this thread. Use and study those answers.

    You will see many books like soros, warren buffet, and others telling a story how they became rich. You will see many in the google search how a systems and coaching will make u rich.

    However, u will rarely see a book, or any link in google search how and why more than 90% of small traders lose.
     
  66. 90%, I'd say about 97%))
    It's in any business...
     
  67. I see your point -- it's important to include what not to do, along with what to do. For example, most instruction manuals begin with the safety warnings to avoid injuring yourself before the instructions of how to operate the machine. Good point about not starting with how to profit as most sources begin with; one of the best lines I've read is, "this is not baseball, don't keep your eye on the ball as it is pitched to you." But do the answers posted so far come from members of the 10% or the 90%?
     



  68. This is a basic research. For example, let say a medical reseachers are on a project to cure lung cancer.

    Instead researching potential vitamin plants or liquids, they begin to research on when, what, why, where, and how other researchers fail to develop a cure. That will take years of years to stiudy before coming a up a correct cure formula. That is the process of finishing the project.

    Back to trading. I have mention other thread that if a person holds a master or Phd degrees are most likely to become successful traders vs others because they learned in school on how to do a research which is why most hedge funds, banks, prop firms, HFT firms, and brokerages (Goldman sach) hires the best academic grads vs others. They hire the best!

    Hope this help
     
  69. When a person with a Phd degree got hired at Goldman Sach and survived in1 yr making an annual salary $200K and a total bonus $100K, he found his "EDGE." He is a pure trader (real trader) and believe me, he does not do what those 90% losers searching for a holy grail system by spending thousands of dollars on these 3rd party vendors and blew their personal saving account.

    Just too bad!
     
  70. Its a fact! Small traders are doomed to fail. There is no way around it. If you're going to trade you have to accept that you will lose some of the time and big traders can take the hits. Small traders can't. If on top of that you add the illusion that trading is a get rich quick scheme, the small novice traders are going to be too optimistic. The disclaimer is ALL OVER THE PLACE! "Trading is not for everybody. Look at your financial position." Yet every day small potatoes around the world decide that this is their new get rich quick scheme.
     
  71. not bad
     
  72. Most lose because they use orthodox methods and strategies, such as MACDs, moving averages, chart patterns etc.

    Therefore by default, the winners use UNORTHODOX methods and strategies.

    That's not to say you can't make money with things like MACDs, moving averages and chart patters. But use them in UNORTHODOX ways.

    That right there is the secret. And that right there is why most of the books and courses aren't much cop, because they teach orthodox methods and strategies.

    So if you want to make money, I've just given you the secret.........
     
  73. not bad
     
  74. Do you think that a successful trader at Goldman would be a successful trader if he left the firm? I think it's a different ballgame trading the firm's money and trading your own. I imagine the edge you'd get by working for GS would be your access to the research, access to programmers, connectivity with every market, every news source, etc. This is not even considering the fact that as the market maker, GS has visibility into order flow which they probably abuse, analysts who can upgrade/downgrade in whatever way helps the firm's books, supposed chinese wall that probably has countless holes. The firm in fact basically has a license to print money, but I think if the trader leaves the firm he doesn't have nearly the same edge. That's just my opinion but I don't work in the industry.
     
  75. It doesn't matter if trading firm.s money or own money. This is trading. Many begin their trading career in a prop firm where one has to make a deposit.

    Getting in goldman sach is huge but the hardest part is playing the favorite game that goes down to personality. If goldman sach bosses like this person, this person will get promoted and have access to trade more money, meet important people, and get paid handsome.

    Those that left goldman sach do have the edge by learning how gs traders trade. Also, ex goldman sach traders will not have hard time finding another trading jobs at major banks and top notch trading firm.
     
  76. You're rapidly becoming my favourite entertainer on this forum (sorry, bearice!) :D .

    Btw, can you pls answer my question in the other thread, namely what your qualifications are and which "house" were or are you a member of?
     
  77. A majority of people are morons, and think that they know everything because they read a book, or watched some show on television. You need to be humble and work on a model for consistency. Don't swing for the fences, and learn from the market, as a real trader can make money in any environment.
     
  78. not bad
     
  79. That's just not true if you're talking about futures.

    Some of you guys talk as if it's possible for anyone with half a brain to make money. You can be very sharp, and very dedicated, and all the rest, but it's mathematically not possible for everyone to make money....or even most to make money. The whole market by it's very nature means that the majority will lose money.
     
  80. u speak the truth. they just lose!!!
     
  81. then explain how 97% of et posters claim to have 'edges', systems, black boxes, money machines & holy grails?
     
  82. They don't. They are suffering autism and A.D.D
     
  83. So what's the best methodology. I would suggest discretionary trading where you only trade when the conditions are correct. This is very hard to code as it takes years of study and a sixth sense of sorts. I think an appropriate analogy would be like a sailor who's circumnavigated several times and knows when the time is right to shoot the Cape (s)---although I must disclose that is not me.
     
  84. I agree, there will always be someone retaining more knowledge than the next guy.

    TIME is why most lose day trading. Too many start way too soon, no one wants to do the opposite way to learning which is long term trading. Spending a handful of years learning how to make money trading long term first, learning slowly and memorizing Price Action and or TA, learning all you can slowly, having the time to backtest and learn how to code, memorizing "patterns", whether they are price patterns, TA patterns, sequence of looking for setups patterns, Money management patterns. The last thing I want to do is having to "think" what I should do in a few seconds, all the Patterns should be memorized, long term gave me the benefit of years to memorize under stress, cause stress makes one freeze up if you haven't memorized what to do for what sequence of the trade.

    But what is great, nobody listens, the 95% are like Bait, fish in a barrel, cheese in a mouse trap, landmine in middle of a road, the roach motel, flypaper, water for a drowning man, lobster in a bucket, crawfish boiling in a large pot with a lid,.....
     
  85. The 95 % can't predict their own future , let alone the future price of an instrument, hence 95% losers.For the vast majority , knowing where price is going will give them the edge to make money.
     
  86. I don't know if my heart will beat in next five minutes, therefore no one knows where Price is going. Unless you have inside information, and even that isn't a sure thing, this is where faith in your well backtested method comes in. Knowing the stats of the Patterns that were tested. Knowing every single thing that can go wrong and what to do. Another point that seldom comes up, what do you do if you lose your cable feed, what do you do? What do you do if your backup fails at same time too? What you do if electric goes out and home phone needs power, how much battery backup do you have? These are all "What if's" problems that do occur.
     


  87. The gathering of more than 90% ET posters claim to be a successful trader.

    http://www.elitetrader.com/vb/showthread.php?threadid=220849

    Unbelievable losers pretending to be a guru traders lecturing losers. That is a scam
     
  88. This is elite traders , more than 150 % are successful traders, if we ignore those removed the loser indexes because they have all blown their accounts , and no longer trade , just like the stock indices where the enrons are never accounted for.
     
  89. Oooh, I noticed something that is maybe affecting your trading....150% is not possible, only 100% is possible.......maybe a math skills refresher course would help out?

     
  90. everybody lose. end of story.
     
  91. Do you moonlight as a motivational speaker?

     
  92. Small Traders will never make it
     
  93. How about having some information on the 10% winners?
     
  94. Let me try to participate by my 5 cents :)

    Traders (i.e., small speculators) are doomed because the exchange (and the market as a whole) is a specialized organization to ravage them.

    Mammals can not eat predators, at best, only a similar or even weaker. It is the law of the nature, and nobody can arguing against it.

    Sg
     
  95. Small animals can successfully parasitize on top predators in food chain, though, nature knows many precedents of this. :)
     
  96. of course!
    until "top" allows them to do it and after they will be are eaten as usual food :)
     
  97. I have yet to recall the case I saw on Discovery or NatGeo when lion ate a vulture. :D
     
  98. you are absolutely right: the vulture is the most long living role on the market but who have the courage to admit that he dreamed of becoming a partner vulture?
     
  99. Look at the first part of my nickname. :p

    Seriously, I like vulture analogy, it may be not too "cool" but it's relatively safe way to parasitize on lion's dinner. :)
     


  100. http://www.elitetrader.com/vb/showthread.php?s=&threadid=236628&perpage=6&pagenumber=1
     
  101. hey emg, if you can tear yourself away from the stroke inducing breakfast of yours...have you honestly answered if you are one of the losers; or one of the winners?
     
  102. "Good Luck Human" from Nanex
    300ms of SPY trading

    [​IMG]
     


  103. http://www.elitetrader.com/vb/showthread.php?s=&threadid=238230&perpage=6&pagenumber=1




    Higher Education is the key to become a successful trader!



    Higher Education!!!
     
