Why do 99% of the people who wants to be traders fail? | Forex Factory

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Why do 99% of the people who wants to be traders fail?

  • #1
  • First Post: Feb 2, 2008 8:29pm Feb 2, 2008 8:29pm
Hello friends,
I have been thinking about this for a long time, yet cannot find THE answer to the question, why does 99% of the people who wants to be traders fail? What is that 1% of people that has it or has figured it out, that we cannot figure it.

After blowing a few accouts, I have been in quest to find the answer. I have read book after books, read blogs after logs, yet none of them really tells you what it is? then again if they know, they might keep it a secrete to benefit them. After all, we are talking about taking somebody else's money.

I have read it is about following a system to money managemet and so forth. I don't know the answer lies with in any techinical or automated system. Money managenment will only prolong the inevitable or not realize one's full potential. This only my humble opinion, so please don't attak me.

I decided to post this question to fellow trader wanna bes' to see what you think about, why does 99% of people fail when it comes to trading? Since I am unable to find "THE" answer on my own, I was hoping that we all could find it in a collective manner. What all this is the "ONLY" thing is going to save us.

Please feel free to share your thoughts and experience.
  • #2
  • Feb 2, 2008 9:39pm Feb 2, 2008 9:39pm
A high failure rate in trading is due to belief. Thought is the creative force behind all things.Thoughts about who and what you are determine how life will be experienced. People come to market out of a sense of need. It is this underlying belief in lack that prevents the success that they are seeking. If you believe you are incomplete and needing of anything then those thoughts will create a life that reflects those beliefs. There is no escaping the consequence of your thoughts about yourself. These underlying beliefs are hidden from view. Without a deep inquiry into self you will be unaware you are behaving against your own best interest, let alone why. Succesful traders regard the psychological aspect of trading as paramount and direct the required amount of attention to this area. They know it is the number 1 reason traders fail.
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  • #3
  • Feb 2, 2008 10:38pm Feb 2, 2008 10:38pm
I didn't really start making money until I took psychology and drama (i.e. me) out of the picture and went completely automated. What I have concluded from this exercise is this, that most people want trading to be exotic and exciting, full of intrigue and ego, when they find out it's a rather boring mathematical process, full of hard work, it no longer captures their imagination. So my theory is that most people never evolve their initial viewpoint of what trading is, they hold onto their non-existent fantasy of what they think it should be like, and therefore fail.

[Edit] Re-reading the above, I guess it's actually kind of the same as what MAC Doug wrote, but from a different perspective.
The breaking of a wave cannot explain the whole sea.
  • #4
  • Feb 3, 2008 3:26am Feb 3, 2008 3:26am
Great traders tell you. trade with the trend. Buy on the trend. make a bomb on a trend. Great trend like Eur / USD , this pair i think some guys must had made it there. cut your losses small. ( this is the fact that is mentioned in all books and i personally spoke to a millionaire trader. this is his advise)

Some curreccies is also on the way down. some guys could also had made it.

Important to have a system that can help you to trade with the trend. Look at MACD 4 hour system and OZFX 200 MA system. they are great long term system that can help to make alot of $$$.

selection of curencies. get something that you think will trend big way. Now is a great time to think as economy is reversing . USD might do well against some currencies. JPY might do well against some currencies, eg GPB/JPY .

Alot of people cut winners and let losers run.
  • #5
  • Feb 3, 2008 4:35am Feb 3, 2008 4:35am
there are many reasons most ppl fail. I think the single biggest is many new traders think it is easy, then when they learn it is not easy, they give up, often blaming others for the failure, either a broker, training course etc.

Another reason is lack of discipline. Trading forex successfully needs a lot of discipline.

I think many people can be successful traders if they are extremely disciplined and work hard.
  • #6
  • Feb 3, 2008 5:55am Feb 3, 2008 5:55am
I think almost two years practice required by newbie before coming on real. Newbie's have to learn from their mistakes but not on real. I mean from practicing on demo...
Newbie feel overconfident and excitment to become rich as quick as they can & which cause them as failure...
I saw lot of system fails and i think the best system for forex trading is your experience .... Which can make anyone perfect...
  • #7
  • Feb 3, 2008 6:50am Feb 3, 2008 6:50am
Quoting snakeye
Hello friends,
I have been thinking about this for a long time, yet cannot find THE answer to the question, why does 99% of the people who wants to be traders fail? What is that 1% of people that has it or has figured it out, that we cannot figure it.

