Now I know why 95% of traders are on losing side | Page 3 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Why are most retail traders usually on the wrong side of the market? 405 replies

Do you know a system to stop over losing in the same day? 13 replies

DD "taking opposite side of trade" explain why this is bad? 5 replies

Why the need for side scroll. w/ diff. time per. 1 reply

Attachments: Now I know why 95% of traders are on losing side
Exit Attachments

Now I know why 95% of traders are on losing side

  • #41
  • Edited 3:07pm Oct 19, 2007 2:48pm | Edited 3:07pm
Hi Threeticks,

As I posted above, the protection of your capital should be a part of your system & money management. Once you have a working system the rest is psychological which is what I was referring to.

So many new traders try out a new system (that will work in the long run), experience a couple of losses, and because of their doubt & inability to accept these losses as a part of the game quickly dump the system and move on to the next. This is a vicious cycle unto itself here - one that if kept up will only hasten the traders' demise.

Again, assuming a working system (of which there are quite a few on this site), it is the traders own make-up that I have seen cause failure again & again. It has taken it's toll on my own account as well.... Something I myself am working on.

D.

Quoting threeticks
"What we can & must learn to control, however, is how we perceive & react to them! Stop looking at them as losses and start seeing them as the cost of doing business!"

True but,Traders must learn to control/limit losses.
Rule No.1 is to learn how to protect your capital.
This before you ever place a trade!!
  • #42
  • Oct 19, 2007 4:15pm Oct 19, 2007 4:15pm
With me its been a case of understanding the convolutions of a currency each day, the inflows and outflows of sentiment with regards to it, combining that with price action, trendlines and indicators, all of which will give me enough of a handle on where a currency is likely to be so that I can make a reasonably informed decision. I use fundamentals for the big picture but am now at the stage where the charts speak to me each and every moment. It's been hard work though, lots of initiative and a little bit of inspiration.
The road to pipland is arduous and fraught with challenge.
  • #43
  • Oct 19, 2007 4:53pm Oct 19, 2007 4:53pm
Quoting JodyOng
With a 5-10 pip take profit, what's your stop loss gonna be? 5 pips? 10 pips? 20? or even 30 pips? Wherever your stop loss is at, with a take profit that tight your risk reward ratio will be screwed.

See this is where you miss the whole point. I only trade Eur/Usd (2 pips spread) at $100 lots and take just 5 pip profit. 5 pips x $100= $500. So ur almost immediately in the profits once you have entered a trade. Plus i scan thru a lot of potential trades every day and ONLY take trades what i call "A-grade trades" because i am NOT out to make lots of pips. 5 pips will do for me thanks. But you only find those trades after years of trading.

Furthermore, with that tightness, the fluctuations/noise in the market will kill you. That being said, I really do not agree with your view on this.

HHmmmm dont know what noise you are talking about? Only a fool will try and trade a ranging market or noises or volatile currencies. But you have the right to disagree......

Another thing is that, if you're playing with such small profit points, you'd be gambling most of the time instead of basing your trades on rationale and logic.

That is a wild assumption. I don't see how small profit points equal gambling? We both enter the same trade based on our preperations. You buy because your trading system gave you a signal. I buy because the price is at convergence. You want 20-50 pips and i want 5 pips....now how is it that you made a rationale and logical decisions while i gambled? On the contrarary...the trader looking for 50-100 pips leans more towards gambling. I take only 5 pips to AVOID any unnecessary risk and eliminate all gambling. I dont wanna stay in the market longer than i have to.

With the view on a trend per se the carry trades, you'd be able to gun for a much higher amount of pips.

Some people are very slow to learn. Carry Trade burnt a lot of traders in the last few months and yet they still try the carry trade.....but i guess you cannot stop a fool from parting with his money

Another example would be the dollar weakness due to the sub prime mortgage.