  104. e,

    keep drinking the cool aid as you obviously are in the loser camp.

    ivy grads can't do squat at trading.

    cheers,

    s
     
  105. What's funny about this assertion is that most Finance professors tend to teach the efficient market hypothesis (I know that's what I was taught in my Finance courses), so they will tell you not to become a trader at all.

    That's for the most part, although there is a minority of Finance professors who are active traders because they believe they've found an inefficiency in the market.

    But, basically you've reversed the causation. People who get accepted to top Finance programs are already intelligent enough to become good traders. Since Finance programs don't really teach you trading anyway, except indirectly through teaching you how to do valuations and financial statement analysis, to say that these people become successful traders because of what they study in school is incorrect. What these people learn about trading is either self-taught, since a lot of them were at least moderately active traders before school, or learned on the job. Now, it is true that recruiters for trading positions generally won't talk to you unless you've got certain credentials, but it's not the credentials or really even what you learn in school that makes you a good trader, it's your own skill.

    Basically, what you really want to say is "Being smart enough to be accepted to a top Finance-related program is the key to becoming a successful trader".
     
  106. What types of people are attracted to trading in the first place?

    Thrill seekers?
    Gamblers?
    People who believe in get rich quick schemes?
    Lazy people?
    People who dont think of it as "work"
    People who give up easily?
    People who cant afford it?
    Educated? Uneducated?

    Id love to see a study on the types of people who go for it.....

    Me?
    I am not gonna say i am a 10% just yet, but im getting there...

    16 months of consistancy is good for most, but its gotta be that way the next 16 months, and thereafter. (No, not every month is profitable).
    Ive been in the green 12 out of the past 16 months and just came off a max loss april. May has not gotten off to the greatest start for me either.

    But, Basically, I cant afford to lose money.
    The "book" would probably say i am undercapitalized.
    But this has worked to my benefit i believe.

    I just cannot lose money, the money is not 100% mine to lose. Plus, ive burned paths to other ventures.....so, I have to do this.
    Ive spent too much money and time in it to let things slip.
    Otherwise its odd jobs for me, which has kept me from being too stupid in the market.

    When you get hit on the head a thousand times, i believe everyone would eventually realize it hurts....but many do not have a long haul approach, nor are they able to stay in this for the long haul which is understandable....
    These folks will either burn thru their capital intentionally to "move on" or just say "f... It, im going for it all this time".....
    Thats when u get forced into being a 90% statistic.

    Allow me let me to be clear......Im not getting rich from this just yet,(been trading 2 1/2 yrs) but the future looks bright for me as long as i keep doing what im doing and dont get stupid...

    To those who are aspiring, i will be honest and say that if my wife didnt have a good salary, i would have had to do something else by now. So, i am fortunate compared to many. I try to remind myself that every day.

    So, thats my story.

    I dont really post to this forum, but i find this thread topic interesting.
     
  107. Poor planning is the key to failure.Poor money management follows.Taking high leverage could be a course too since it posses higher risks.Never enter a trade because the price is suddenly rising or falling. Always plan your trades in advance. Know your desired entry point, Take Profit and Stop Loss rates before you trade and wait for the right opportunity to arise.
     
  108. let me alert the media..............:)

    s

    :D
     
  109. Remember, first and foremost, trading is a Business. You have to treat it as such. Our top people, and our family members, work 60 hours per week or more in their business.

    Lazy people, as noted above, will not make it in this or any other business IMO.

    All the best,

    Don
     
  110. The correct answer is that there is no best way. There are a million ways to skin a cat as they say.
     
  111. Trading is gambling and betting on unknown outcome , where no patterns give an edge and same patterns can give opposite outcome.The market is efficient . unless you know something (an edge) which the market does not know , it is a losing game.
     

  112. Even in a losing game there is always a winner. Find out how to make that you.
     
  113. Here is another interesting quote from the article above:

    [​IMG]



    When these crazy investors begin day trading their retirement accounts thinking they are going to get rich quick and thinking they are

    PRO



    their cycle begins by subscribing 3rd party educational service/system vendors


    [​IMG]




    couple years later, their retirement accounts are nearly wipeout. And what they will do next,


    cry cry cry to the gov.
     
  114. "Why do more than 90% of traders lose?"

    This is not fully true. The CBOT published that over 90 percent of new retail accounts opened lose their money in 6 months. I think most retail traders lost money in the beginning. That doesn't mean they learned how to be successful.

    In this thread it appears there are no sources. Before getting into a debate on why 90 percent of people lose, you should clarify if you are even correct with your 90 percent.




    EDIT: I was responding to post # 1, but then I saw the post above me afterwards.

    emg .....you keep saying higher education is key. Higher education has nothing to do with being a trader. Maybe you don't have any higher education and you are upset you are not a profitable trader. I have higher education, but I would still be a trader if I didn't. Also before you spend your entire day (are you unemployed?) making misspelled charts. :D
     
  115. Higher Education is the key to become a successful trader. Higher education with above 3.5 GPA will allow u to work in the house and learn how institutional trade.




    [​IMG]






    [​IMG]





    stay tune for more proofs are coming on poor ghetto inexperience lower educated day trader will lose. They just lose!
     
  116. Revisiting this article (research) again:


    Do Individual Day Traders Make Money?
    Evidence from Taiwan


    http://faculty.haas.berkeley.edu/odean/papers/day traders/day trade 040330.pdf


    [​IMG]


    [​IMG]




    the occasional day traders can be those that are trading their retirement accounts:

    [​IMG]


    they fair far worst than heavy day traders. It is obvious those that day trading their retirement accounts will be wiped out



    More proofs are coming
     
  117. A majority of traders are undercapitalized

    You have to have the capital , skill set & dicipline to trade your plan effectively
     
  118. Does emg have a mental disability? I am going to put him on my ignore list.......
     
  119. Smearing shit on a piece of paper would be a valid counter to the academic arguments. Bring them on. Google images of faeces for the ripostes.

    From the genius nobel prize winners that first brought you LTCM...

    emg is the rain man of Et -over 4000 posts with the same message.
    Mental illness seems a strong possibility.
    Got his mba in a cracker. Bet he can't wait to see what new qualifications Xmas 2012 brings him.
     
  120. I think so :(

     
  121. It's because people can't be simple. They tend to be very smart at things.
     
  122. because 90% of people cannot trade properly.
     
  123. How to trade properly?
     
  124. more like 90% of people are simple. If you observe the average trader. you wil lsee their greed kills them every time. Nature. Can't be beat for the majority eho put no work into what REALLY works in the long run.
    ----------------------------------------------------------------------------------------
    It's because people can't be simple. They tend to be very smart at things.
     
  125. Really?
    -------------------------------------
    How to trade properly?

    ----------------------------------------

    Manage risk, cut losses, let profits run, treat it like a business not a gamble.

    the main reason peope lose = they gamble.
     
  126. Discipline, Focus and Confidence

    “The defining characteristic that separates the consistent winners from everyone else is their mind-set, allowing them to remain disciplined, focused, and above all, confident in all conditions. As a result they are no longer susceptible to the common fears and trading errors that plague everyone else.”

    - Mark Douglas, Trading in the Zone
     
  127. 90% lose because people use to much leverage and people are not mentally built for it. i learned how to deal with leverage but the market is draining. myself as an example i will not buy this market long no matter what. i am 95% cash and waiting for a correction. i put 5% of my account in short fund and only down 2.5% on that 5% position that's nothing. i did it that way to limit my downside but its making me miserable. i was much happier in cash. i was a positive day trader for a long time never made the big money but made money almost every year except my first. the market is always right even when you see only bad. i only see one positive the fed is printing money at 5 year stock market highs that's screaming we are in trouble to me. i want to sell this fund just to get it off my mind and stop watching the markets. the s&p is up 200 points in 3 1/2 months so i know from experience it will take profit very soon and i will probably sell it. the fed scares me to much to go long or short. my point now being is i wrote this thread saying all this on a 5% trade down only 2.5% on the whole position. if we don't get a sell off soon my food will have to stop eating $50 a bag dog food. haha
     
  128. I heard if you add water you get a nice gravy. Just dont drink out of the toilet.

    :)
     
  129. i meant if we don't get a sell off soon my dog will have to stop eating $50 a bag dog food but thank you for the tip

     
  130. Well, hopefully you and the wife can still afford to eat it. :)

     
  131. Proper risk management is counterintuitive and uncomfortable. It is more comfortable to take a profit than a loss, so losses tend to be bigger than profits for most people.

    If you go blindfolded, and randomly buy or sell with 1:1 risk/reward you will be correct 50% of the time, so it's easy for people to mistake luck for having an edge.

    Trading is hard. Spend thousands of hours staring at a chart until you start to recognize repetitive patterns. Learn how to properly manage risk. Be as comfortable(or better off indifferent) with a trade that ends up losing as you are with one that wins.

