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Why you lose money and will always lose 43 replies

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Attachments: 5 Reasons Why Traders Lose
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5 Reasons Why Traders Lose

  • #141
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  • Dec 26, 2013 9:15am Dec 26, 2013 9:15am
Quoting Chicky
{quote} I am a prostitute. Nice to hear about you. Just asked because you looked familiar.
  • #142
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  • Dec 26, 2013 10:44am Dec 26, 2013 10:44am
Quoting Chicky
Baby Pips recently added this. "One big reason people lose is because they stare at charts more than that they do at boobs."
....hehehe, that made my day!!!
  • #143
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  • Dec 26, 2013 11:06am Dec 26, 2013 11:06am
That is some funny chit mang! Thanks for sharing....

Quoting Chicky
Baby Pips recently added this. "One big reason people lose is because they stare at charts more than that they do at boobs."
SPC * Swollen PocketZ Crew!
  • #144
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  • Dec 26, 2013 11:42am Dec 26, 2013 11:42am
YEP!
  • #145
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  • Edited Dec 27, 2013 1:55am Dec 26, 2013 1:22pm | Edited Dec 27, 2013 1:55am
Quoting PoundTrader
{quote}
All these people preaching to the choir is what's really funny.
In ff posts that are not pretentious are very rare.

You quickly realize that forex profits are like the weather. Many talk about it but no one does anything about it.
  • #146
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  • Dec 26, 2013 6:49pm Dec 26, 2013 6:49pm
Reason no. 6 - a lack of motivation and 7 - hotheadedness
  • #147
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  • Dec 27, 2013 1:41am Dec 27, 2013 1:41am
Quoting PoundTrader
{quote}

LMFAO
Audentes Fortuna Juvat
  • #148
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  • Dec 27, 2013 3:51am Dec 27, 2013 3:51am
Traders lose more money or their losing trades than they make on their winning trades.
  • #149
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  • Dec 27, 2013 3:56am Dec 27, 2013 3:56am
Quoting PoundTrader
Traders lose more money or their losing trades than they make on their winning trades.
you can be right 9 out of 10 trades but if the 10th trade wipe out all the gains on the previous 9 trades then your back in the same boat if not worst
  • #150
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  • Dec 27, 2013 4:29am Dec 27, 2013 4:29am
Quoting PoundTrader
{quote} you can be right 9 out of 10 trades but if the 10th trade wipe out all the gains on the previous 9 trades then your back in the same boat if not worst
your risk is more then your reward
  • #151
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  • Dec 27, 2013 11:14am Dec 27, 2013 11:14am
Most traders lose because they fail to see the obvious detail in front of their eyes, the answer is clear as day but they don't see it...

This threads asks for "5 Reasons why most traders Lose".... how many "traders" actually answer the question?

1.stupid.
2. arrogant.
3. impatient.
4. poorly educated.
5. misinformed.
tradewith60
  • #152
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  • Dec 28, 2013 11:55pm Dec 28, 2013 11:55pm
Quoting 60minuteman
Most traders lose because they fail to see the obvious detail in front of their eyes, the answer is clear as day but they don't see it... This threads asks for "5 Reasons why most traders Lose".... how many "traders" actually answer the question? 1.stupid. 2. arrogant. 3. impatient. 4. poorly educated. 5. misinformed.
  • #153
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  • Dec 29, 2013 12:54am Dec 29, 2013 12:54am
Wait a minute ....................... please wait.

We started with 5 reasons why traders lose ............ and now after 16 pages we have about a thousand more. I am a bit confused.

May I request owner of this thread to insert a poll in here listing all the fuckin' thousand and five reasons and ask for a vote (allow each participant to choose 5 reasons).
The Thief of Wall Street
  • #154
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  • Dec 29, 2013 1:32am Dec 29, 2013 1:32am
Quoting Chicky
Wait a minute ....................... please wait.
Chicky,

Your post caused me to ponder whether losing traders actually know the reasons for their failure.

After all, if somebody knows exactly how and why his trading is deficient, then doesn’t that suggest that he must have an inkling as to what he should be doing? And if he knows how to trade profitably, then why isn’t he winning?

Hence I’d respectfully suggest that, if the vast majority lose (as is apparently the case), then the vast majority who’ve posted in this thread aren’t qualified to answer the OP’s question. Hence I doubt that a poll would bring us any closer to the truth.