My friend the dollar weakness goes MUCH further than subprime crisis. If you know your fundamentals you would know that the Fed lowering interest rates was the worst possible thing that could have happened to the USD. Why would anyone wanna invest in a country where interest rates have just been cut??? Isn't that why people borrow money from Japan and invest it in New Zealand (the whole carry trade thing)??? Plus Ben Bernancke is not a good Fed Chairman. He is trying to bail out people who made bad decisions regarding sub prime loans. The market should teach these people a lesson. The Fed should not step in and rescue these people. And if the Fed is concerned about inflation then why are the lowering interest rates. Low interest rates makes is easier for people to borrow cheap money and spend more thus INCREASING inflation. That is bad fundamentals!!! Plus the USA is currently not a safe haven. People are reluctant to invest in a country that is in a war. Too risky. Plus the budget deficit is unacceptably high. Who wants to invest in a country with so MUCH debt?? Plus there is a new kid on the block called the Euro who is slowly replacing the USD as the world currency. Opec is starting to quot oil in euro for certain european countries now and that means people dont need to buy USD first to buy oil anymore. Plus China is the emerging market. And is taking a lot of business away from the USA. People might start buying those crappy cheap chinese cars instead of Ford. So what am i saying here: The USA is in bad shape. Only Bloomberg and CNBC will tell you the US economy is in good shape. But the rest of the world doesn't believe it. And it was evident during the last NFP data release where the USD got hammered after good date came out.

When the news came out, you should have been able to foresee a dollar weakening and start trading on the short side. That my friend is one way that big money is made.
HHmmmm....like i said before...only a fool will trade the news. Newstime is the riskiest time to trade and forex is already not easy. So why would you wanna make it even more difficult for yourself? Besides trading the news is not as easy as you think. Remember oktober NFP where everyone expected good data to support the USD? Well the USD gained some ground as the numbers where announced BUT guess what? Some german bank knew the USD will gain so they decided to buy millons of cheap dollars right after the NFP. And that is the reason why the USD jumped up a 100 pips right after NFP. Hey and who can blame the german bank. Everyone want cheap USD so we can sell it later at 1.4500. But if you think you can make lots of money trading news then who am i to stop you
  • #44
  • Oct 19, 2007 5:10pm Oct 19, 2007 5:10pm
Quoting jlpi
Even if I agree with most of what is written on the original point I totally disagree on this particular point.
As SeekingLight said, I think it is the other way around. Most of the beginners want to scalp the market and are afraid to lose any small profit. So they will take a lot of small profits and large losses.
In an analogy to physics I would say that they try to trade the noise instead of trading the signal. So they win small on the noise and loose big on the signal (the trend).
Of course some scalpers have very good results but it is definitely not a game for beginners.

Linked to that is the tendency to overtrade and to look very low time frames. The reason for that is the need for action and excitment of the beginner. The beginner even if he says he wants to make money doesn't really want it above all. What he wants is excitment. Then he gets it but as for any hobby you have to pay for it.
in my opinion good trading is boring and profitable!
HHHmmm very interesting observation i made. Most people think because you only want 5 pips profit or only take 5 pips profit you are scalping. Why is this???

Lemme explain again.

Scenario 1: I enter a trade with $1 lot based on my trading system/techical analysis/ fundamental analysis. I take 50 pips profit. 50 pips x $1 = $50. But to get the $50 i need to maker 50 pips right? Is everyone following so far?

Scenario 2: I enter a trade with $10 lot based on my trading system/techical analysis/ fundamental analysis. I take 5 pips profit. 5 pips x$10=$50. In order for me to make $50 i need to make ONLY 5 pips.

Now how is scenario 1 a well thought out trade while scenario 2 is scalping???

Maybe i can answer myself. Maybe brokers and "gurus" have conditioned us to think you have to make at least 10 pips to be called a trader. Afterall if you read thru the threads on the trading system forum it is all about PIPS. Nobody ever says "Hey guys i just made $5000 with my system this month." And any trader who only takes 5 pips after doing his homework is considered a "lessor trader".