    This is just me, but I think finding a niche in the market to focus and specialize in is the way to go.

    Also, the people who lose money aren't "stupid", or even bad traders like some people are saying. If the 90% was removed from the market, leaving the supposed 10%, there would still be 90% losers.
     
  132. risk <2% capital per trade

    cut losses

    Let winner run

    Turn into a business managing O.P.M.

    (basically see what the masses do..do the opposite)
     
  133. An interesting post on the causes and characteristics of success and failure in trading from another board.....

    "Most new traders fail and so do most new businesses. While the failure rate for new traders is probably even higher than the failure rate for new businesses, the reasons for these failures are mostly the same.

    The two most common causes of failure among both new businesses and new traders are under capitalization and lack of domain expertise/education/understanding.

    As to capitalization, the minimum requirements for successful futures trading is full margin + maximum negative departure + one standard deviation of expectation.

    That formula assumes a positive expectation. Without that positive expectation - the capital requirement for a losing trader or business is infinite.

    Expectation is one of the prime determinants of capitalization and domain expertise/education/understanding is a prime determinant of expectation.

    Consider the requirements in time, money and self to become a medical doctor and then note that the most successful traders make far, far more money than the most successful doctors.

    As capital requirements are inversely proportional to expectation which means that the very best require the least capital, one distinction between winning and losing players is defined by losers trading highly leverage forex and ES traders with only a few thousand dollars per contract - neither has more than a pennies on the dollar chance of success.

    Considering domain expertise/education and understanding, imagine in your mind a complete description of those few that make all this money. What does their shop look like, how is it equipped, what is the speed and flow of their data, what is the collective education, experience and resource of the people in those shops that design the systems and methods that produce all of those billions of dollars.

    Now imagine in your mind the resource, education and experience of the average individual trader - make the comparison and you have your answer."

    Jack
     
  134. The most common reason for failure is that the system is built to cause failures. Limit trading to only the top 2% and guess what - 90% of them will fail.

    Put another way - most lose because it is the only way for some to end up winning.
     
  135. Let winners run and cut losers short. Is it possible to do worse cutting losers TOO quickly? I've also heard let a trade breath? Not sure what that means either. It's all so confusing...
     
  136. Finally, an intelligent post.

    Trading is a COMPETITIVE game...
    Where you have roughly 2% winners and 98% losers...
    If you account for the millions that have lost and quit.

    Also, the Securities Industry actively promotes the falsehood...
    That any idiot can make money trading or "investing"...
    By heavy advertising, giving away useless charting software, etc.
    Frankly, ET promotes the same ridiculous falsehood.

    If you do not have a COMPETITIVE ADVANTAGE that puts you in Top 2%...
    You are totally screwed no matter how much you lie to yourself.
     
  137. this is why people say 'i look at institutional levels'. of course, this is a complete joke. they have no idea, and so they make this stuff up to tell other people. gives them "credibility" but it is useless. remember, most wall street firms make up products that will never have any TA associated with it, and they make tons. HFT doesn't care about TA. so these things affect all markets (due to hedging) and a trader can't know exactly why size is coming in, and when.

    most lose because they think they can out think the people with almost unlimited pockets, time, and are simply smarter individuals. and doing this by books or the internet. so go buy a basketball and practice 10,000 hours and get the best coaching in the world...you will not make the NBA, that is for sure.

    look in the mirror and ask yourself, how long have you been doing this and are you rich enough to not have to sell anything or worry about money like a normal person? good lawyers and doctors make 500,000 a year, and so after all your time looking at charts i hope you are easily making 100k. easily. if not, it's not working. for whatever reason, it's not.
     
  138. You need to be able to ride your profits as much as you can .People can not handle making a lot of money during a short period of time , but they can easily loose it all in one day .
     
  139. I think that most of traders lose money because of lack of experience and practice. Nowadays, there are very good stock trading platforms where you can test and improve your trading skills and apply the knowledge you acquire to the real markets, and at the same time win money! What do you think? Do you some stock trading games?
     



  140. Excellent answer. Educational/system vendors do promote falsehood. The real trading education is



    Higher Education


    Higher Education is the key to become a successful trader.



    [​IMG]


    upon graduating from a university, u will be able to work in a legit trading firm. After 5 years minimum working in a trading firm or 10 years minimum working in many legit trading firms, u should be a successful trader and have enough capital (minimum $500,000. Recommend $5 million) to open a retail account or u may choose to managed accounts and open a hedge fund firm.


    Those that chose not to get a higher education degrees will end up losing


    [​IMG]



    More than 90% of small traders lose. They just lose!
     
  141. emg you seem to suffer from mental retardation. I hope you get better. You should not attempt trading. No matter what others post (including my thought out three sentence plus post before) you just keep typing. I guess you are a failed trader and blame it on quitting community college.
     
  142. Any advice for stock trading platforms where you test your skills and understand how real markets work?
     
  143. That's a little harsh on retards isn't it?
     
  144. Wow...I didn't know that most small traders were from the ghettos. I thought folks from the ghettos spent their money on women, music, guns, drugs, and beer parties.

    I didn't realize they were opening trading accounts too. Geesh, maybe eSignal and Interactive Brokers need to put up some billboards in the ghettos to get more clients. :D
     
  145. Almost everyone that works knows how much they will take home at end of day
    there's a lot of peace of mind with that
    . As a waiter have no idea what that will be...but I do know i'll be net positive.can't lose money at work.
    that's stresssful too

    trading for $ is uncertain because i can lose money while working, Or i a may make a little $ but see how much i might have made.

    the uncertainty of result is why it's so hard.

    Could be down 4 days of week make it all back on the 5th and more..i don't think i could handle that

    i need to see something anything every day

    you ask why trading is so hard?
     
  146. I think the main reason why investors lose money is because they are lazy. :p
     
  147. i can imagine that trading is easier if you don't really need the $?

    do you need the $?
     
  148. I need money. Everybody wants more money.

    I like this quote from Jesse Livermore.

    Livermore: There is nothing like losing all you have in the world for teaching you what not to do. And When You know what's not to in order not to lose money, you begin to learn what to do in order to win. Did you get that? You begin to learn!
     
  149. It is more important not to lose. Because there are many opportunities to make money in the market. And when there are opportunities, we can not be afraid. This is what I think.

    But it is not easy. When we think it will be easy, we start to lose money.
     
  150. "Do or do not..there is no try"
    -Yoda

    How about that one?
    :D
     
  151. I like it. I think the same.


     


  152. The question is, how are u going to win this game SMALL TRADERS?

    how?

    small traders are LOWER educated and poor (ghettos). Moreover, some of u are trading your RETIREMENT funds (STUPID).


    [​IMG]

    http://www.sec.gov/investor/pubs/daytips.htm




     
  153. The reason why more than 90% traders lose is because trading is simple and yet complex at the same time--just like a card game.

    Any newbie traders enter into the market could taste temporary victory by having luck on their side. I know some traders who don’t use stop loss at all. They risk everything on every single trade until they blow up. Some of the less lucky traders discover the average down strategy to bring luck their way, but in the end, they found out that they were just delaying their bad luck, and have blew up their accounts.

    Some of the more senior newbie trader became “expert” in technical analysis. They use combination of MA, Volume, RSI, Bollinger Bands to make their trade, but yet they still don’t know why it works or why it doesn’t. What’s worst is that some get into the Technical Analysis versus Fundamental Analysis mentality, and decided to dismiss everything related to fundamental, and use price alone.

    Once they blow up their accounts, they then realized that trading is not for them.

    Some of them may further their research and look more deeply into books like Reminiscences of a Stock Operator, and Market Wizards, but at this stage, they are still too new to trading to get anything meaningful from these books.

    They started to get more serious about trading by “treating it like a business”, but little did they know that the word, business, is referred to the gambling business. They are still too early at this stage to believe trading is gambling, and would probably argue with anyone all day to prove trading is not gambling.

    They learn about risk control and started using stop loss. They now focus on money management which keep them in the game longer, but eventually they blow up their accounts, and realized that trading is not for them. Who would blame them? They have dedicated so much time and efforts into trading, and yet all they received in return are an onslaught of punishments. The normal peoples will get jobs and move on with their lives. Some of them became “trading guru” and started to teach others “how to trade”.

    The remaining masochistic traders learn more about stop loss. They read books like Trading in the Zone and The Secrets of Professional Turf Betting. They dig up their dust-covered math textbook on probability from high school. They now realized that trading is gambling. They try out this new acquired knowledge. Some blow up again and some decided that it will take too long to reach their financial goals.

    The masochistic traders who continue this journey have graduated to the next level of Hell on Earth. They have acquired a solid understanding of strategies like average down and building pyramid, and they know the “why” of various trading concepts. They looked back at their mistakes and realize how the vig and ATR may be the major contributors to their past failures. They are at this point in their mid to late 30s and are living with their parents.