After blowing a few accounts, I have been in quest to find the answer. I have read book after books, read blogs after logs, yet none of them really tells you what it is? then again if they know, they might keep it a secrete to benefit them. After all, we are talking about taking somebody else's money.

I have read it is about following a system to money managemet and so forth. I don't know the answer lies with in any techinical or automated system. Money managenment will only prolong the inevitable or not realize one's full potential. This only my humble opinion, so please don't attak me.

I decided to post this question to fellow trader wanna bes' to see what you think about, why does 99% of people fail when it comes to trading? Since I am unable to find "THE" answer on my own, I was hoping that we all could find it in a collective manner. What all this is the "ONLY" thing is going to save us.

Please feel free to share your thoughts and experience.
I started trading FX during September 2003. I demo traded using $50,000 accounts. I made my first FX trades during March 2006. My first 75 FX trades were all wins. In my first three months of trading I doubled a $25,000 US Dollars account to $50,000. I have managed as much as $250,000 US Dollars at one time. Over 80% of all my FX trades are winning ones. I have had margin calls, I have had EGO issues because of my earning PLUS 25% on managed funds each month of my FX trading career and at times I risked too much capital.

I consider myself based on actual performance (DOCUMENTED) to have the answer to how to be in the 5% winning group.

The MOST IMPORTANT factor has been posted on this thread.

Here it is...

Succesful traders regard the psychological aspect of trading as paramount and direct the required amount of attention to this area. They know it is the number 1 reason traders fail.

If I judge you have the psychological makeup and are prepared to learn the fundamentals which include the economics, the geopolitical and a good understanding of the technicals to time entry and exit points along with a good Risk Management and Event Management system you just might be able to join me in the 5% category.

My only reason for posting this answer is to say there is a proper way to trade and earn substantial profits. You need to invest the time and effort that it takes. I am coming up to my second full year of live FX trading and I still have much more to learn.

As good as your record is in demo trading it takes about two years of live trading to learn your profession. There is NO mechanical system out there that can guarantee success long term. Technical trading on it's own cannot work long term. Understanding the nature of the economics of the world, the changing geopolitical factors. Having a real understanding why for instance the FED just cut 1.25% from the discount rate gives you a edge on most other traders. I knew the cuts were coming 6 months ago because of my exhaustive fundamental research and knowledge.

I sincerely hope this post has helped to answer your questions.
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  • #8
  • Feb 3, 2008 7:07am Feb 3, 2008 7:07am
Quoting Umairs2004
I think almost two years practice required by newbie before coming on real. Newbie's have to learn from their mistakes but not on real. I mean from practicing on demo...
There is alot of learning for a newbie to do, akin to a degree course if not a phd. A demo is appropriate while learning analyisis techniques, risk management and market behaviour and is great for testing ideas but no amount of practice can substitute for live trading experience. demo trading is completely unlike live trading.A dedicated student could be ready to begin sooner than 2 years. Start small like 1k micro and manage risk to 1-2% per trade. No amount of demo trading will stop you making live trade mistakes so the sooner you can go live the sooner you will learn imho
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  • #9
  • Feb 3, 2008 7:57am Feb 3, 2008 7:57am
Most people fail in forex or most other self directed endeavors because of one primary flaw - lazy.

Half hour on this website alone should give you an excellent reference point for the proper forex educational requirements. Unfortunately you're on your own following through with your training, and how many people truly have the enthusiasm, drive, and discipline to succeed?
History is written by the victors.
  • #10
  • Feb 3, 2008 8:18am Feb 3, 2008 8:18am
Quoting M.A.C.Doug
There is alot of learning for a newbie to do, akin to a degree course if not a phd. A demo is appropriate while learning analyisis techniques, risk management and market behaviour and is great for testing ideas but no amount of practice can substitute for live trading experience. demo trading is completely unlike live trading.A dedicated student could be ready to begin sooner than 2 years. Start small like 1k micro and manage risk to 1-2% per trade. No amount of demo trading will stop you making live trade mistakes so the sooner you can go live the sooner you will learn imho
Well You might be right ...But im here describing my own experience....
Im doing a very good job ... forex is my part time business...I was much excited and open a live with fxcm at the start without much trading sence , proper planning and sytem...So lose some money at beginning as a newbie and close my account after that with disappointment...Then i practiced hard on demo for almost one and half year...Meanwhile i always considered demo as my real with stops, money managment, target profits & plannings...When i feel that im habitual of getting good pips per month with confidence then came on live with both mini & standard accounts & getting very good pips by the help of my own techinques, system, planning & specially my one and half year experience of demo...
Now My trading practice experience on demo is of one and half years & im on real from last 5-Years...
  • #11
  • Feb 3, 2008 12:08pm Feb 3, 2008 12:08pm
Quoting Warren Forex
I started trading FX during September 2003. I demo traded using $50,000 accounts. I made my first FX trades during March 2006. My first 75 FX trades were all wins. In my first three months of trading I doubled a $25,000 US Dollars account to $50,000. I have managed as much as $250,000 US Dollars at one time. Over 80% of all my FX trades are winning ones. I have had margin calls, I have had EGO issues because of my earning PLUS 25% on managed funds each month of my FX trading career and at times I risked too much capital.

