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The brutal truth of day trading

  • #261
  • Apr 13, 2021 9:05am Apr 13, 2021 9:05am
Quoting remonpilip
Listen, Market never changes. Human Nature is still the same then and now and since Mesopotamia. The only difference now and a hundred years ago is the scalability -meaning, now more people have access to the market with relatively low initial balance- The same goes for forum psychology that I've seen in many of the threads: That one guy that writes a lot, that points to no-where. To put it simply, Motivational BS. Personally, there...
yes it still Newton laws PA will be motion up or down till fear is calmed , greed is satiated , ignorance , hope dissipates. You don't play pool with PA, sometimes I wish I could (ha)
but we don't know when? so its better to be in direction of motion. fighting it will incur losses.
  • #262
  • Apr 13, 2021 9:19am Apr 13, 2021 9:19am
Quoting GEfx
This thread seems to be meandering a bit. I've been thinking of a way to turn brutal truths into learning experiences. For example, everyone who trades will experience losses. That's a brutal truth. But, from this truth, flows another brutal truth: 98% of retail traders fail. So, how do successful traders avoid this second, follow-on truth? There are brutal truths behind the processes needed to short circuit the apparent link between a loss and losing. Anyone interested in going down this path for a while?
Sounds like a great topic GEfx, perhaps traders should start aiming for a more realistic monthly profit target. That would help many traders stay profitable.
Trading thin liquidity at the boundary of the charts
  • #263
  • Apr 13, 2021 9:55am Apr 13, 2021 9:55am
Quoting GEfx
This thread seems to be meandering a bit. I've been thinking of a way to turn brutal truths into learning experiences. For example, everyone who trades will experience losses. That's a brutal truth. But, from this truth, flows another brutal truth: 98% of retail traders fail. So, how do successful traders avoid this second, follow-on truth? There are brutal truths behind the processes needed to short circuit the apparent link between a loss and losing. Anyone interested in going down this path for a while?
Do you want to find the brutal truth about why 2% could theoretically earn? The only hard truth is that they just don't have time to lose everything. The fact is that trading depends on many factors and there is no single time period when all traders fail (Although, this is a topic for another discussion ...) and therefore someone loses earlier, and someone later. So those who managed to earn before the loss are those 2%.

Now let's assume that this 2% is a myth and everyone will lose. I will rely on the statement that the market is an equilibrium system in which if someone loses, then the other wins. So, averaging the result, there are no losers and those who have earned, because the balance is 50/50. But we are in touch with the brutal truth that most traders are insignificantly small volumes. And if a big player takes profits, then a lot of small traders must lose.
  • #264
  • Apr 13, 2021 9:58am Apr 13, 2021 9:58am
Quoting RickM
{quote} Sounds like a great topic GEfx, perhaps traders should start aiming for a more realistic monthly profit target. That would help many traders stay profitable.
Could not agree more. If you aiming for 10% a month lets say, once you spread that over a months trading, really allows you to put things into perspective.
It gives you a freedom to get over the fear of missing out every damn trade.
Get the Lag out
  • #265
  • Apr 13, 2021 10:04am Apr 13, 2021 10:04am
Quoting triphop
{quote} Personally I'd spend all your time researching something concrete and stop trading. It's not hard to trade when you have a series of traffic lights in place, otherwise you'll end up in a multi-year battle of you vs the markets, and it doesn't have to be like that at all. And it always looks a piece of piss in hindsight, that again is an illusion. As someone - gravitron? Apologies if someone else said - if you must trade, drop your lot size down to 0.01 lots and focus on method method method. The idea it's just personal psychology holding...

You still need your head screwed on right, at least I do.
Get the Lag out
  • #266
  • Apr 13, 2021 5:27pm Apr 13, 2021 5:27pm
Quoting remonpilip
{quote} Hi PeterCaleb, No offence, but I seldom reply to this kind of slow-witted arguments, but I'm not doing anything right now. Anyways, You are perceiving it as a noun, I was implying it with an adjective. What happens to the majority's emotion after they drink the water? It's the same with muddy water and it's the same with packaged water. The majority feels hydrated. What happen to the majority's emotion when the Nation is entering a recession? they feel fear, they panic, they sell everything and in a fair market, the market has always, and...


