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Why you lose money and will always lose 31 replies

The one reason that trumps all other reasons why traders lose 262 replies

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The reason why 95% of new traders consistantly lose money

Quoting dpereira
Let's say you take a position and it goes against you, what do you do, you just wait until it goes back up ...
Nah... That's when I cast a net in another Lagoon.
Thanks for this post FXTitan

im a noob trying to make sense of everything and so far ive realized that money mgmt and position size are more important than anything...your post got me thinkin bout stop losses and hedging now....

btw am i thinkin this out right?

you do the things upsidedown - you close out ur wins and let your losses loose
and you use hedging so that if your trade goes against you, you still profit a certain amount?
Because 95% of the loser traders are trading on rigged platforms. I have come to a realization that all MT4 platforms are rigged in favor of the house.

Of course this is just one of the reason and trader's psychology is another HUGE factor.
I'd like to see some examples of this....

Charts, please?

Quoting FXTitan
It is very simple... As has been said by another famous trader/ mentor, CUT YOUR PROFITS AND LET YOUR LOSSES RUN! If your stops are going to be hit anyway, why don't you allow them to make you money instead of losing you money?

This is exactly the opposite of the mantra every broker/ market maker drills into you. They make you believe that you will be safe if you cut your losses short and use stops to protect yourself. They make you believe that with some cool system you will consistently win more trades than you lose or win more money than you would lose by having the right risk/ reward ratio. These guys fully know that you will lose all your money eventually just like the other 95% of traders out there. You will be just another usual statistic if you trade like everyone else trades.

Now this is where gearing and money management really come in. If you use low gearing {1% of your account per trade} you can let the market swing very wide and very far against your position. If you now use a stop to take profits, it will eventually be triggered just like your stop for loss would have eventually been triggered.

Now look for possible turning points. I am sure you can find an indicator/ price pattern that does that. Only work on longer time frames, 4hr minimum, daily is good. Hedge your position, go long/ short at the same price with the same profit target both ways. You can also make your profit target bigger in the direction of the larger trend. Now your stops will definitely be hit no matter which way the market swings.

But, you might ask, what about open positions that really run away against you? No problem. As your account balance grows, you will still use 1:1 gearing. When your account balance keep growing by booking profits, the percentage drawdown of previous open positions with smaller lot sizes will shrink {in relation to total account size} because the current lot size you use now will grow too and so determine your bigger profits as well.
Good post.
Trade what you see, not what you think.
Quoting BurgerKing
Because 95% of the loser traders are trading on rigged platforms. I have come to a realization that all MT4 platforms are rigged in favor of the house.

Of course this is just one of the reason and trader's psychology is another HUGE factor.
Forex has always been rigged. I've been saying it for years.
I can assure you what we are seeing is only the tip of the iceberg. Other retail brokers have similar practices as metatrader brokers. There are plenty of machinations going on in this market; most of the parties involved, banks, brokers, market makers, large hedge funds and other big operators are far from being squeaky clean.
Retail traders are just small fish (prey) in a big ocean.
You need to become an institutional trader to trade FOREX.
FOREX is like casino if you are a retail trader and trade through a cheap broker.
Trainee at UBS Investment Banking
Quoting PipStar
Forex has always been rigged. I've been saying it for years.
I can assure you what we are seeing is only the tip of the iceberg. Other retail brokers have similar practices as metatrader brokers. There are plenty of machinations going on in this market; most of the parties involved, banks, brokers, market makers, large hedge funds and other big operators are far from being squeaky clean.
Retail traders are just small fish (prey) in a big ocean.
PipStar, if forex is rigged, then I believe that this is great cause for optimism. The key is to find out as much as we can about how the manipulators trade, and place our entries and exits at or around the same points that they do.

A random game can never be beaten, but we can easily win in a game where there are discernable patterns that result in predictable beahvior.

Your signature says it all: "Find an edge. Snatch the advantage from your opponent. Stack the odds in your favour. Trade only when there is an overwhelming chance that you will win."

The key is to somehow find that edge.

David
Quoting BurgerKing
Because 95% of the loser traders are trading on rigged platforms. I have come to a realization that all MT4 platforms are rigged in favor of the house.

Of course this is just one of the reason and trader's psychology is another HUGE factor.
Well i traced this back to your thread here:
http://forexfactory.com/showpost.php...0&postcount=19

Thanks for the eye opener
I guess at this point stay away from MT4 and maybe SL's too...
What else can you do to protect yourself short of leaving FX altogether?
Quoting FXTitan
Hi

I have been trading forex fulltime on and off for more than 7 years. I have bought and completed several forex courses, read books, did online research on forums such as this one and even tried out EA robots. The only consistent thing that kept on happening was that I was bleeding money. Sure, I would have one or two profitable months, but I mostly lost money. I have wiped out several trading accounts causing myself terrible heartache during this time.