    Some started to incorporate statistical concept like correlation into their trade to diversify their risk, but yet they still trying to figure out the appropriate percentage of capital to risk per trade or per hypothesis. They don’t have much capital anymore, but they are still trying.

    Some realized that the edge is really in the bulls and bears.

    to be continue……….. (stay tuned)
     
  154. most of people lose money only because of the high volumes...imagine your deposit is 10000 dollars and you buy 3 lots of eurusd...isn't it risky? )))) most of traders work in the same way and lose
     
  155. PA, what is vig? As in the vig and ATR?
     
  156. There is some solid effort and responses here, however about all of you are just wrong.

    Trading is a slang term for risk on-risk off services. As a trader, you buy, hold, and sell risk. That is all it is.

    All people need risk on- risk off.






    I'm questioning how "elite" some elite traders over here are. :) (respond if you feel the same way!!!!!!)
     
  157. It's anything you paid to the broker.
     
  158. Do 9 out of 10 traders still lose?
     
  159. Why do more than 90% of traders lose?

    5% don't study at all.
    15% study what doesn't work.
    40% don't study enough / in detail.
    20% approach trading incorrectly.
    10% don't have sufficient analytical ability.
     
  160. You necromanced this stupid thread just to ask this?

    Like some clueless newbie?

    Man, you are losing it.
     
  161. And we both wrote something on it, ROFLMAO
     
  162. All traders lose

    The consistency successful ones..., lose more often..., while losing a considerably lessor amount per loss

    RN
     
  163. Lose more often?
     
  164. I think the spirit of the thread is, at the end of the year, if they make it that long, do they have more money than they started with, or less. Including datafeeds, books, software fees, seminars, internet connection, computer expenses, commissions, etc.

    And, is this enough to make a living on without external support. For the sake of argument, let's call a "living" >$25k after expenses.
     
  165. I can't tell you Why.
    But I can tell you How.
    And it's all that matters ...
     
  166. What if he makes 22,5K after expenses ?
    Consistently ? Or 25K in average ?

    Arbitrary value for useless variable is ... BS.

    You can be a successful trader but not able to live from your art.
    However if successful you are. One day will come when you'll be able to.
    The only spreadsheet that matters is the P&L. Not the bills or whatever else.
     
  167. If you made it on average, it would not be a living since some months you won't be able to pay your bills, and by the definition I gave, he would need external support. And if he got not even that unlucky, he might not even make any money say the first three months and blow out because most retail traders are horribly undercapitilized.

    The reason I said $25k after expenses is because it is a reasonable number that I have seen many many retail traders make in the past that had humble trading accounts of say $100k. At IB that gives you portfolio margin and you might be able to make chicken stew. And if you live frugal, you can support yourself just about anywhere in the world.

    The point is not only are they not making anywhere near $25k a year, most of them go negative year after year after expenses. So $25k or $25,000,000 is a mute point.
     
  168. You're Right.
    But I am in favor to drop your second condtition.
    Because a successful trader isn't necessarily earning more than 25K.
    Success in trading is sized by the growth of wealth over time.
    If someone turns 100$ into 1000$ in a year, he's good.
    Or Probably Good if not lucky. But earned < 25K.
     
  169. Turning $100 into $1000 is a tremendous result if done consistently.

    Although, I would like to see (obviously):

    • The account size that it is done on (is it really $100?)
    • The MAE and MFE
    • How often does he blow out the $100, then subtract from future gains.
    This person is a hobbyist anyway.
     
  170. MAE ? MFE ?
    So no one will ever be able to fool you.
     
  171. more than that
     
  172. Traders lose due to reckless risk management. That is all.
     
  173. It's not only about Risk Management.
    Play Russian Roulette with a good Risk Management.
    Or even with a good Risk Management, you could still loose money.
     
  174. Actually, that's all it is.
     
  175. How do you manage risk ?
     
  176. To focus on R:R only is bullshit.
    Everyone wants an infinite ratio.
    But it doesn't fit your underlyings.
    Plus an infinite one with P(G)=0 ...

    So if you want to max it out (Ratio)
    You've got to understand your underlying.
    At least you need some clue to choose among options.

    You want to build a "system" that tells you where to invest.
    A system that will give your strategy the appropriate conditions.
    Max Ratio in a shoppy market and it's Gonna be a bloody carnage.

    Risk management only is muscles without brain.
    Stay blind if it works for you. I liked your post.
    But I am one step further. I am a free man.
    Free to choose so I honor the best I can.
    Don't need to be a genius to choose.

    But I want to invest where the probability is higher.
    Among the probabilities of size and occurance of a move.
     
  177. Buy lottery ticket if there's nothing more than Risk Management.
    Looks like you have infinite wealth for not having to choose.
     
  178. This is false. Provably false.

    Here's what you say in your main thread:

    "In order to be successful in trading, it doesn't matter whether you are right or wrong when placing a trade. What does matter is that when you are wrong, you lose a little bit and when you are right, you maximize your gains."

    Here's the proof that the above paragraph is incorrect :

    If you are wrong on every trade entry, it doesn't matter how much you cut your losses. You will be a loser overall.

    On the other hand, if you are right on every trade entry, you have found a holy grail. So it doesn't matter whether you let your winnings run except for the final profit. Regardless of how much gain, you will be a winner overall.

    Clearly how you enter your trades (rightly or wrongly) is a factor in whether you are ultimately successful.

    In other words, trading success is not just about risk management (Cutting Losses Short and Letting Winners Run).

    Please get over your obsession with risk management. Risk Management is necessary but not sufficient for successful trading.
     
  179. Don't most pros (in any profession) start as hobbyist/novices?
     
  180. "Novices" and "hobbyists" aren't necessarily the same thing. For example, Renaissance Technologies is the most successful hedge fund of the past 30 years, and they hire highly-accomplished PhD researchers who are utter novices when it comes to trading. I'm probably not going out on a limb here by claiming that a Renaissance Technologies novice is probably going to be at a significant advantage over a DIY trading hobbyist/novice.

    On the other hand, it's certainly possible to start as a "hobbyist" (or just barely more than a hobbyist) and later earn an exceptionally good living from trading. I don't think it has a high success rate (especially compared with those who start out in "professional" environments such as bulge bracket banks or quality hedge funds), but it certainly does occur.

    In any event, a hobbyist or novice certainly shouldn't count on succeeding in trading, and if married, certainly shouldn't promise any level of success in trading to a spouse!
     
  181. A professional trader at a financial institution all begin as a novice but the word novice is typically not used when talking about a professional trader that's been newly hired by a financial institution. Also, professional traders are never refer to as hobbyist because its a salary position. In contrast, the word hobbyist is associated with someone that already has another job or retired from another job and trading is just something they do on the side for fun, academic (keep the mind fresh) regardless if profitable or not profitable.

    A retail trader as are most members at Elitetrader.com are typically not professional traders unless they are working for someone and licensed or they are private traders (phrase used in Europe or Asia) and they use to be a professional trader (e.g. institutional trader or hedge fund manager...all of which are licensed). Paperwork by brokers identify retail traders as "individual trader".

    A lot of retail traders loosely use the term "pro trader" for a retail trader that's profitable and has no other source of income or someone that manages their trading in a business like model.

    Funny, if you actually meet a professional trader that works for a financial institution...they almost never refer to themselves as a "pro trader" or "professional trader". Instead, they use their actual job title along with mentioning the name of the firm they work at.

    Retail traders that view their trading as a "source of income" instead of as a hobby and they file their taxes as someone that's "self employed"...trading for them is a full-time gig and the ones that are profitable and doing such beyond just a few years have most likely managed their trading in a business like model...only a small percentage of retail traders qualifies as such.

    I believe when this forum was first started by Baron (owner)...most came here as retail traders that viewed their trading as "self employed". As the years went by and as global economies changed for the worst...most come here already with another job or possibly unemployed and actively looking for a job with aspirations of trading for a living or as a 2nd source of income.

    Forum also has retirees and wealthy folks. Yet, the wealthy folks did not earn their wealth from trading and they don't need a job. There's also the university student group of traders here. There posting habits very obvious especially during the summers in comparison to other months of the year. This level of members I now believe is where the growth is at Elitetrader mainly do to the growth of Universities in the world with state of the art trading rooms. In addition, I think there's a growth of members that are retirees considering people are living longer with some money saved up and realizing they don't have enough money for retirement.

    Note: Growth here in students and retirees is just speculation on my part but its gotten easier to identify the posting habits of students at this forum (dramatic increase in their summer posting habits).

    This place has such a diverse group of traders, its probably why there's so much arguing, debates because everybody's background is different while most are losing. Yet, I believe we have more profitable traders than the statistics suggest but the income level is so small that they certainly are not trading for a living and because of such...they get viewed as hobbyists.

