(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. I too would like to know where those stats come from. All the people I know trading, albeit 5 whole persons, are making money. Two do it for 100% of their income. All are retailers. Looks to me like it's the "pros" that blow up. Leverage, ain't it a bitch!
    #11     Jul 25, 2006


    I started full time 10 years ago and back then many new aspiring traders felt they could throw darts and make money. They thought the market was an ATM machine. They all got their rude awakening when they started losing big $$$ trying to trade YHOO, DELL, INTC back in those days. Like deer in headlights they'd be down a couple thousand $$$ before they knew it. Then they'd get stubborn and want to "get even". Eventually their accounts were bleeding big time and they'd quit showing up at the office.

    Since then I've known a number of people who tried trading with no real plan. Before I started I developed a business plan, goals & objectives and a "what if I fail" fallback plan. I think to this day many refuse to take losses when they should and the hundred dollar loss turns into a thousand and then grows even larger --- lack of money management skills and no discipline are still abundant IMO.
    #12     Jul 25, 2006
  3. I think the big guys want the stocks move as they want, and they have enough money to do so. where the equities they got from? from most traders,so if the big guys are making money, most traders will lose.:(
    #13     Jul 25, 2006
  4. I'm surprised that this wasn't included as a choice.

    Cheese is dead on. Searching for the best entry, the best exit, the best indicator, the best setting, the best charting program, the best pattern blah blah blah isn't going to do the trader the least bit of good if he has no idea how markets work.

    I'm not sure where this cluelessness comes from. Perhaps from the fact that there are no barriers to entry (anyone, after all, can walk into a casino). And the infomercials appeal to a gullibility that often seems pandemic.

    Certain parallels can be drawn between all of this and Paradise Island, Pinocchio and his friends, and the eventual Donkey Boys.
    #14     Jul 25, 2006
  5. dac8555


    i think success in ANYTHING all boils down to discipline.

    95% of people are a failure at business or the corporate world too. How many people WANT to be rich and how many actually are?

    why? they dont do the work or dont prepare suficiently to achive success...other things take priority...normally the priority is laziness.

    why are so many people so fat? lack of discipline.

    why are there so many criminals...lack of discipline.
    #15     Jul 25, 2006
  6. They come from brokerage figures, but they are at best anecdotal. Like the misinformation about terrorists and finding a husband after 40 or whatever, the "fact" is extremely sticky.

    The fact is that the "failure rate" among traders isn't that much different than the failure rate among small businesses in general (which may also be not dissimilar from the failure rate in professional schools, or, perhaps, the failure rate in anything), which is around 55 to 60%. And the causes are pretty much the same: lack of preparation and overconfidence. And both of these lead -- for traders -- to the most common specific cause: selling winners too soon and not selling losers soon enough.

    There is also the question of how one defines "failure". The so-called failures don't all go bankrupt and move under the bridge. Many just break even, which, if one isn't keeping up with the averages, constitutes "failure". Or, they may be in the black, but, again, are not keeping up with the averages and thus "fail".

    As can be expected, a smaller percentage consistently beat the averages. An even smaller percenage beat them to a remarkable degree. And an even smaller percentage make the kind of bucks that make them famous, or at least well-known in the trading community. And all of this follows pretty much a standard distribution.
    #16     Jul 25, 2006
  7. I believe the reason why I loss money is lack of discipline. I know the problem and it's hard to fix. I am taking time off now. I spent all night to determine what trade for tomorrow, determine their stops and exit. But once the trade is made, I didn't follow through with the plan. If I did, I would be much much better
    #17     Jul 25, 2006
  8. Buy1Sell2


    And a very large reason is that newbies attempt to daytrade before they position trade. This is an absolutely huge mistake as the decisions come much faster in daytrading and they aren't prepared for them.
    #18     Jul 25, 2006
  9. Boys, boys, boys.
    Before y'all get too far afield from my good friend Kiwi_trader's opening post, try to be a little more discriminating of word meanings.

    To lose means failure? Is that what many of you are saying? Kiwi said nothing about failing, he ask about losing.

    BTW Kiwi, losing is part of the game.

    And be very careful of others defining “failure” for you. I doubt you'd like the results.
    #19     Jul 25, 2006
  10. without an edge you will lose...
    #20     Jul 25, 2006