I would bet that every trader reading this post can and is identifying with me. Most of us reading these forex forums are consistent losers in forex and we wouldn't be here if we weren't looking for a better way to trade...

Have you ever wondered why 95% of traders lose consistently? What is the most common thing that most traders consistently do? What is the most urgent mantra that is drilled into our brains while learning to trade? Can anyone guess?

It is using stops! CUT YOUR LOSSES AND LET YOUR PROFITS RIDE!

95% of all traders consistently lose money because they use stops. Big stops, small stops, trailing stops, you name it. Who of us can truly know which way the market will go? Even by using every indicator, being a technical or fundamental fundie, no one can predict market movement.

Who of us thought that the usd would fall 200p against the gbp at the Feb 2008 nfp report. The worst report in 4 years produced exactly the opposite result than we expected! How many fib bounces did exactly work out as you hoped? How many times did the market take out your stops when you least expected it and turn around to go in the original direction you planned?

This is my theory. Traders that lose consistently, use stops. Forex trading is a guessing/ gambling game. The market makers indirectly participate in the forex market by finding traders dumb enough to actually trade and by trading I mean losing their money to the brokers' account. The brokers make money in forex not by trading themselves, but by having noobies trade for them and losing.

The traders who have become successful and that have stuck around long enough knows that no strategy using stops, consistently works and make money. So what have they done? These traders had to start thinking out of the box. Only by turning everything they know onto its head were they able to change their results.

Since I had this 'awakening' I have not lost a single trade. I have 100% consistent winning track record! No Bull! {Don't worry, I am not selling anything...}

Ok, so how does it work? Lets say instead of using stops to book your losses, you use stops to book your profits... Huh?

It is very simple... As has been said by another famous trader/ mentor, CUT YOUR PROFITS AND LET YOUR LOSSES RUN! If your stops are going to be hit anyway, why don't you allow them to make you money instead of losing you money?

This is exactly the opposite of the mantra every broker/ market maker drills into you. They make you believe that you will be safe if you cut your losses short and use stops to protect yourself. They make you believe that with some cool system you will consistently win more trades than you lose or win more money than you would lose by having the right risk/ reward ratio. These guys fully know that you will lose all your money eventually just like the other 95% of traders out there. You will be just another usual statistic if you trade like everyone else trades.

Now this is where gearing and money management really come in. If you use low gearing {1% of your account per trade} you can let the market swing very wide and very far against your position. If you now use a stop to take profits, it will eventually be triggered just like your stop for loss would have eventually been triggered.

Now look for possible turning points. I am sure you can find an indicator/ price pattern that does that. Only work on longer time frames, 4hr minimum, daily is good. Hedge your position, go long/ short at the same price with the same profit target both ways. You can also make your profit target bigger in the direction of the larger trend. Now your stops will definitely be hit no matter which way the market swings.

But, you might ask, what about open positions that really run away against you? No problem. As your account balance grows, you will still use 1:1 gearing. When your account balance keep growing by booking profits, the percentage drawdown of previous open positions with smaller lot sizes will shrink {in relation to total account size} because the current lot size you use now will grow too and so determine your bigger profits as well.

By using low gearing you consistantly book, say 1-5% profit on every trade. Your equity balance will fluctuate and your free margin balance will also fluctuate but at a relatively constant percentage of your total account balance. If you use larger gearing like say 5:1 and 10:1, your account might be wiped out because your margin will not be able to carry it if you have multiple positions open.

Now you have to think what is the reason for you trading? Is this a longer term investment strategy or are you suicidal? {I recommend you keep your day job, for now} By suicidal I mean, trying to scalp or using any other short term strategy that doesn't work in the long run and under various market conditions. Using longer time frames for this investment strategy is definitely better! It is a fact that when you close your account, using my strategy, in the end, that the negative open positions will then be closed as well and you will then book your first real losses.

This is not a big deal if your available equity has grown much larger than your opening balance when you close your account. I, for example, am currently growing my account by a minimum of 10% a week and this current week on the gbp/usd is up 23% so far. The power of accumulated growth is truly amazing! I have fine tuned this strategy to produce better results and started using it on a new account and I have so far doubled this account since 7 Jan 2008 {15 Feb today}.

I am not writing this to show off how brilliant I am, but to challenge the broker induced/ losing trader mentality that you have been taught that prevents you from becoming successful in forex.

If you can start with $1000 and grow it consistently over time, you will be able to show a spectacular return on your investment when you close your account even after taking the loss in the end from the accumulated losing positions. If you manage to make 10% accumulated growth per week on your capital over a year, your available equity in the end will be many times larger than your opening account balance. Work it out on paper and you will prove it to yourself.

