(Why) do most traders lose?

Discussion in 'Psychology' started by kiwi_trader, Jul 25, 2006.

Why do traders lose?

  1. Undercapitalized

    23 vote(s)
  2. Trading Strategy: Entry

    20 vote(s)
  3. Trading Strategy: Exit

    26 vote(s)
  4. Psychology/Discipline

    137 vote(s)
  5. Money Management

    65 vote(s)
  1. Its a given in the industry that the majority of traders lose. Whether its absolute "I blew $400,000 and I'm out" losing or just the "I can't make this work and I'm closing my account" we get told that 90-95% of new traders will lose and be out of the business in short order.

    Identifying why might help some of the newer ET members (no, not your new alias) to avoid a few of the pitfalls.

    So, experienced traders, and less experienced traders who are identifying some issues: why do most traders lose?

    My pick for first reason: trading: they never had a fully tested systematic way of trading in the first place.
  2. Sorry for this: I'd like to say all of the above.

    But Money Management is more a requirement for success than a reason for failure (does that make sense?).
  3. Indeed kiwi,
    No need to further vote on that one.
    One could perhaps refer to this affliction as soft "Brain Management".
  4. Cheese


    Why do most traders lose?
    Very amusing .. a poll without the obvious category.

    Failure to undertake and complete the the extensive study, research and preparation to know your market sufficiently.

    The amateur either can't or won't do that. He prefers death by firing squad .. that means here, the market firing moving numbers at him until he is shot dead in the heart and forehead.
  5. ddunbar

    ddunbar Guest

    And after they've tested and studied...

    No discipline, no balls.
  6. taowave


    The simple reason most people fail at trading is due to the fact their are NO barriers to entry.....

    Most people naively take advantage of this and simply do not treat trading as they would another potentially highly lucrative field...

    They fully comprehend that Lawyers attend 3 years of law school,that doctors spend 7 years or more preparing to practice,that athletes have been training most of their life,yet for some unknown reason,the majority of people who enter the trading profession simply refuse to "train at their craft"...
  7. The fact that most traders lose is part of a self adapting system that makes the top traders to win and the rest to lose. This self adapting system will always work. It will separate the best traders from the rest until the difference is big enough to make the best traders make lots of money. The level of difficulty will change until there is a balance between the wins and the losses.

    Example: if everyone can predict the tops and bottoms within 10 minutes after the event took place, the winner has to be faster, because at the moment when everybody knows what will happen prices will react immediately and profits will disappear instantly.
    Those who are always in advance of the crowd will always be the winner. But to be in advance of all the others you have to improve constantly as competition will not rest either.

    It is like any sport, there can only be one winner. If the level goes up, again only the best one will win. That can be the same person as before but it can also be another person.
  8. I trade only with my money and have never traded for a company or prop, so I am basically I am just curious as to where the reports come from that most people fail in trading, one thread put it in the 90% region. I have 3 close friends who trade for a living and only have one friend who has tried but has not made it, and that is down to inexperience. I am not saying that it is not true that most fail but I just have not seen it personally. If these rough percentages come from prop shops or whatever tey are called then I would hazard a guess to say they have access to way too much money having way too little experience, it takes years to understand the nuances of the market not simply a few weeks or a college degree. It would be foolish to give a medical student a scalpel or a laser in an operating theatre after only a few books and a weekend course, so why do it with the stock market.

    So to answer your first question about why people may fail,, my money would be on : using too much capital with too little experience
  9. Big discipline and BIG balls don't help. :D
  10. From a 20 year broker friend: They don't cut loss and they trade for too short a move.
    #10     Jul 25, 2006