    Why do more than 90% of traders lose?

    On the surface there are many easy answers like poor trading plan, poor discipline, not having an edge, poor risk management and so on. Yet, I think its much more deeper than that. The human brain makes poor decisions involving money...behavior finance.
     
  182. Lots more involved than just risk management. Like fear of losing, fear of missing out, fear of being wrong, not having a well thought out plan, not having the discipline to follow your plan. Lot of things but certainly not just risk management. .
     
  183. I guess my point is that there is no relevance in labeling one as a hobbyist, or pro, or whatever. What I would think is relevant is how well one can trade.

    A so-called successful hobbyist may be 'early' in their hobby--having just discovered/created their holy grail; and might actually be growing wealth at a rate sufficient enough to soon be able to change their 'label' to pro, with respect to US tax code--should they choose to, they could actually also be a 'better' trader than a/a-few/many/most pros with respect to non-institutional trading/algo-coding abilities.

    tl;dr

    What is in a name?
     
  184. Well, words do matter.

    And unfortunately it is common to conflate "professional" with "expert" and "amateur" (aka hobbyist) with "novice".

    The truth is there are novice professionals, expert professionals, novice amateurs and expert amateurs.

    Pros get paid, amateurs don't. Got nothing to do with the level of expertise.
     
  185. Right. That clearly expresses my point.
     
  186. That's where a lot of rookies go wrong trying to understand prudent risk management. It's more than risk reward.
     
  187. No one is wrong on every trade.
     
  188. Prudent Risk Management is not only necessary, it is the crux of successful trading. It is the only thing that matters.
     
  189. Incorrect
     
  190. More than 90% of traders lose due to reckless risk management--nothing more.
     
  191. Not the point. Stop cutting out crucial parts of the proof and try to understand it.
     
  192. In order to be successful in trading, it doesn't matter whether you are right or wrong when placing a trade. What does matter is that when you are wrong, you lose a little bit and when you are right, you maximize your gains. Why do most traders (especially day traders) lose? They don't have prudent risk management skills. End of Story. Now, a lot of folks may say, "but the newbie trader doesn't know how to pick entries and exits". While that may be true for some, the real issue is that when they are wrong, they stay married to a position, or add to a position in order to not admit failure. Your best bet would be to learn to embrace failure, learn to shrug it off, learn to admit when wrong and learn to stay in trades that are winners. You see, Prudent Risk Management is not just about placing an initial stop---it's also about managing a winning trade. Remove the focus from high winning percentage. Retrain focus on losing a little and making a lot.
     
  193. Your refusal to completely and unequivocally define "Prudent Risk Management" (PRM) is very telling. So far you've made it mean whatever the hell you want it to mean. That is the action of a crank or a troll.

    Will you at long last tell us exactly what you mean by PRM? If yes, thank you. If not, why not?

    A full definition of PRM will clear up any misunderstandings and allow us all to progress from here.
     
  194. Traders lose due to reckless risk management. There is no other reason. Period.
     
  195. Is this your response to my last post?
     
  196. says you, so you're saying someone without an edge or plan or discipline can make money with just good risk management I say your're completely wrong. Takes a an edge, discipline, self confidence, self trust AND risk management
     
  197. The Edge IS Prudent Risk Management.
     
  198. I'm using Prudent Risk Management in my local casino, on roulette. I only play on the number 21. I employ PRM because i only put £10 on a number, and when i win, i make a lot, £350!

    Can't understand it though, I'm still down money even though i won a few times in the last 100 spins. Thought i had the EDGE cause i was using PRM...oh well.
     
  199. You must have an edge that over time gives a better chance of one thing happening over another. Each individual trade doesn't matter it's an edge over time that has a positive expectancy. Let's see Mark Douglas or you
     
  200. The only good risk management strategy in Roulette is not to play at all. Your example is not appropriate.
     
  201. Correct. --and that edge is Prudent Risk Management.
     
  202. Most folks will never be able to grasp the idea that what we can control is risk and that management thereof is the only true edge in trading. Anyone can find entries. It's the management of those entries that separates the winners from the losers.
     
  203. I agree with controlling risk but you can also control risk with better entries and exits
     
  204. To be fair, you can't be sure you're using PRM because Buy1Sell2 refuses to adequately define it.
     
  205. Controlling risk is all we have. Better entries and exits can be, and are, found by anyone. There is no edge there. Most traders will pull profit before targets or too early if trend trading, remove or not use stops, scale in and scale out, use breakeven stops, set stops inside the noise, risk more than 2% TLNW etc etc etc. ----Picking entries and exits is easy. Utilizing Prudent Risk Management is the real, and only , edge in trading.
     
  206. Buy1Sell2 refuses to unequivocally define "Prudent Risk Management."

    Clearly Buy1Sell2 is either a crank or a troll.

    Cranks and trolls are complete wastes of time.

    Buy1Sell2 is now on my ignore list.

    Done with this incessant nonsense.
     
  207. You control your risk by having better entries and exits and having a method that has a positive expectancy. By managing yourself. Period
     
  208. This is not the Edge.
     
  209. I applaud you expressing / backing your views in your posts here..., but it occurred during premo trading time



    I am sooooo going to jump your ass if it affected your prime directive today..., by even a smidgen

    Make me eat these words Slugar - please - I'll gladly do so

    ==================

    btw - this falls under managing risk / self


    RN
     
  210. It also happened during a very choppy time in the nq. I was sitting firmly on my hands and waiting for a good set up
     
  211. Eating my words here Boss..., every one of em

    Please pass the hot sauce

    :)

    RN
     
  212. The vast majority lose money over time in this business due to:
    • Having no EDGE.
    • Not having the necessary understanding of the market they are trading, its participants and their various roles which are needed to find an EDGE.
    • Poor Mindset & Discipline - unable to to design a plan and stick to it acting in a consistent manner.
    • Undercapitalisation - causing them to rush and make poor decisions under more pressure than someone who is well capitalised.
    GL

    edit - there are more reasons but I think these are the main ones. for example being mentally retarded doesn't help, you see a lot of logic/cognitive fails on public internet forums and those people will obv donate.
     
  213. Which gives you more profit. I can pump out decent profit with mediocre entries, but the drawdown relative to profit potential is very unattractive. Drawdown is your enemy. You absolutely MUST have a directional biased edge to minimize this. No other way around it. The best speculators watch their money like a sacred cow. It's easy to say "just let your profits run", but actually really hard to do while your watching your drawdown run at the same time. Not a good confidence builder.

    Yes, but very few can find great entries. The market plays this little dynamic game called "catch me if you can". Have you not figured this out yet?

    Again, keep fooling yourself

    This is all textbook bullshit. Great traders can handicap the noise and expansion levels before it even unfolds. Do you seriously trade? What world are you living in? Why the fuck would I want to risk 2% of my TLNW per trade? This is crazy talk
     
  214. This is the only valid point in your posting. This is part of Prudent Risk Management which is the only edge in successful trading.
     
  215. This portion of your posting was well thought out and accurate.
     
  216. I certainly lose more often, but being I have manual trading, automated trading and a staff that lose too. More trades you eventually put on, more in numbers you lose, but the bottom line keeps going up, more taxes I pay, happier I am, sort of, so long as bottom line goes up. I have learned in life, you either stand still and life just hits you hard OR you find ways of keep going, whether buying each year more rental houses, yeah you become a good repairman and you have to have a Rental Plan with all the answers, you put up with a great deal of crap and you can figure out who lying to you and who is not, you take some dumb idea and make small business out of it, before you know it you adding employees, you keep moving. I started trading as a hobby long ago, I love back testing and eventually it grew. There been a few times where trading has been my only income, like in past eight years, but before I got ill, always had some job going where I worked for others even though I traded, had real estate and started businesses, I never saw at any time they were work, always something on the side that I loved to do. I suppose for most people they see being away from home as work to them even though they started those entities, I just don't cause I know I could sell it all away and not do it.

    Five years ago I changed my thinking, I don't do anything else other than risk management when I trade. BUT much comes before risk management to think this way. People will use term of risking 2% and have so many trades before they can blow out account, BUT, after each loss, the 2% becomes smaller of what is left in the account, that 2% is not the same on each. Newbie thinking is often on entries of systems and that is true for scalping, but not true if you going for more than 8 ticks. Entries are like 5% of Trading Plan and Risk money management is 95%-what to do before entering and after entering. Long term trading I risk like 1% and often times lower-reward I seek at first target is 6-12 times what I risk on each trade and remainder can be anywhere from 55 to 115 times the risk over the course of 2-5 plus years on the initial trade. I now do add-on trades with first targets and second half all different, plus doing option spreads. And why I am spending much more time shifting energies to long term and option trading. In day trading I risk more than what I make each and every day, like 40 trades in a day risking $150 trying to make $100-$150, Goal is 6-7 points each in ES and weekly Goal of 30-35 pts-some days I trade for full hour if day before I didn't make my Goal, 50 ticks in Crude Oil and Gold, and walk away. But some days I am risking all that to end up with 1 tick per trade, good days if make it fast and walk away in five minutes. One huge game of me against myself.