Or

Is it more of a ego thing. Traders thinking it is a game to see who can stay in the market the longest? But what does the trader win who stays in for 400 pips? Well i hope it is better than my $500 i make with 5 pips after risking only 0.0001% of my account on the whole trade. Afterall it is all about the money and NOT about the pips. The sooner traders realize this the sooner the better.
  • #45
  • Oct 19, 2007 5:33pm Oct 19, 2007 5:33pm
Quoting taxgeek
Another point: most people simply do not want to take time to study the chart. They get into a hurry. Then they go short, when the chart plainly says go long.
Can't say that I agree with the 5 or 10 pips business. That takes too much trade hunting. That gives you that many more opportunities to make errors. But to each his own cup of tea.
Now here is a trader i like. Yes i agree charts will tell you a beautiful story. Just get rid of all your indicators and study them. They will tell you where they wanna go next. But like you say. One has to have lots of patience. Not everyone can wait for a cycle to complete before entering a trade.....
  • #46
  • Oct 19, 2007 5:43pm Oct 19, 2007 5:43pm
[quote=Northernstar;1656650]On average 1.32 losses occur for every 10 trades. So after 8-9 winning trades I look always for the loss to come it is more probable than a winner.


This is absolute bollocks, didn't they teach you anything in school!:surprised
  • #47
  • Oct 19, 2007 5:49pm Oct 19, 2007 5:49pm
There are two type of traders whether coming from Forex or commodity trading. There are long term traders or investors who buys and holds for longer period and often like to use the 4H charts or higher, and there are the real trader or some referred to as scalpers; they like to use the shorter time frames. The philosophy, psychological make up between these two types are vastly different, the only common ground is that scalpers only use longer time frames, 1H to 4H or even daily chart, to determine the momentum for their trades just as their other counter parts other than that very much are the same.

As far as trade setup, a good scalpers will blow the investor type traders, however this is where most scalpers or traders failed because they didn't spend enough time studying the market or learned using the right tools for their trades; indicators will only work as well as what it is supposed to. As far as commenting on trader's style I think it depends on personal preferences, the time frames and the type of indicators that they feel most comfortable with not how the pro's are using mind you.

Cheers,

scalpt
  • #48
  • Oct 19, 2007 5:50pm Oct 19, 2007 5:50pm
Quoting bugscoe
I make my living off of 5-10 pip moves, over and over again.

The key is proper MM and knowing when to increase and decrease your lot size and having a feel for when momentum is entering the market. When I see/feel it, I go for it.
Finally someone who doesn't sound like a broken record. i dont know why people have a problem with a trader making 5-10 pips? If only they sit and think for a while. It would be silly in my opinion NOT to look for 5-10 pippers.

But i guess most traders dont play forex but rather their egos. "I just made 200 pips on gbp/jpy today" or "I am still riding the wave"

Let's make it simple here. If i trade $10 lots and take 5 pips profit per day then that gives me 5 pips x 20 trading days in the month x 12 months x $10 lots = $12 000 per year assuming i only do 1 trade a day.

If i take 2 trades a day that would be $24 000 a year
If i take 3 trades a day that would be $36 000 a year
4 $48 000
5 $60 000

You can easily do 5-10 trades a day. Do the maths.

So i dont know why people wanna do the 50-100 pip trades???
  • #49
  • Oct 19, 2007 6:35pm Oct 19, 2007 6:35pm
Quoting iandekoker
If only they sit and think for a while. It would be silly in my opinion NOT to look for 5-10 pippers.
I don't quite agree with this statement. Going for 5 pips is extremly inefficient spread+commission wise. Plus ATR is usually large enough to shoot for more than 5-to-10 pips per trade. I dont see how shooting for multiple mini trades is more profitable than one swing trade.
  • #50
  • Oct 19, 2007 6:48pm Oct 19, 2007 6:48pm
Quoting WTB
I don't quite agree with this statement. Going for 5 pips is extremly inefficient spread+commission wise. Plus ATR is usually large enough to shoot for more than 5-to-10 pips per trade. I dont see how shooting for multiple mini trades is more profitable than one swing trade.
Because within that one swing trade, there are many trades going both ways. You just need to know what to look for. I can catch the beginning, get out and short the retrace, then get back in long as the trend continues, etc.