I consider myself based on actual performance (DOCUMENTED) to have the answer to how to be in the 5% winning group.

The MOST IMPORTANT factor has been posted on this thread.

Here it is...

Succesful traders regard the psychological aspect of trading as paramount and direct the required amount of attention to this area. They know it is the number 1 reason traders fail.

If I judge you have the psychological makeup and are prepared to learn the fundamentals which include the economics, the geopolitical and a good understanding of the technicals to time entry and exit points along with a good Risk Management and Event Management system you just might be able to join me in the 5% category.

My only reason for posting this answer is to say there is a proper way to trade and earn substantial profits. You need to invest the time and effort that it takes. I am coming up to my second full year of live FX trading and I still have much more to learn.

As good as your record is in demo trading it takes about two years of live trading to learn your profession. There is NO mechanical system out there that can guarantee success long term. Technical trading on it's own cannot work long term. Understanding the nature of the economics of the world, the changing geopolitical factors. Having a real understanding why for instance the FED just cut 1.25% from the discount rate gives you a edge on most other traders. I knew the cuts were coming 6 months ago because of my exhaustive fundamental research and knowledge.

I sincerely hope this post has helped to answer your questions.


I think you are one of the true traders from the 1% category. I think you have a lot to offer. I didn't think that I would actually find anyone from the elite group. I agree with most of the things that you say. I think when become elite trader none of the technical or fundalmental really matter. At this stage, trading becomes a second nature that takes very little effort. You see the trade even before it happens. This just my humble opinion.

Can you explain your mindset, psychology, pertaining to trading as well as the life in general. If you don't want to share your techniques, that's OK. Like you said it's all about what is going in our head. I could have the best technical system, yet I won't see it the you see it, if mind set not where it should be. I think you could make biggest contribution to all of us who want to be like you.
  • #12
  • Feb 3, 2008 12:08pm Feb 3, 2008 12:08pm
Quoting Money-RX
Most people fail in forex or most other self directed endeavors because of one primary flaw - lazy.
I don't think it's just laziness.

I think it's to do with ability. Some people simply can't trade, and were never meant for this game.
  • #13
  • Feb 3, 2008 2:59pm Feb 3, 2008 2:59pm
Quoting forexmoments
I don't think it's just laziness.

I think it's to do with ability. Some people simply can't trade, and were never meant for this game.
Very true. And most will never know if they have the ability because they will not do whatever it takes to position themselves for potential success.

It is no coincidence that less than 1% of the wealthy in the US pay over half of the tax revenue. A few people have the right attitude and mindset while 99.9% of the rest are merely passive dreamers looking to win the lottery.
History is written by the victors.
  • #14
  • Feb 3, 2008 3:17pm Feb 3, 2008 3:17pm
LOL "meant for the game" as if it is genetic. What a joke. Successful forex trading is based on luck, not intrinsic ability or skill.

Quoting forexmoments
I don't think it's just laziness.

I think it's to do with ability. Some people simply can't trade, and were never meant for this game.
  • #15
  • Feb 4, 2008 12:48am Feb 4, 2008 12:48am
Quoting snakeye
Hello friends,
I have been thinking about this for a long time, yet cannot find THE answer to the question, why does 99% of the people who wants to be traders fail? What is that 1% of people that has it or has figured it out, that we cannot figure it.

After blowing a few accouts, I have been in quest to find the answer. I have read book after books, read blogs after logs, yet none of them really tells you what it is? then again if they know, they might keep it a secrete to benefit them. After all, we are talking about taking somebody else's money.

