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

  • #261
  • Jan 2, 2008 9:59pm Jan 2, 2008 9:59pm
You have a finite amount of capital. That is the "edge" that the broker has as he assumes your risks....

Every trade has the potential to take a significant percent of your account. That, my friends, is why money management is so important. Rob Booker and Merlin have stressed this in several posts.

You should do everything in your power to protect your capital. The fact is, the markets are random, no matter what any indicator or mythical fibonacci number tells you.

PROTECT PROTECT PROTECT. Get out of losers quick, because without capital you are nothing but a sidelined player on the injury list.

There will always be a few "lucky" winners that figure out more probable ways to survive, and make nice profits. However, those that trade without stops (or even without tight stops) will feel the pain.
  • #262
  • Jan 3, 2008 10:31am Jan 3, 2008 10:31am
You have a finite amount of capital. That is the "edge" that the broker has as he assumes your risks....

The broker more importantly understands that the market is statistically not going to gap up and down consistently or significantly enough to cause them to loose their shirts as a market maker. The worrisome time for them is during news events and some brokers just don't quote until things have stabilized. They make an absolute killing on spreads alone and on stop hunting especially breakeven stops.

If anything they may understand that the majority of retail traders have no clue about the complex sophistication of this market. They also understand fear and greed and that newbies will be hard pressed to manage their emotions properly enough to put the time in and stay the course to really study the markets to get a grasp on how they really work.

Every trade has the potential to take a significant percent of your account. That, my friends, is why money management is so important. Rob Booker and Merlin have stressed this in several posts.

CORRECT!

You should do everything in your power to protect your capital. The fact is, the markets are random, no matter what any indicator or mythical fibonacci number tells you.

The truth is that the market is not random at all. It may "appear" random due to a lack of understanding as to why a move is occurring but there is always a reason for price movement. I was in the "randomicity" camp until I got schooled by a pro. The trick is correctly determining what is driving the price action and coming up with a game plan for getting into it as long as the reward is worth the risk. To boil it down to a "trick" belies the incredible amount of wisdom it takes to properly judge what is going and an why. It could be an economic news event on the forex factory calendar hitting or missing numbers, a merger/acquisition deal, some central banker intimations, equity market upheaval ,the "force" of stronger currency pulling dragging a pair up or down, commodity prices, ana reaction to fibonacci level. Overwhelming or infinite complexity should never be confused with randomness. Unfortunately it takes a great deal of diligent research and patience and then more research to learn how to consistently locate an edge with all these factors that can have an impact on the speculation that causes price movement.

PROTECT PROTECT PROTECT. Get out of losers quick, because without capital you are nothing but a sidelined player on the injury list.

CORRECT!

There will always be a few "lucky" winners that figure out more probable ways to survive, and make nice profits. However, those that trade without stops (or even without tight stops) will feel the pain.

The lucky ones are those that understand the how currency markets work, from a top-down point of view. These are the diligent, seasoned traders that confidently find and take low risk and astute trades.


  • #263
  • Jan 3, 2008 11:37am Jan 3, 2008 11:37am
This is simple.

1. It is not about Risk or MM.

2. It is simple as this. 95% are not imbeciles - we are talking of university graduates from different fields, non-graduates that have been successful in other endeavors. Old and young people. Does this mean all do not know anything.

I always argued that if 95% of traders are not successful it means that the problem lies in our methods and not ourselves. Numbers don't tell lies. I can't remember when I failed woefully until I started out in forex trading. I have suffered so many emotional and financial injuries in the past just because of my using wrong methods.

It means that linear methods are just not right for trading or otherwise 95% would have been successful. This is simple mathematics. If 95% failed it is the method, not us.

You can talk about money management, 1% of equity, I do not think George Sorros used 1% of his equity to moved market against the British Pound in those days.....not sure of the story but it did happened. ... and (he made 2 billion or so out of 1 billion, not sure of actual amount. definitely it was not 1% of his equity, but he stake all his has using quantum method because he knew that 95% were wrong). He used something 95% do not know about.

But 95% are made to worry too much about MM, instead of methods of trade.
  • #264
  • Jan 3, 2008 1:24pm Jan 3, 2008 1:24pm
i think it ill be come on because of

money management
  • #265
  • Jan 3, 2008 4:03pm Jan 3, 2008 4:03pm
Percent of equity is one of the most meaningless stats. If you have 500 in an account and trade 1 dollar lots, you only lose the 500 dollars if you trade -500 points. It means your not a good trader. If you have 10,000 in your account and you trade 1 dollar lots. If you lose 500 points you lose 500 dollars. The person who lost 100% of his account and the person who lost 5% of his account still lost the same amount of money. The same is true if they win. Trader A may have increased his account 100% and Trader B may have increased it 5% but they still made the same amount of money.