There is no right/wrong way. There is only the way that works for you and makes money.
  • #51
  • Oct 19, 2007 6:50pm Oct 19, 2007 6:50pm
Quoting WTB
I don't quite agree with this statement. Going for 5 pips is extremly inefficient spread+commission wise. Plus ATR is usually large enough to shoot for more than 5-to-10 pips per trade. I dont see how shooting for multiple mini trades is more profitable than one swing trade.

I'm with you WTB. I know a few guys that earn a nice living on 5-10 pips per day. They have much more information ready at their fingertips(including extremely transparent order flow info) than I do and a billion times better execution capabilities. Its hard for a guy like me to compete with that, but if you are in that arena and are capable of it, then more power to you.
Man who scratches ass should not bite fingernails
  • #52
  • Oct 19, 2007 7:01pm Oct 19, 2007 7:01pm
I'm with WTB here. If you trade for 5 pips and your spread is 3 pips. You need to earn 8 to make 5. You need to win way over 50% of the time, just to break even, let alone make a profit. I'm not saying it is impossible, just that the VAST majority who try it will fail.
  • #53
  • Oct 19, 2007 7:57pm Oct 19, 2007 7:57pm
Well if ya got a minute check out what Mr. Butch has to say about gambling and think if what he says has any merit with trading..

Inserted Video
Check Mate GAME OVER
  • #54
  • Oct 19, 2007 8:07pm Oct 19, 2007 8:07pm
Quoting bugscoe
Because within that one swing trade, there are many trades going both ways. You just need to know what to look for. I can catch the beginning, get out and short the retrace, then get back in long as the trend continues, etc.

There is no right/wrong way. There is only the way that works for you and makes money.
What is it that you look for that differentiates it from a whip?
  • #55
  • Edited 10:02pm Oct 19, 2007 8:11pm | Edited 10:02pm
Just like i wrote in a similiar thread, i must say.. how incredible is this?

I have already read to ignore the trend and now here, i'm seeing that in fact being a scalper is the way to go.

...and the h4 charts are way to big TF, lower the better.

And the cherry in top of the cake, both clearly try to display a image of professionalism.

Jesus Crist... what is this? BrainWash Factory? I've never seen in any forum before so much threads that in fact gets ppl back to 0 instead of learning.
  • #56
  • Oct 19, 2007 8:52pm Oct 19, 2007 8:52pm
Quoting Warper
Just like i wrote in a similiar thread, i must say.. how incredible is this?

First there is the other guy saying that we should trade against the trend and now here, i'm seeing that in fact being a scalper is the way to go.

...and the h4 charts are way to big TF, lower the better.

And the cherry in top of the cake, both clearly try to display a image of professionalism.

Jesus Crist... what is this? BrainWash Factory? I've never seen in any forum before so much threads that in fact gets ppl back to 0 instead of learning.
So... Your advice would be... Or do you just want guidence?
  • #57
  • Oct 19, 2007 8:56pm Oct 19, 2007 8:56pm
I subscribe to the 10 pips a trade theory myself, but that's the day trading half of my trading style. 10 pips for the first leg and 1/3 of profit target, 30 pips next with another 1/3 of the trade taken off for profit, and finally a following 65% retracement method with the final third of the trade. The main thing though, is that I trade this way for income and not capital growth. For capital growth I'll trade those 200-500 pip swings that seem to crop up time and again (I would say one good tradeable one per week or two).

There is definitely more than one way to come out ahead, and why not blend them together? I prefer the 10 pips a day to steady pay than the more occasional payout which may need a bailout, but that's just me.
Never underestimate the powers of the Force.
  • #58
  • Edited 11:26pm Oct 19, 2007 9:24pm | Edited 11:26pm
Quoting Bemac
So... Your advice would be... Or do you just want guidence?
I replied to the other thread and there is my overall opinion of the underlying reason why small TF have poor precision.

http://www.forexfactory.com/showpost...83&postcount=5

http://www.forexfactory.com/showpost...8&postcount=11



Now, if i want guidence? Hmm, i have to refuse, i don't see how it can add something to my knowledge.