    We all have our own challenges in getting what we want or need in life, I think in term I have to keep moving. Be smart enough to be open minded, and be dumb enough to test everything out before risking money. I came to the market a smart guy, the markets taught me how dumb thinking that was.

    Life is risk, people should be good at risk, and yet few are....

    Jobless Claims in morning...I love reports.
     
  217. What a great post by Handle123. A lot of great traders left ET over the years but we're lucky to still have Handle123. If that sounds like I'm blowing smoke up his ass...it's because I am!

    Thanks for the insights buddy and hope the recovery is going well for you.
     
  218. Imo's.

    Edges can originate from entries as well as exits. Iow, I disagree that PRM is the only thing.

    However, exits are more important than entries. At most any given entry, there usually is a profitable exit somewhere...the variable is when.

    But with exits, that's it. Game over. Profit or loss is decided. Schrodinger's Cat has been spied.

    In still other words, with a random entry, there is a greater chance of making a profit than with a random exits.

    You ultimately and finally control your risk by when your are willing to exit if the trade goes wrong...regardless of entry.

    Imagine a system such that, given any random entry (short or long), it simply moves, or doesn't, a stop-loss point in accordance to the movement of the underlying. The looseness of the stop-loss is determined by algos. Once the stop is hit, the system reverses position and repeats the process in reverse.

    This system can be said to be based solely on risk management. An algorithmic SAR.

    PS. Years ago, I read of a trader that could, and reportedly did (for a demonstration), successfully trade even with only random entry points.
     
  219. You sir are a prize tool. A shining example of a logic fail cluster fcuk that shouldn't be allowed a keyboard. troll denied.
     
  220. And that's not too surprising when you think about it. If that trader also knows where price is likely to move, he can immediately ditch the "bad" entries based on his assessment of the technical situation, whilst holding the correctly aligned positions until the predicted move plays out.

    Still, if you asked this trader whether random entries are his preferred means of entry...he would rightly concede that it's sub-optimal, since with knowledge of where price is heading, he could alternatively have taken the opposite position to the one taken for those bad random entries.

    Only if you blindfolded the trader prior to the random entry and he was not allowed to view the chart to the left of the entry price, would it be a fair test of his exit skills! Presumably, as new bars of data are received, over time he could begin to formulate a fresh interpretation of the market context, and then base his exit according to his reading of the emerging technical situation.
     
  221. Your post harkens me back to my youth - we had geese - I recall how they like to squawk..., shit all over the place - and thump their chest in an effort to bluff

    I post two innocuous sentences - the geese come flocking

    ===============

    Just goes to show - takes one to know another.., and the geese (LOL)


    Trade well my brother - and as we both fully appreciate - to hell with the results

    :) ;)

    RN
     
  222. So, we need to get the flock out of here and start trading....LOL
     
  223.  
  224. We can not say any fix reason is their in loss of most of the traders , Some factors take part in their failure as lack of knowledge, less trading experience or practice , weak in market analysis and emotional trading attempts, If some one is able to overcome these problems he can certainly improve trading results.
     
  225. Thanks. Interesting connection between NP-completeness and market efficiency.
     
  226. Buy1Sell2............PLEASE EXPLAIN WHAT HAPPENED TO YOUR "lose a little bit, but max your gain" THEORY IN THIS EXAMPLE! APPARENTLY HE FOLLOWED HIS RULES ALL THE WAY UP AND ALL THE WAY DOWN!
    http://www.elitetrader.com/et/index...months-will-i-ever-be-good-at-trading.299904/
     
  227. I considered that as well, even though we don't know for sure? I guess that ends that!
     
  228. Multiply 1.15 million by .98, then again by .98, then again by .98 and then again by .98 etc etc etc. Tell me how long it would (or how many trades) it would take to get down to 150,000, You'll see that the thread is a wind-up
     
  229. Because they overpay the price !
    Bet dear on a broken horse.
    It's good to dream, but ..
    Not as big as hiddin'
    R.E.A.L.I.T.Y
     
  230. Fxcm user here, not seeing any slippage.
     
  231. About 101 times?
     
  232. and that would be in a row? You can quickly see that the thread is a Classic Wind-Up
     
  233. so 10% of traders are winners? It's hard to believe. Since I see in forums, many people make profit and they even make monthly income. of course now i'm a loser, but I'm improving everyday and I have faith in forex
     
  234. Something to understand...once a trader is profitable for a decent period of time and have expressed this "accomplishment" to the world...then their edge fades away and they can't adapt...must save face to preserve respect and credibility from their peers by "faking" their continued success. It's just human nature to want that "respect" to never die. How could they show themselves on any forum as a failure...especially after all the advice they've given to newbies and all the arguments they've stubbornly fought that their way is the "BEST WAY"! Human nature does't want to go through that humility. Yes, there have been some exceptions, and I express great respect for those who've been honest and truthful about their situation. My point is...many traders go through this process...so there is always a "GROUP" of traders who are doing well (of course, you will hear them loud and clear declaring their winnings)...and then a decent percentage of those traders will lose their edge and the "faking" will begin...this will repeat and repeat. I believe this is why it appears there's much more than 10% winners. SO, DON'T BELIEVE THE HYPE!!!!!!!!!!!!
     
  235. Thanks Leverage !
    2 Ticks difference btw Bought & Sold.
    But that's cool you have not been wiped out.
    You've just traded about 200 contracts on the ES.
    According to the commissions. No newbie should do that.
    So you're either Demoing, either new and good to die.
    Or an experimented scalper. Or someone that,
    Were close to lose his shirt averaging down.

    * Actually it's written down
    --->>> 220 Contracts
     
  236. haha, I trade 20 share lots, the two ticks are simply total average from the greater sum. Ive been doing this for long time, its not like I started today. each trade would be 40 lots/ really just 5 trades. My target was /is 5k a day. So I was short a few dollars
     
  237. In your opinion...why do more than 90% of traders lose? Do you agree with this estimation?
     

  238. 90 % is to low, its way higher. I would say maybe 3 out of 500 make it. main reason is people run out of money before they learn how to trade. No one, and I repeat no one should use real money for at least first year or maybe longer. No one listens though. I didn't and for the first two years I got beat up. Then I found an instructor which I held onto for 5 years. Problem is multi faceted though why traders fail, but main concept is they lose their money. I have a student now that I just told to stop because he doesn't know what he is doing.
     
  239. Much agree! Adequate amount of capital is necessary to get through the "LEARNING CURVE"!
     
  240. The truth is that we're talking about 10K hours screen time.
    But I'd say that among these 10K, spend 50% of them on Excel.
    Then 40% on YouPorn, 5% on youtube, and 5% trading your setups.

    New traders just don't know what to do. So they behave like a crowd.
    Meaning that they have no plan. First one needs to suffer.
    Then realize that one needs a plan to survive.
    Because all that money drive us crazy.
    Newbie lose then lose lot harder,
    While trying to make it back.

    A plan is not made on the battlefield,
    It's made at the very back shop.
    Cold, crunching numbers,
    Logically & Statistically.

    It's good to watch the tape,
    But you need a bigger picture.
    Otherwise the market will beat you.
    Newbie jump in with book in their hands.
    But they don't know that they are told craps.
    They take it for bibles or textbooks,
    They never looked for refutations.
    They say Okay. And breath it.
    One need to test. test. test.
    Test ideas, the market.
    Not answer. But test.

    None have the answer.
    But one can ask the good questions,
    And understand what the tape is yelling.
    And know if he can trust it or not.
    Because the tape is king,
    But not your friend.
     
  241. I agree. You need some kind of framework to watch the tape within
     
  242. Actually, a framework can give you better odds.
    By framework I mean ... Conditionals that shape the distribution.
    If you have great conditionals then you can trade less recklessly.
    But always listen to the tape to know what she thinks about that.
    For exemple it's good to fade the next day after three down.
    Statistically, on the ES. But the Market may keep bearish.
    Or the reaction of the market after a bullish news ...
    Well ... I think a framework can add consistency.
    But framework is a really loose term.
    It can be technically speaking...
    But we need conditionals.
    IMHO

    That's it.
    A framework tells you,
    If it's wiser to buy or to sell.
     