I have read it is about following a system to money managemet and so forth. I don't know the answer lies with in any techinical or automated system. Money managenment will only prolong the inevitable or not realize one's full potential. This only my humble opinion, so please don't attak me.

I decided to post this question to fellow trader wanna bes' to see what you think about, why does 99% of people fail when it comes to trading? Since I am unable to find "THE" answer on my own, I was hoping that we all could find it in a collective manner. What all this is the "ONLY" thing is going to save us.

Please feel free to share your thoughts and experience.
The reason so many traders fail is because the gyrations of the markets are mostly random. Money management and psychology are not enough to beat the markets.
Domo Arigato, Mr. Roboto!
  • #16
  • Feb 4, 2008 1:19am Feb 4, 2008 1:19am
Forex is gambling. It's only a matter of time before a huge losing streak comes.... That's why so many people lose.

Don't you agree with me, Seeking_Light?
  • #17
  • Feb 4, 2008 1:33am Feb 4, 2008 1:33am
if indeed 95%-99% of trader are not that successfull, by natural selection, the market is evolving in very very rapid speed. though the player may try again and again, but it is just like having an epidemic that decimate us every now and then.
but what if forex loss is deducted from other trading profit? such as import/export, then we can say 95%-99% of forex trader don't really care their loss.... (of course it not true) (but i don't know if it is false either)
  • #18
  • Feb 4, 2008 2:00am Feb 4, 2008 2:00am
Quoting Warren Forex
The MOST IMPORTANT factor has been posted on this thread.

Here it is...

Succesful traders regard the psychological aspect of trading as paramount and direct the required amount of attention to this area. They know it is the number 1 reason traders fail.
"Successful traders" know how to trade. Therefore, the only problem at that point is controlling ego, impulses, etc, i.e. psychology. This is their opinion AFTER THEY KNOW HOW TO TRADE.

Regardless of your psychological makeup, you must learn to trade or you will not be successful, period.

Quote

You need to invest the time and effort that it takes. I am coming up to my second full year of live FX trading and I still have much more to learn.

As good as your record is in demo trading it takes about two years of live trading to learn your profession.

This is the answer. Practice, study, learn, trade, find what works for you. After a year or two of practice, and a year of two of winning, you will have confidence and certainty, and will have the psychological makeup of a successful trader, it will be automatic.

But you can't have the mindset if you don't know what you're doing. You can repeat as many times as you want, but with no effect, "I am Elmer J. Fudd. I own a mansion and a yacht."
  • #19
  • Edited 2:34am Feb 4, 2008 2:07am | Edited 2:34am
Quoting snakeye
Can you explain your mindset, psychology, pertaining to trading as well as the life in general. If you don't want to share your techniques, that's OK. Like you said it's all about what is going in our head. I could have the best technical system, yet I won't see it the you see it, if mind set not where it should be. I think you could make biggest contribution to all of us who want to be like you.
While this might provide insight &/or entertainment, I think the key is that this person practiced demo for 2 1/2 years before going live.

I'm not recommending this, my belief is that learning goes more quickly with real money, even if it's a very small amount. I agree with Warren when he says it takes about 2 years of live trading to "get it". So why not go live and get on with it?

I think after you trade for 4 - 5 years as Warren did, you would have the mindset you need to trade successfully. I don't think you can get it by someone else telling you how they think. You can't just put it on like a pair of his shoes.

And, even if you could, they may not fit you.
  • #20
  • Feb 4, 2008 5:08am Feb 4, 2008 5:08am
....Forex is gambling. It's only a matter of time before a huge losing streak comes.... That's why so many people lose......

I don't hold out that I know anything. I like it that way and so does my lawyer.
But, I've found most of the people I personally know who've lost in FX the past year or two
were buying US dollars and short Euro in some fashion. That's not gambling, it's being stupid !
Euro goes up, they sell it. It goes up, they sell it. Dollar drops, they buy it. Makes no sense.

Actually worked in '05, but payback was double for '06 & '07. We gotta brand new year.

Again, how does anybody know anything, but M. Lynch is eyeing 157 eur/usd this year.
B of A says 135/36 by year end. Lots of 140 consensus out there too.
Somebody's being stupid again and we've got all year to figure it out. Trick is to figure out WHO !

Remember, you BUY an appreciating asset and LEASE a depreciating asset.
That should apply to fiat currencies as well, if the plan is structured properly.
Maybe I'll "rent" some dollars and buy some common sense - a rare commodity these days.
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