Be well.
  • #59
  • Oct 19, 2007 11:32pm Oct 19, 2007 11:32pm
On the 5-10 pip profit vs 50-100 pip is a no brainer. Most people who trade are looking for the big hit. (Big hit=get rich quick) It seems like the more pips you make the more money you can make. If you have the proper leverage either of the two will work according to YOUR trading style. No one trading style or system is better than the other. As a trader you need to find what works for you. Stop trying to make all the money all the time, and take what the market gives you. Greed will empty your account faster then you can deposit more money to make up for what you lost.
  • #60
  • Oct 20, 2007 4:01am Oct 20, 2007 4:01am
Ok since a lot of people disagree with me on the 5-10 pips strategie let's put my theory to the test. This way you can see for yourself whether i am gambling or scalping or trade according to a precise workable plan.

Ok so we need something to tell us when we are in a good trend. Also we dont wanna enter on the beginning of the trend. We wanna wait till the trend is underway before we get in. That way we will be in profits right away. And withing seconds you will close your trade with 5 pips profit.

We need the following Indicators. Yes i know i have said before i dont like indicators because of the lack. But how else am i gonna make my point??

You can use this little trend catcher on any time frame from 3 minutes to daily charts.

We need the ADX indicator and set to 7.

Draw two horizontal lines on the ADX. Set the parameters to 25 and 35 respectively. As we know the theory behind ADX is that the trend is strong once the ADX break above 35 level (some say 25, others 40, others 30). But since i am conservative trader only looking for A-grade trades i will use 35 level. Sometimes even 40 level. And ADX under 25 is ranging market, one in which you DO NOT wanna trade. We also know that the ADX doesn't show trend direction but trend strength. And i only wanna trade the strong trends. Afterall i only wanna make 5 pips not 100. So i dont care if i join later than most other traders. If you wanna get the direction the look at the DMI lines.

If you like me and only trade "A-grade" trades then you wait for the ADX to pull under the 25 level. ADX under 25 level tells me the market is not trending and in ranging mode. So at this point i am not interested in trading. As soon as the ADX breaks thru 25 and starts moving up towards the 35 level you begin to show interest cause you might have a A-grade trade coming up. Once ADX breaks above 35 horisontal line you want confirmation that a trend has indeed started. The confirmation comes when the candlestick in which the ADX broke thru the 35 level CLOSES and the ADX is still ABOVE the 35 level. I then enter a trade on the opening of the next candlestick.

If you want further visual confirmation that the trend has started then add two moving averages to your chart.

Simple Moving Average set to 4 and applied to close
Simple Moving Average set to 11 and applied to close

We all know the theory behind moving averages. Wait for 4SMA to cross up over the 11SMA then we are in uptrend. And when the 4SMA crosses under the 11SMA then we have a downtrend.

Ok so now you have a ADX that crossed above the 35 level. And you have two simple moving averages that have crossed. If 4 crossed above the 11 then we are looking to buy. If 4 crossed down thru 11 then we are looking to sell. You can even use the +DMI and -DMI on your ADX. We all know that once the +DMI crossed up over the -DMI then we are looking to buy and when the -DMI crossed up over the +DMI we are looking to sell. But to make sure you are trading a strong trend wait for the DMI to also cross above the 35 level. If it is the +DMI that crosses above the 35 level then we have a strong uptrend. If it is the -DMI that crosses above the 35 level then we have a strong downtrend.

Anyway i have attached a chart. Look at it and then decide whether or not i am gambling, scalping or ............

ps....this is not a trading system so please dont ask me questions about backtesting, risk reward, time frames, EA's, etc. This is just a little trend catcher that i got from Matt Kirk a while ago that helps me get in and out of the market quickly knowing i am on the right side off things.
Attached Image (click to enlarge)
Click to Enlarge Name: gbp.gif Size: 37 KB
0 traders viewing now