  243. Dry up liquidity? All of the retail traders combined probably are worth 30 seconds of SPY Bids
     
  244. That's true. If you glance over a COT report,
    Small accounts represent ... A tiny portion of the liquidity.
     
  245. nearly all retail traders lose their money eventually. More importantly, the big firms are market making and taking all of the funds in their back pocket (b-book).

    apparently theres this trader in melbourne who has an algorithm which accesses all the big brokers b-book databases and takes the reverse position. I am pretty hesitant in believing it though. They're called Jackson capital http://www.jacksoncapital.com.au/

    If true, it seems the little guy is pegging one back!
     
  246. they said they've traded for years (some people say 2years or more) and I just thought after such time they might improve and moving forward, they know where the chart goes?
    After years of trading, might everyone come to this level?
     
  247. After years of experience, yes, most people do improve their trading knowledge...but not necessarily their trading account/profits. It takes more than what direction the chart goes...understanding what drives price action and when conditions change in the market will evade the majority of traders...even after years of effort. Adequate capital is necessary for this learning curve and not everyone will be prepared for this...if they do trade for years (like those you speak of), the LAW OF NUMBERS will win out as the majority of traders won't win over a long period of time in a complex competition like the financial markets. If your definition of moving forward is breaking even some years and modest profits other years...limited losing years...I believe this could be doable with a simple system with a good R:R. As far as making a living or attaining trader "elite" status...it will require a much deeper understanding! If some of the traders you speak of (with monthly income), are option sellers...that's a whole different discussion. GOOD LUCK TO YOU!!!!!!!
     
  248. we know nothing about what other people make or do not make...

    but i have a feeling :) that the numbers of consistent traders approaching zero, and definitely not 10%.

    10% is something invented by the industry or wannabes, in order to have something tangible to hold-on to....

    reality imho is much much grimmer

    imho most of so-called successful traders just masturbate on market, while sitting either on pension, either on wife's neck, either on disability, or on some other sources of income which hold them afloat
     
  249. well. there're many problems.... anyway, thank you.
     
  250. :))) they share their experience and talk like they earn much money, exactly number 10 -15% monthly. Ok. I'll stop believe in this.
     
  251. Majority are in a haste, they don't want to spend time in demo, they want to start trading in real account quickly and with greed. This make their trading look very bad. If a trader properly learns trading and then start in real account, he can do very good.
     
  252. How many traders are telling you this? This isn't a common performance, but there are traders out there that can do this. Just focus on your own journey...don't worry about anybody else...if you do, it can cause emotional trading...bad stuff!
     
  253. agree

    nobody worries about nobody

    it just that many people want to have a confirmation that what they try to archive is achievable at all, they want see in the success (or perceived success) of others the possibility of their own success

    but they ask a wrong question, and a wrong person

    Instead of asking others "Can it be done?", they should ask themselves "Can it be done by me?" and the answer should be - yes !

    Lats assume that nobody made it before , lets assume that there were no successful consistent traders at all..

    so what? even better

    this is an enterprise for the discoverers, explorers, pioneers, for the people who want to step in the unknown, even if where nobody stepped before, people whose believe in themselves comes not from what others did or did nor do, not even from what them themselves archived before (since often it's irrelevant) it comes form the irrational self-believe
     
  254. I read it in forex forum. anyway, thanks for your advice.
     
  255. Almost all billionaires are people who achieved something that statistically was almost impossible.
    Going from zero to a billionnaire is statistically almost impossible. That's a good example. Gates, Zuckerberg, Dell, Koum, Dorsey...

    You should try to do something that statistically it almost impossible.
    If you try to do something that everybody can, there will be less potential profits as profits should be shared between those who can what you can. The less people who can do what you can do the better for you. You can dictate prices and take all the profits.

    So daytrading is a good idea because most people lose and a few get very rich.
     
  256. First part of post is brilliant. The part about day trading is not. Your broker is daytrading against you and so is every algo and HFT. You are not doing anything unique. The odds is with the algos.
     
  257. Not important who trades against me, I trade the ES so my broker cannot trade against me. Years ago I traded Forex, and yes that was against my broker. But I became smarter with the years.
    My order goes directly in the market, not in the book of the broker. If you trade you always have a counterparty, broker, HFT or anybody else. I don't care as long as I make good money. As I take consistently money out of the market, somebody else should lose that money. The odds are with my algos. :p

    In daytrading you should be part of the 10%, just like the small group that became billionnaire.
     
  258. The market is full of conflicts constantly, but in essential, just two big camps, buy or sell, they play each other, but because the speeds and volumes of these two big groups are changing dynamically and there are lots of manipulating, more complex price movement patterns and behavior show up. The smarter retail traders profit consistently because they know how to see through all the traps and camouflages and choose the right side most of the time; the less smart traders then need a lot of luck and are at market's mercy, that is why for those people, sometime they make a lot of money but sometime they lost a lot of money, because they can only see/grasp the price movement/trending/direction on the surface based on the TA/indicators/system they use.
     
  259. They lose cos they simply don't know what they're doing, and also they try to learn from people who are not different from them.
    So I even hesitate to call them traders. they're more like gamblers.
     
  260. I dont lmw for sure. many trader fail and I think yes, as my experience making profit cosnsiettnly is ot easy task, sometime loss higher than erarly profit, and sometime faced with successive loss, and ssometime get margin call account and maybe many reason the cause of failure, greedy, reckless in trades and lack discipline etc
     
  261. They fail because it is hard.
    Like any other human enterprise. Most people fail.
     
  262. Interesting article with simulations about ES intraday trading. Just a small excerpt:

    If futures day trading is a negative-sum game, why is it so popular?

    Answer:This happens because 99% of the trading literature involves unsupported claims of day trading success and trading gurus would have no subject if they admitted the low success rate.
     
  263. The fact that futures are a zero-sum game is a less important feature, the more important is the high leverage, which means that you'll go bankrupt faster than stocks if you're doing the wrong thing, and vice versa if you're doing it right...
     
  264. That's a lovely vice versa -- but many people get blinded by thinking it will rain money on them instantly forever.
    [​IMG]
    :rolleyes::)
     
  265. About that article:
    “In logic, if one claims that unicorns exist, the burden of proof is on him and not on those who object. “

    This argument can be used against Harris’ statement too. It is too easy to ask from your opponent to show proof while your statements are like dogmas and shouldn’t be proofed. It’s not because you cannot proof something ( or don’t want to) that it is impossible.

    I object, so it is up to Harris to prove his point. A chart is no proof for me.

    “Whether you toss a coin or you use an indicator, performance is calculated based on entry and exit signals. When looking at sequences of entry and exit signals, they all look similar regardless of the method used to generate them.”

    For Harris they indeed all look the same. If you don’t know anything about animals, an elephant looks the same as a mouse for you as they have the same color and both have 4 legs and a tail. Knowledge from who is analyzing is important. That knowledge Harris misses completely.

    Random entries and exits as used by Harris have nothing at all to do with how successful traders trade. So his logic is complete nonsense.

    It is weird that none of the few successful daytraders ever wrote the nonsense Harris wrote. Weird because they are in a much better position to give a objective and realistic opinion as they trade. The fact that they are or were successful is the ultimate proof that Harris writes nonsense. Harris never traded as far as I know, he writes.

    “We cannot exclude the possibility that there are indicators that have predictive ability on intraday data but that must be proven using proper statistical analysis. Suffice to say that most known technical analysis indicators generate random signals.”

    Ask Harris to name 25 indicators and how they work and he will not be able to answer you. And then he pretends to be an expert? He wrote articles on various different subjects. He must be the smartest man on earth being an expert on so many domains.


    About the charts he shows: I see already one huge error that has a massive impact on his “proof”. In real trading people use stops, in his samples this is not the case because then we would see no distribution of losses below -20 % . Nobody will put stops further than -20%. Except Harris and idiots.

    I also don’t understand why small accounts would have bigger losses. $3000 margin per contract means that the number of contracts stay in proportion with the account. $3000 account means 1 contract, $30,000 account means 10 contracts. So return or losses will stay the same % wise.
     
  266. Constant commissions, although irrelevant for futures, minimums matter for stocks and CFDs.

    Great, I'm an idiot, thanks for ruining my Sunday.
     
  267. My mistake, I always think about futures as I only trade that.

    You take intraday losses over -20%??? :wtf:
    I don't know where you live but I hope it is already evening there, so the damage will be smaller as the day is almost over. :)
     
  268. Although it is well-known that profitable futures day trading offers low chances of success, many traders hope of beating the odds because they believe they have an edge. In most cases, the assumed edge is either a lucky streak of winners or some curve-fitted algo on past data. Although there may be edges in intraday timeframes, over time most cannot cover transaction cost and losses accumulate.

    Just because someone writes something, does not mean it is true for YOU!

    If anything, it shows that this person does not have a clue about how to make money daytrading the ES - and I am not one bit surprised by his silly and ridiculous comments!