Interesting. I said so few words but you chose to read it that way. Thank you for sharing.


Peter
Real Trading is not gambling.
  • #267
  • Apr 13, 2021 5:45pm Apr 13, 2021 5:45pm
From the perspective of someone who has been actively trading for a long time, I have never seen ANY real life hard evidence of any 98% fail rate and 2% success rate. Sure I've seen all manner of conjecture and propaganda online etc, however, nothing genuinely real. So to me, it's not brutal truth or even remotely close to real. People are too easy and quick to believe before doing thorough research and good old basic thinking.

@GEfx .... to the query of "So, how do successful traders avoid this second, follow-on truth?" ....


Attached Image (click to enlarge)
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If the reader of this is not willing to accept specific forms of approaching trading, then you are just hiding from the simple truth that you are clinging to the idea of one thing or another. Pass or fail.... Direction, probabilities and timing are not enough in the 21st century of information overload and silly sites like this where the impressionable are met with the attitudes of silly intellectuals.

There's some brutal truth for you. Attitudes are no cover for hope and small thinking.

Day trading (along with whatever version of definition of it you choose to run with) is exactly that ..... your version. Online or offline, ignorant is still ignorant.


Peter
Real Trading is not gambling.
  • #268
  • Apr 13, 2021 7:20pm Apr 13, 2021 7:20pm
Quoting Barrg1
{quote} Do you want to find the brutal truth about why 2% could theoretically earn? The only hard truth is that they just don't have time to lose everything. The fact is that trading depends on many factors and there is no single time period when all traders fail (Although, this is a topic for another discussion ...) and therefore someone loses earlier, and someone later. So those who managed to earn before the loss are those 2%. Now let's assume that this 2% is a myth and everyone will lose. I will rely on the statement that the market is an equilibrium...
I suggest to read post #62 and the published researches mentioned in that post.

49% of the traders in the study did not lose money and earned at least $0.1 in a year. I am not sure how people define “lose money” to make up to 97% in wiki talking about the same study, but definitely not comparing to $0.

hope it helps
  • #269
  • Apr 13, 2021 7:37pm Apr 13, 2021 7:37pm
I would suggest people learn how to think properly so then, they don't need to 'believe' or follow biased studies that are never completely forthcoming with all aspects of conclusions. A person must begin with generic, general and work your way through the spectrum of observation to very specific. Studies and arguments can never help with this. In the real world, only time and effort helps.

Some more basic brutal truth people don't seem too keen to swallow.

Peter
Real Trading is not gambling.
  • #270
  • Apr 13, 2021 10:32pm Apr 13, 2021 10:32pm
Quoting GEfx
This thread seems to be meandering a bit. I've been thinking of a way to turn brutal truths into learning experiences. For example, everyone who trades will experience losses. That's a brutal truth. But, from this truth, flows another brutal truth: 98% of retail traders fail. So, how do successful traders avoid this second, follow-on truth? There are brutal truths behind the processes needed to short circuit the apparent link between a loss and losing. Anyone interested in going down this path for a while?
Hi GEfx,

Well, to object your opinion,

I've collected all the research you can read on this post. I do not know where you came out with that 98% fail rate, whilst the studies shows that the fail rate is much higher than what you subjected. (the fail rate according to the studies: 99.5% post)

Of course, this "fail rate" in terms of day traders in Brazil accumulating wealth well below that of a bank teller in Brazil.

And To put things into perspective,

The fail rate of Businesses are much more lower -that is, 20% in their first year compared to a day trader: 99.5%-

So you ought to open a business than to trade.

Entrepreneurial ventures have a success rate of 80% and day trading have a success rate of 0.5%

I've done the research, You do the rational thinking (although I don't expect you to, because Humans are ,in general, irrational. me included.)

With the research done, it doesn't mean that I'll choose to venture into Business instead of Speculating. I still speculate, but now with a smaller fraction of my wealth.
In other words: only depositing the amount I'm willing to lose.

Regards,
R
Steps to profitability: Collect data, money management, stay bored
  • #271
  • Apr 14, 2021 1:33am Apr 14, 2021 1:33am
Quoting remonpilip
I've collected all the research
I think you are absolutely right. It will be better to compare trading with sports, not with business. Business is much easier, but the profits are lower. Sports seems to be very close. Top football players earn a lot, but there are few of them in the world.