The advantage of mini accounts and micro accounts is you have guarenteed the minimum amount of money you could lose. Trader A potential loss is 500, trader B is 10,000. So who is the wiser???
  • #266
  • Aug 17, 2010 5:21am Aug 17, 2010 5:21am
Quoting iandekoker
After reading numerous of these threads I realize why most traders DO NOT make money in forex. It's because of the following reasons:

1. Traders open a mini/micro account with $500 and then play volatile currencies with $1 lots. Now this is a sure way to blow account after account. Besides you will NOT make money trading a mini/micro account. The odds are against you. That is the reason why brokers allow you to open a mini/micro account. They know sooner or later you will get your leverage and/or stop losses wrong.

2. Most traders DO NOT know...
1. Thats a psychological issue, not a broker issue

2. Ummm have to point out here that most pairs range 100+ pips per day, therfore there are lots of 100+ opportunities every day, just by trading off extremes at Supply/Demand. Although I do agree that a 200pip stop is dumb. I mean how could it take 200pips to figure out you got it wrong?

3. Ive written a bunch of LEADING indicators, Im not sophisticated enough to use exponential anythings or stochwhatevers, tho. Are you aware that your statement about how much price can move in 4 hours is in conflict with your earlier assertation about profit potentials?

4. I wasnt aware that gold priced dropped by all that much in the last half of 2008 to drive AUD to almost half its value.

5. Absolutely.

I think most people lose in forex because it is competitive in nature and most people are taught to not compete, that showing up is good enough, that education stops as soon as you leave school and that working hard means 40 hours per week selling their labour to another man.

G.
  • #267
  • Aug 17, 2010 5:26am Aug 17, 2010 5:26am
I'm not sure I know a lot of people who are able to follow the myriads of 'trading rules' I see here on forex factory and succeed.
Keep it simple is the name of the game, anyways, i daresay the problem is not peculiar to forex, do we ask ourselves questions like, how many small businesses that start up survive after the first 2 years consistently making profit? or why can't i get up every morning to jog at 5am consistently for a whole month?
the truth is the cause of the problem is majorly in the mind, no matter what trading system you have if you cannot follow it, you will fail. People need to spend less time looking outward and spend more time looking inward.

discipline forms character and character is what most people lack.
  • #268
  • Aug 17, 2010 6:02am Aug 17, 2010 6:02am
Trading needs at least 2000-3000 hours of learning, practice and revision on a demo account.

95% of traders dont do that.
  • #269
  • Aug 17, 2010 7:51am Aug 17, 2010 7:51am
blah blah blah
Time hides Nothing
  • #270
  • Sep 30, 2015 9:26am Sep 30, 2015 9:26am
Retail traders lose because the market is rigged for them to lose. Fx is controlled by the big banks, it's their game. You're better off gong to Las Vegas, at least there you can enjoy some drinks and a show while you're losing your money.
  • #271
  • Sep 30, 2015 9:36am Sep 30, 2015 9:36am
"I always argued that if 95% of traders are not successful it means that the problem lies in our methods and not ourselves. Numbers don't tell lies. "

Numbers indeed don't lie - it means forex is a rigged market. The problem does lie in ourselves, traders keep coming back to play in an unfair game. Your first loss is your best loss - it's telling you to quit being a sucker and get out of forex. There's a much better way of making money - get a job.
  • #272
  • Sep 30, 2015 10:40am Sep 30, 2015 10:40am
Quoting bredin
and that working hard means 40 hours per week selling their labour to another man.
Who then takes risk in business similar to the risk traders do.

I agree with you, it's a mindset/education/cultural thing. I like to say "stop working hard, start working smart". I actually know a few millionaires, all made their money with smart ideas (not to mistake with smart new products, btw!), hard work may be part of it (is almost always was) but it was never the reason for their success. Know your times value, if your money relies on your time you're f*ck*d. You can't scale your time, only workers, space and money.

I'm honestly not sure if I should get involved in those "why retailers lose" discussions, so if I stop to respond you know I made up my mind

Quoting gravitist
"I always argued that if 95% of traders are not successful it means that the problem lies in our methods and not ourselves. Numbers don't tell lies. " Numbers indeed don't lie
Yes, they don't, but no, maybe the calculation of that number is/was flawed. There clearly is a potential time frame issue. btw, the numbers are not THAT different from new businesses.

