Did you hear margin call at least once in your trading career? I'm sure you have some number, it can be 0 but it can be also 39... nothin wrong about that, let's not judge book by cover and focus about main topic of this thread.
This thread is created for one purpose, discussion about why 90% 'traders' are losing in the long term (i think that's even more)
If you disagree on something posted here feel free to comment, it's all about having real conversation.
So let's start....
There are some things which makes me go wild about trading books and "educators", traps for your ming that dont have nothing to do with real performance (and even hurts) and exist only to make you feel comfortable.
1. PYRAMIDING 'casino paradox' -
Let's consider real situation. You go to casino with 100$, play 1 game and win another 100$. Now you have 200$ in hand and decide to bet all your cash and hope for 400$. Does it work? Clearly past performance won't change future performance, it's all about percentage game so pyramiding in casino will result in clearing account faster, you can make some maths and realise that for yourself.
Now let's make the same concept in the market
You place your position (1 lot) and it make some profit so you open another position (1 lot). Let's hope for trend to the moon and add another size...
Now question, let's assume that one time you didn't manage to open your first position but market is going your way and based on your strategy you would open another position. Will you :
A - Open 1 lot
B - Open 2 lot
C - Do nothing
Answer
If you chose A or C
Congratulations!
You think that past performance has an impact on future results, that's gambler attitude
You won couple of times and hope for strike for milion $(let's be clear - it won't happen).
If you chose B it means that you don't have this problem(Cheers!)
Im often shocked when i see this strategy in one place or another, especially when some trading guru post to his(or her) fans how it's easy.
You may say that pyramiding is all about following the trend, but in my opinion market makers won't make you profit entering simple one after another positions due to volatility. Traders are constantly getting their SL hit, not because some divine power but because big funds operating large amounts of money are making this way their income.
I couldn't find even one fund using this type of managing money strat. - and the reason is simple - it hurts performance, I'm not able to provide you specific values, it depends on many technical stuff and i'm not yet as good as i would love to as quant to break down this topic.
Feel free to comment and argue.
There will be new topics from time to time, i have few of them
This thread is created for one purpose, discussion about why 90% 'traders' are losing in the long term (i think that's even more)
If you disagree on something posted here feel free to comment, it's all about having real conversation.
So let's start....
There are some things which makes me go wild about trading books and "educators", traps for your ming that dont have nothing to do with real performance (and even hurts) and exist only to make you feel comfortable.
1. PYRAMIDING 'casino paradox' -
Let's consider real situation. You go to casino with 100$, play 1 game and win another 100$. Now you have 200$ in hand and decide to bet all your cash and hope for 400$. Does it work? Clearly past performance won't change future performance, it's all about percentage game so pyramiding in casino will result in clearing account faster, you can make some maths and realise that for yourself.
Now let's make the same concept in the market
You place your position (1 lot) and it make some profit so you open another position (1 lot). Let's hope for trend to the moon and add another size...
Now question, let's assume that one time you didn't manage to open your first position but market is going your way and based on your strategy you would open another position. Will you :
A - Open 1 lot
B - Open 2 lot
C - Do nothing
Answer
If you chose A or C
Congratulations!
You think that past performance has an impact on future results, that's gambler attitude
You won couple of times and hope for strike for milion $(let's be clear - it won't happen).
If you chose B it means that you don't have this problem(Cheers!)
Im often shocked when i see this strategy in one place or another, especially when some trading guru post to his(or her) fans how it's easy.
You may say that pyramiding is all about following the trend, but in my opinion market makers won't make you profit entering simple one after another positions due to volatility. Traders are constantly getting their SL hit, not because some divine power but because big funds operating large amounts of money are making this way their income.
I couldn't find even one fund using this type of managing money strat. - and the reason is simple - it hurts performance, I'm not able to provide you specific values, it depends on many technical stuff and i'm not yet as good as i would love to as quant to break down this topic.
Feel free to comment and argue.
There will be new topics from time to time, i have few of them