Quoting remonpilip
I still speculate, but now with a smaller fraction of my wealth. In other words: only depositing the amount I'm willing to lose. Regards, R
This is the worst mental trap/mistake! Willing to lose. You are willing to lose. And you will lose. Because that big PC with a virtual game called life will give you what you want. It has infinite resources.

Anyway if there are 99.5% losers, then it is 99.5% success rate for successful trader. Let's subtract 30%fees and then we will get 69.5%! Very good result.
Observer effect
  • #272
  • Edited 9:38pm Apr 14, 2021 11:01am | Edited 9:38pm
Quoting GEfx
This thread seems to be meandering a bit. I've been thinking of a way to turn brutal truths into learning experiences. For example, everyone who trades will experience losses. That's a brutal truth. But, from this truth, flows another brutal truth: 98% of retail traders fail. So, how do successful traders avoid this second, follow-on truth? There are brutal truths behind the processes needed to short circuit the apparent link between a loss and losing. Anyone interested in going down this path for a while?
Okay, I don't really know, even approximately, how many people lose and win in the forex. The exact number is irrelevant. I think it's safe to assume that a lot more lose than gain. I offered up this topic, and I will kick it off with the following: one of the brutal truths behind avoiding turning losses into losing, is eliminating psychology as a topic in your trading. Simply put, in my work with over 110 traders that I know and trade with, all of whom are very, very successful traders, the topic of trader psychology has come up exactly zero times in discussing trades and trading situations. Zero. This isn't to say that trader psychology isn't important or a thing for retail traders. But the objective reality is, successful traders have moved well beyond this topic. It is incorporated in their trader mindset, where rational thinking controls decision making, not emotions or mental baggage. To be brutally honest, you need to tie down this shit long before you open a trading account. If you want to join the trading elite, get control of yourself before you invest a lot of time and money in forex trading.

A few months ago, in a different FF thread, someone offered up a quote from a FF expert, that went something like this: focus on price through your trading psychology. This incoherent babble was widely applauded by the participants of the thread. It could not be farther from the truth. First, most people in FF do not understand currency pricing, so I'm not sure what they'd be focusing on, except closely observing price movement. But the notion that trade execution involves psychology is utter BS. If you are relying on psychology to manage your trades and your trading success, you've already lost.

Brutal truth for success #1: psychology is an excuse for losing; if you can't eliminate its impact on your trading mindset, you are going to lose.
  • #273
  • Apr 14, 2021 5:34pm Apr 14, 2021 5:34pm
Quoting GEfx
{quote} Okay, I don't really know, even approximately, how many people lose and win in the forex. The exact number is irrelevant. I think it's safe to assume that a lot more lose than gain.
You're right. Most brokers claim 70 to 90% of their clients lose money. That pretty much sums up your point.
  • #274
  • Apr 14, 2021 6:14pm Apr 14, 2021 6:14pm
Is psychology the be all and end all of trading? No it is not, but it is very important in starting to become a successful trader.

You need to understand what type of trading suits your personality. You need to control your emotions. Too much fear, too much greed, too much hubris can all cause issues for traders. Impatience, over analysis. Different people different issues it's human nature. My Psychological issues when I started out were patience, figuring out what kind of trading suited my personality(impatience) obvious now but mystifying then, plus a small dose of hubris.
  • #275
  • Apr 14, 2021 6:21pm Apr 14, 2021 6:21pm
My point being that do successful traders need to discuss psychology of trading, not really. But those still striving to become successful are probably still dealing with some issues that need to be controlled.
  • #276
  • Apr 14, 2021 8:18pm Apr 14, 2021 8:18pm
Quoting rockypoint
My point being that do successful traders need to discuss psychology of trading, not really. But those still striving to become successful are probably still dealing with some issues that need to be controlled.
Forget psychology, ask how many traders have created a full trading plan that covers every aspect of their trading duties- you will get very few putting their hand up.
It needs to cover every likelihood’s that may occur and then describes how you will manage a trade if unusual events occur.
Its a business plan really, my plan runs 62 pages long and its updated weekly.