Quoting gravitist
Your first loss is your best loss - it's telling you to quit being a sucker and get out of forex. There's a much better way of making money - get a job.
That may be true for you and for many other people. However, if you're actually running a business losing is just part of it just like in trading (hint: your boss is running a business, it's the very reason people like you can get a job). Early 2010 I bought myself into an engineer office in Germany, end of 2010 I noticed my business partner has a few problems and is sabotaging our success. End of 2011 I finally realized I need to push him much harder to not let the company fall apart. 6 Months later I realized he has bipolar disorder little bit later he died by a brain bleeding. After a fight with his heirs I took over the entire business, remodeled it a little bit and sold it off pierce by piece. I did all that next to taking care of the day to day business. And now people want to tell me trading is harder? Yeah, good joke. Since I'm trading I can actually manage my risk much better than I ever could in so called real business, I can sleep at night and I barely work more than a few hours a day.
  • #273
  • Sep 30, 2015 11:33am Sep 30, 2015 11:33am
"if you're actually running a business losing is just part of it just like in trading (hint: your boss is running a business, it's the very reason people like you can get a job). "


Trading retail forex isn't a business, it's a hobby or worse yet, a gambling addiction. Oh, btw, I don't work for a company, I teach at a university. What you say may be correct, but the fact remains most retail traders lose. It's because the game is designed for them to lose.
  • #274
  • Sep 30, 2015 11:41am Sep 30, 2015 11:41am
Quoting gravitist
It's because the game is designed for them to lose.
Ok fine, I give up. Believe want you want.
  • #275
  • Sep 30, 2015 11:44am Sep 30, 2015 11:44am
LOL ... this thread was dug up from the past .... eh? Same old topic, same old outcome.

For those who haven't or can't, it's gambling. For those who can and have, it's business. Yada yada yada ....

One need look no further back than Smartmoney's post #262 for the truth of it all.
Ghost Rider - WWTBMD?
  • #276
  • Sep 30, 2015 11:48am Sep 30, 2015 11:48am
Here are my 2 cents on this matter.

You can trade forex with leverage but you can also trade it without leverage. Just shuffle the real money you have from one currency to another and start thinking about which currency you should keep it in. If you start trading without leverage currencies (as an investor not a trader), you will start thinking completely differently about economic news, technical analysis, etc. You will start looking for bonds yields (an essential part of the fx market!!!). You will also realize how complex and random trading is (like trying to predict the movement of a candle in the wind).

Most people that come to forex are looking to get rich quick and without effort. That's gambling, end of story. If you want to get good at it, you can as well try poker. May be your chances are higher there.

If you really want to be succesful in foreign exchange, trade without leverage, and get happy with +10% to +30% growth per year. That's the right mind set.
  • #277
  • Edited 9:55pm Sep 30, 2015 8:49pm | Edited 9:55pm
Quoting albchr
One need look no further back than Smartmoney's post #262 for the truth of it all.
Thanks Chris. I read that post when it was written, and it struck a chord with me, but then I've never been able to find it again. Totally agree with you, his comments about randomness (the largest paragraph in blue typeface) are especially true IMO, and nothing much has changed in the intervening 7 years. Too bad that he only ever contributed 3 posts before disappearing.
  • #278
  • Sep 30, 2015 11:11pm Sep 30, 2015 11:11pm
Quoting gravitist
"if you're actually running a business losing is just part of it just like in trading (hint: your boss is running a business, it's the very reason people like you can get a job). " Trading retail forex isn't a business, it's a hobby or worse yet, a gambling addiction. Oh, btw, I don't work for a company, I teach at a university. What you say may be correct, but the fact remains most retail traders lose. It's because the game is designed for them to lose.

I would argue that universities are businesses.
  • #279
  • Oct 1, 2015 3:09am Oct 1, 2015 3:09am
Quoting hanover
{quote} Thanks Chris. I read that post when it was written, and it struck a chord with me, but then I've never been able to find it again. Totally agree with you, his comments about randomness (the largest paragraph in blue typeface) are especially true IMO, and nothing much has changed in the intervening 7 years. Too bad that he only ever contributed 3 posts before disappearing.
Hi David, yeah well, you know how it goes here. Most of the good ones remain very scarce. Too busy ... you know ... trading.

Hope all is well buddy.
Ghost Rider - WWTBMD?
  • #280
  • Last Post: Oct 1, 2015 4:19am Oct 1, 2015 4:19am
Quoting hanover
Simple: The main reason most traders lose is randomness plus costs. Trading is a negative sum game. David
This one simple sentence sums it up so well. Trying to find a real edge that is not just a part of a normal randomness set is the challenge IMO
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