Anyway, just a thought, after reading your post, and downing a couple of glasses of Aussie Cab Sauv that I was given for Xmas.

Compliments of the season to you,
David
  • #155
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  • Dec 29, 2013 1:51am Dec 29, 2013 1:51am
I have a client for whom I’m writing an EA. However, he also trades a live account manually, using a completely different strategy.

His manual trading involves trading GBPNZD only (because it has the highest daily pip range). He takes his entries on M1, buying at the top of the Bollinger band or regression channel, and selling at the bottom. He also considers overbought/oversold on other timeframes, as shown by the CSM indicator that I wrote, which are effectively filters. Hence he frequently has multiple positions, both long and short, open simultaneously; and in many cases this involves adding to existing losses, i.e. increasing his exposure in one direction while the market moves against him. Instead of using a stoploss, his exit strategy is simply “never close a trade at a loss”. If a trade moves into profit quickly, he takes the profit. Some of his losses that have yet to return to profit are more than 6 months old. His win rate (counting both closed and open trades) is around 97%.

Ordinarily I would have thought that this was a poor strategy, as it flouts the textbook maxims of cutting losses quickly, and letting profits run. However, for a period of more than 3 months, and 200+ trades, his equity (i.e total of both closed and open positions) continued to rise every week, without exception. In other words, the profits on the closed trades, for any given week, always exceeded any increase in loss on the open trades. The week-after-week consistency looked very impressive, even to someone as skeptical as I am.

After 3 months of consistent profit, he believed that he’d conquered the market. By this stage his account was about +40% above his initial deposit. Then, near the end of November, he was caught unexpectedly with an excess of sell positions when GBPNZD moved higher for 3 days in succession, and his account equity suddenly fell from +40% to around –45%. But his overall win rate remained above 95%.

His equity has since picked up again, and to the point where he still believes that “never close a trade at a loss” is a perfectly viable strategy, and even contributes to his winning edge. Even though his account equity is still at an overall loss, he nonetheless sees himself as a very successful trader. He points to his win rate, and he believes that, given enough time, all of his unrealized losses must eventually return to profit, because “the market always comes back”. Prior to all this, he blew one live account, and when I suggested that his current account is likewise running at overall loss, he said “don’t worry, I’ve no intention of letting it happen again. I’ve learned from my mistakes the first time around”.

For me, this has been an interesting study in watching a trader’s “mindset” (in the wider sense of the word). And it’s also highlighted just how insidious markets can be, rewarding a trader for a long period of time, while he breaks all of the established rules, before finally coming back to bite him. And then after biting the trader, it returns to rewarding him again, enough to convince him that the loss was a mere aberration, and in fact he was right all along. Losing money while breaking the rules is bad enough; but (paradoxically) winning money while breaking the rules, and encouraging and ingraining bad habits that will ultimately cause greater long term damage, is even worse.
____________

[EDIT] I wrote the above about a week ago, but didn’t post it until now. His account balance is currently at around –75%, as he’s still holding onto the sell positions he entered back on 30 May at around 1.88, while GBPNZD is currently around 2.02

What can be learned from this? That it's possible to have a solid entry method, and a win rate of 97%, and nonetheless experience a drawdown of 75%.
  • #156
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  • Dec 29, 2013 4:04am Dec 29, 2013 4:04am
Quoting hanover
I have a client for whom I’m writing an EA. However, he also trades a live account manually, using a completely different strategy. His manual trading involves trading GBPNZD only (because it has the highest daily pip range). He takes his entries on M1, buying at the top of the Bollinger band or regression channel, and selling at the bottom. He also considers overbought/oversold on other timeframes, as shown by the CSM indicator that I wrote, which are effectively filters. Hence he frequently has multiple positions, both long and short, open simultaneously;...
To never close a losing trade at a loss will not work long term.
better to : "Always close a losing trade at a smaller loss"
First of all: Never add to losing positions AND trade small.
Then manage losers with a combination of:
1) When closing a winner, use a small percentage of the profit to reduce position on the loser(s)
2) Wait for market to "come back" and close loser(s) at a smaller loss - or if you are lucky - break even.

The idea is to implement a strategy for losers that is the opposite of a strategy for winners.