So may I ask how many other traders have bothered to plan to be successful ?
Trading thin liquidity at the boundary of the charts
  • #277
  • Apr 14, 2021 9:42pm Apr 14, 2021 9:42pm
Quoting RickM
{quote} Forget psychology, ask how many traders have created a full trading plan that covers every aspect of their trading duties- you will get very few putting their hand up. It needs to cover every likelihood’s that may occur and then describes how you will manage a trade if unusual events occur. Its a business plan really, my plan runs 62 pages long and its updated weekly. So may I ask how many other traders have bothered to plan to be successful ?
I agree with you, RickM. Assuming this thread doesn't die, planning and execution should be discussed in greater detail.
  • #278
  • Apr 14, 2021 10:39pm Apr 14, 2021 10:39pm
Quoting RickM
{quote} Forget psychology, ask how many traders have created a full trading plan that covers every aspect of their trading duties- you will get very few putting their hand up. It needs to cover every likelihood’s that may occur and then describes how you will manage a trade if unusual events occur. Its a business plan really, my plan runs 62 pages long and its updated weekly. So may I ask how many other traders have bothered to plan to be successful ?
Hi RickM,

I am a bit curious about the aspects of trading plan you have included in yours. 62 pages is a very detailed one and must have devoted a lot of effort into it! Nice.

I can start with sharing my approaches to plan when developing the first algo strategy. My approach is statistics, so essentially all numbers.
Simply collect past data and compile into meaningful charts for the strategy... Win rate, optimal RR, etc...

Eventually the rules are coded into EA, Real time monitoring and history tracking into indi and alert. Probability of win/loss and risk of ruin, etc are estimated.
I manually record and evaluate all trades and use the simplest statistical model to estimate risk of ruin knowing that it is unnecessary to complicate this part of calculation as we never know the future. So currently I only keep an eye on the trades and maintain the risk of ruin to minimum.

To summarize, my "plan" includes
1) Entry rules
2) SLTP setting and adjustment criteria
3) Risk of ruin management and max DD upon major reevaluation and/or termination of strategy.

Here is 2 charts I am keeping track on for possible adjustment of rules as time goes by.
RR vs Return of past n trades
RR vs win rate of past n trades (*Edit: % is relative to the win rate of 1R, which is definitely not 100%)
Attached Image

Attached Image
  • #279
  • Apr 14, 2021 11:11pm Apr 14, 2021 11:11pm
Quoting RickM
{quote} Forget psychology, ask how many traders have created a full trading plan that covers every aspect of their trading duties- you will get very few putting their hand up. It needs to cover every likelihood’s that may occur and then describes how you will manage a trade if unusual events occur. Its a business plan really, my plan runs 62 pages long and its updated weekly. So may I ask how many other traders have bothered to plan to be successful ?
Mine is less than a page. I will share it because most people are not wired to be traders. To trade, you have to be not be a human. Humans avoid risk and seek certainty. A trader must seek risk and avoid certainty. This is why traders invert the traders equation.

My business plan:

I trade only one pattern. If it is not there, I do not trade.
I trade both long and short. Sometimes at the same time. This is not to be confused with grid trading.
I use starter positions, I add as the market proves me right.
LOSERS AVERAGE LOSERS. This is not to be confused with scaling in.
I segregate longs and shorts.
I have soft targets and hard stops.

That's it. That's my business plan. Those six sentences cover every single outcome in the market.
If you are good at something, never do it for free--Joker
  • #280
  • Apr 15, 2021 3:30am Apr 15, 2021 3:30am
Quoting GEfx
{quote} Okay, I don't really know, even approximately, how many people lose and win in the forex. The exact number is irrelevant. I think it's safe to assume that a lot more lose than gain. I offered up this topic, and I will kick it off with the following: one of the brutal truths behind avoiding turning losses into losing, is eliminating psychology as a topic in your trading. Simply put, in my work with over 110 traders that I know and trade with, .
Couldn't agree more but one question. Where, on God's earth, did you find 110 good traders? I've been at this over a decade now, and I've met two who were on the same page. Two. Out of way over a 1000. Real world, professional and retail.
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