    Making money is easy, when you know how. Keeping the money you make is another story, and this is where most who have a little bit of success fuk up - they think, just because they made some money by clicking the mouse, they now know everything about daytrading ES futures - big mistake!

    There is only one certainty when trading, and that is, you can lose.

    I know absolutely nothing about the intricate workings of the index futures markets, nor do I need to - done about 10 to 15 trades on ES in last 2-3 weeks (have to check exact numbers) and had no losers, largest drawdown was about just over $1k on one trade, but did not panic and sell with loss as my "simple investigations" into related markets indicated to me that the ES would "more than likely" rally back up, which it did.

    The main problem with this type of trading (wide stops), is that it carries high risk, and you leave yourself open to sudden moves against you if any major news causes the markets to make sudden movements.

    The lowest risk trades are the short term trades, meaning seconds to minutes, but also requires series focus and no distractions of any kind, from without, or within!

    The only thing I know, is that I really know nothing - but I can still make some money trading the ES, and hold on to it - so far anyway!

    Take everything you read with a pinch of salt - any trade that a person speaks about is not a real trade unless verified by broker confirmations - why would any person speak about trading and not show what they speak about, unless, of course, he/she is just talking out their arse, which most do!


    J_S
     
  269. No but as of now I trade without stops and I certainly can do -10% in a day.
     
  270. So you are not (yet) an idiot. :D
     
  271. Yes I think so, often hear statement if more than 90% trader get fail and losing money in this field, as trader need pay attention with the risk that involved and not only profit as their target
     
  272. If this is the conclusion you reached, you don't understand the premise.
     
  273. Trading without stops is a very risky business, especially with ES and NQ.

    A few months ago, not long after my return to trading, I bought one NQ contract and held overnight with no stop. The following day I was down over $1K. I decided to double up and bought another NQ contract. Within a few hours I was down over $3K.

    I now had a big decision to make - will I cover and take my loss, or wait!

    Fuck it, I said to myself, I should have known better, and now had to have a good look at the higher timeframe charts and make a call on near term market direction. I concluded that a rally was very likely, so held out with no stop.

    Off the top of my head, I made about $300 or $400 on the double up, but it was bad trading to allow myself get in that situation in the first place, as I have often made $300 on an ES trade in a couple of hours max, with very little risk!

    Being rewarded for bad trading is a very dangerous game to be playing, and I know only too well from past experiences.

    Wide stops, or no stops, are fine once you have plenty of money and can afford to lose $5k without it bothering you one little bit - scared money never wins, but you must also know when to get out when you are losing, especially with ES and NQ - a fool and his money are easily parted!

    J_S

    easy spot the bad trades, even though I made some money!

    Screen Shot 05-24-16 at 12.29 AM.PNG
     
  274. "The game of speculation is the most uniformly fascinating game in the world. But it is not a game for the stupid, the mentally lazy, the person of inferior emotional balance, or the get-rich-quick adventurer. They will die poor. ”

    — Jesse Livermore, How To Trade In Stocks
     
  275. QpUOTE="nitro, post: 4284954, member: 8288"]If this is the conclusion you reached, you don't understand the premise.[/QUOTE]

    I do understand the premise very well: Harris can speak in dogmas but opponents have to give REAL proof. If that is the way to discuss then every normal thinking person will agree that it is pure manipulation of the truth.

    The charts he shows have NOTHING to do with trading. The distribution of profits and losses from his chart is completely different from my REAL trades. I never have trades with -20% losses or more. If we would adjust his chart with this fact, the conclusions will be completely different from the actual ones, as the losses would be reduced dramatically. Even the distribution of the profits are completely different; in real trading you will never have the smooth curves that he shows. He adapts the story to the endpoint he wants to proof. So his start is: to what conclusion should I arrive? And then he adapts the story in function of the wanted result.
     
  276. It is OK being an idiot, once you know why, and do something about it - but it you are a fool, you will always be an idiot!

    Harris, if that is the author's name, is a muppet - he is talking rubbish, and more than likely trying to sell something, same as the rest of the muppets out there.

    Some time ago, I done a little experiment to remind myself how stupid one can be - I contacted an "expert" in relation to spread trading, from the IB website that links "professionals", like the add where you see the 2 yuppies fishing:rolleyes:

    To cut a long story short, the muppet wanted a minimum of $600 for an hours work, and recommended I do a few more hours as well.

    This muppet, could not even provide an outline of what we would cover, and when I asked what we would talk about, for his "free" 1 hour online introduction, he replied, "anything you want to discuss"!

    I know a few things about trading that this muppet, and his myriad of academic gobshites will never know - I learned the best way, by winning and losing my own money, and finally seeing trading for what it really is, a mug's game - but only if you are a "mug"!

    As SOCRATES once said to me, " most people are fools", and boy, is he right!

    J_S
     
  277. A fool thinks himself to be wise,
    But a wise man knows himself to be a fool.
    - William Shakespeare
     
  278. " the only thing I know, is that I really know nothing"..the real Socrates:thumbsup:

    Forget about everyone else, including the idiot J_S, and know that..no reward without risk!

    Btw, no sign of RN for a while, is he Ok, or does anyone know?

    Maybe he is after retiring with all the money he was handed from the fools:D

    J_S
     
  279. Forex trading is not easy way to making profit, trend market very fierce and no mercy, any trader can losing money in trading activity, often hear if more than 90% trader get fail and might this is true although not become real statistic
     
  280. 90% traders lose. I heard about it before, but I think as many traders here, have believe in forex. Hope that can be the rest 10%. For now, I won and I lost, I still cant make gradually profit like 5-10% per month, but I also didnt lose so much. So I still have a faith like: I'm improving everyday. I talk to myself, it takes time to master forex
     
  281. Not everyone is discretionary, I've yet to have a "fuck it" moment when trading. Follow the plan whether it works out or not. Nor am I trading futures or holding overnight.
    The dollar values don't matter at all to me, only percentages. I can't make any comment on "5k" because is that on a 50k account or a 500k account?

    Stops are a necessity for certain people and will ruin others. Speaking about universal rules in trading is useless.
     
  282. However this is universal :

    Victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win.

    If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.

    - Sun Tzu
     
  283. Forex is the most difficult market to trade.
     
  284. FX, is a mug's game!

    Highly leveraged account, is one quick way to part a fool with his money, very quickly.

    J_S
     
  285. Trade GBPXXX, avoid trading EURXXX unless you are a bank and have to take speculative positions. British are better friends, Germans are a bit unpredictable.

    Avoid setting up "stops" at X.99 or round number (X.00) when a market is in bullish sentiment, that's where market makers are waiting. Also set up "stops" at the bottom of lowest low of the session or even a little bit further down. Vice versa in bearish markets. Then you'll be safe in most of the time. That's called buy low and sell high. You have to incorporate the risk management in your plan/strategy otherwise it's not a completed one.
     
  286. I have had loads of "fuk it" moments, and not just in trading:rolleyes:

    The point about the $5k is this - providing you do not sell short at a major low, or buy at a major high, then the odds of the ES going 100 points against you are slim - possible of course, and can happen, but low odds.

    So, if for some reason, you do get caught, it must not bother you losing the $5k, and you must continue to trade, based on the charts, not on your wallet!

    Trading is 99.999% mental, and if you let yourself get sucked into the excitement of trading, odds are you will get caught out many times, and keep on fukin up till you blow all your hard earned money, and possibly ruin your life for yourself and your family - we all have heard the stories, and know of someone who was found dangling from the end of a rope!

    Sit back and use your head, fuk everyone else, as most people are fools, and will do nothing but cost you money by listening to the silly and idiotic things that they natter on about!

    J_S
     
  287. Julie you're only 22. Keep it up :)
     
  288. Both tried to take over the world and ruined the lives of countless nations.

    None are friends!

    J_S
     
  289. Of course, I am speaking about buying and holding for a period, in relation to the $5k, be it a day to a week, or so - not about short term daytrades, as that is a completely different story, and approach.

    J_S
     
  290. Do you mind if I ask you what is your average annual return trading forex?
     
  291. I am also learning as well, all I can say is I achieved about 200 pips by trading GBP - USD/AUD/NZD today
     
  292. Why is average annual return relevant? They could have had wicked winning streak in beginning of each year and went up 1000% in one week, then spend remainder of 50 weeks sliding down to 100%, but you eyes will grow cause they did 100%. Don't you think this are wrong questions to ask? How come no one asks drawdown, or how many profitable days in relationship of losing days in a year, what is worst losing trades in a row, have you tried to improved losing trading by altering risk management.
     
  293. Maybe rarely as retail trader can survive nd making regular profit, but still possible to making profit in forex trading, as trader only making effort with learning but sometime loss inevitable