The scary part is this: "Then, near the end of November, he was caught unexpectedly with an excess of sell positions when GBPNZD moved higher for 3 days in succession"

Why an excess of sell positions ?
I take it as meaning he took on too much risk...
  • #157
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  • Dec 29, 2013 4:19am Dec 29, 2013 4:19am
Quoting hanover
I have a client for whom I’m writing an EA. However, he also trades a live account manually, using a completely different strategy. His manual trading involves trading GBPNZD only (because it has the highest daily pip range). He takes his entries on M1, buying at the top of the Bollinger band or regression channel, and selling at the bottom. He also considers overbought/oversold on other timeframes, as shown by the CSM indicator that I wrote, which are effectively filters. Hence he frequently has multiple positions, both long and short, open simultaneously;...
Interesting Hanover, I still think our main problem is an obsession with win rates, accurate entries, being right and never losing at any cost. Also we have this desire to get out of the market the very moment we are in it, the ticking seconds seem to torture most if not all traders. The irony is that entries are largely irrelevant, low win rates and time in the market make for a much easier and massively more profitable strategy.

How many threads are there here on position trading? compare the percentage to the fixed stop loss, tp threads... then compare that ratio to how many traders make profit.... There is a correlation worth noting....Our real edge is being able to follow and react to the market, the banks can't do that, we just need to ride their movements and ride it for as long as possible.
tradewith60
  • #158
  • Quote
  • Dec 29, 2013 4:22am Dec 29, 2013 4:22am
Quoting hanover
I have a client for whom I’m writing an EA. However, he also trades a live account manually, using a completely different strategy. His manual trading involves trading GBPNZD only (because it has the highest daily pip range). He takes his entries on M1, buying at the top of the Bollinger band or regression channel, and selling at the bottom. He also considers overbought/oversold on other timeframes, as shown by the CSM indicator that I wrote, which are effectively filters. Hence he frequently has multiple positions, both long and short, open simultaneously;...
I don't know from where he got this method, but must admit that he is very close to the best system I ever came across. The only issue with him is not fixing his risk tolerance. However, the most strange thing I find is his win rate of 97%. This should be around 50%. This system uses few deeper techniques but the basic concept comes from the fact that this market always moves in cycles.
The Thief of Wall Street
  • #159
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  • Dec 29, 2013 4:28am Dec 29, 2013 4:28am
Quoting Chicky
{quote} I don't know from where he got this method, but must admit that he is very close to the best system I ever came across. The only issue with him is not fixing his risk tolerance. However, the most strange thing I find is his win rate of 97%. This should be around 50%. This system uses few deeper techniques but the basic concept comes from the fact that this market always moves in cycles.
He doesn't close trades that are not in profit... I looked at something similar, unless you keep a balanced hedge so only one direction has an extra position then the drawdowns will eventually spiral out of control.

What it does teach you is that if you take small risks and let them survive as long as possible, eventually some very very big wins will develop, which is a much better strategy all together. 30% win rate and 25/1 R/R
tradewith60
  • #160
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  • Dec 29, 2013 4:44am Dec 29, 2013 4:44am
Quoting 60minuteman
{quote} He doesn't close trades that are not in profit... I looked at something similar, unless you keep a balanced hedge so only one direction has an extra position then the drawdowns will eventually spiral out of control. What it does teach you is that if you take small risks and let them survive as long as possible, eventually some very very big wins will develop, which is a much better strategy all together. 30% win rate and 25/1 R/R
"Hedging" is one of the techniques used in this method, but when we say "Hedging" it is in its real term and not just a "Contra Trade", although one can also use "Contra Trade". This Hedge needs not be perfect, partial hedge is used to slow down the pace at which drawdown increases. This is one way of setting a risk tolerance.

The losses, no matter relating to how small a position, should remain under-control and within a calculated risk tolerance level. This is like a horse and a rider. A horse needs a rider to remain within the intended pace of the race. Without limiting a risk tolerance, it is like letting the horse to sprint and drain all energy very quickly. A good rider is supposed to control the pace. The second problem is big winners and the third issue I see is 25/1 r:r. In nutshell, concept (or strategy) is right, but techniques (or tactics) need a lot of refinement.

This is max I can comment. I am under disclosure obligation.
The Thief of Wall Street
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