The power of hedging is great. If, however, you only trade in one direction, {say the direction of the weekly trend is up} and you keep buying the dips/ possible turning points on a daily chart in the weekly direction and the market for some reason keeps going against you and you find yourself 1000p down, then you run the risk of wiping out your account because all your open positions will be negative and will grow until your margin collapses. By hedging every new position in this scenario, you keep booking profits on the way down and you can just wait for the market to turn around to go back up again and resume the weekly bull trend.

Now I am not trying to sell you a system and I won't give you my system either. I have suffered too much to just give it away. This is my intellectual capital and my trading edge. I have paid my dues to learn this game the hard way. I am sure you guys understand that. I do not care to prove myself to the skeptics among you so I will not post any of my results. You have to decide if you want to take me at my word or not. I merely want to make you consider what I wrote and to challenge you to start thinking out of the box. If you start working on it, you will find your own market beating strategy and have plenty of free time to enjoy your profits.

I have now become one of the 5% of traders who consistently win, without using stoplosses, and make good money.

Good luck
Thanks you for your honesty.

Here are my thoughts. Forex is virtually impossible if you depend on indicators and wanna day trade. The only way your gonna make a success of forex is when you take long term positions. If you keep your positions open for weeks and even months. Obviously with the correct money management.

There is just NO way ur gonna make a succes of forex if you intraday trade. A lot of people will disagree with me and they are welcome to.

But in the end they will all lose their money.

I have a thread where i asked traders to post their live account statement so everyone can see how profitable they are. Very few are willing to do it. For obvious reasons. And that is reason enough to tell me they are all in your situation.

There is a reason why every forex broker says: "Dont trade with money you cant afford to lose"
Quoting Time
Thanks you for your honesty.

Here are my thoughts. Forex is virtually impossible if you depend on indicators and wanna day trade. The only way your gonna make a success of forex is when you take long term positions. If you keep your positions open for weeks and even months. Obviously with the correct money management.

There is just NO way ur gonna make a succes of forex if you intraday trade. A lot of people will disagree with me and they are welcome to.

But in the end they will all lose their money.

I have a thread where i asked traders to post their live account statement so everyone can see how profitable they are. Very few are willing to do it. For obvious reasons. And that is reason enough to tell me they are all in your situation.

There is a reason why every forex broker says: "Dont trade with money you cant afford to lose"

It's so sad that you are talking out of your arse. You need to get to know some traders personally that do this for a living, trading intraday. People do it. Most that do it don't define themselves as "intraday traders" they are just traders.
They pick their entries, sometimes they stay in for hours, sometimes minutes and sometimes weeks, however much potential is offered, that is what they take and that's what makes them great traders.

You sit on your chair in your home and have now encrusted around yourself a shitty belief system based on your own failure.

Good going
Quoting Time
There is just NO way ur gonna make a succes of forex if you intraday trade. A lot of people will disagree with me and they are welcome to.

But in the end they will all lose their money.
Here he goes again.

Please tell me Time, how long in your "expert" opinion does this take to happen?

I just want to know how long I have left in this industry.
Carpe Divitiae
Quoting blueruby
I read BWILC. Tried "letting my losers run" and, guess what?

One of them ran, and ran, and ran some more.

I soon decided that stops were for me, and bird watching wasn't.
Not using stops worked better for me in ranging trading. Once there was a break out above the range of EUR/USD in Nov of 07 I thought it would come back and to this day it still hasn't. I finally did cut the loss months after but it didn't wipe out my account because I used low gearing.

Although I no longer use the "run your losses and cut your profits" method, I will not say that it doesn't work. It just doesn't work for me. I believe that a loss is inevitable using that or any method and a trader would still need a stop loss even if it is a very large one.

More importantly, how efficient is running your losses? What is the percent of gain per month or year relative to simply buying and selling at support and resistance or riding trends? I don't think there is a single answer but for me cutting my losses and running my profits is far more profitable.
Quoting bobblong
It's so sad that you are talking out of your arse. You need to get to know some traders personally that do this for a living, trading intraday. People do it. Most that do it don't define themselves as "intraday traders" they are just traders.
They pick their entries, sometimes they stay in for hours, sometimes minutes and sometimes weeks, however much potential is offered, that is what they take and that's what makes them great traders.

You sit on your chair in your home and have now encrusted around yourself a shitty belief system based on your own failure.

Good going
I do not appreciate your lack of respect in making this comment. So i have asked the moderators to give you an infraction.

If you cannot responde in a decent manner then please refrain
Quoting Time
I do not appreciate your lack of respect in making this comment. So i have asked the moderators to give you an infraction.

If you cannot responde in a decent manner then please refrain
You are like one of those people that would sentence crazies in the middle ages to death by hanging because they said the world is round but it is obviously flat. You are sewing ideas in other people's minds when you post here, so it is my duty to counteract the harm you inflict.
Quoting Time
I do not appreciate your lack of respect in making this comment. So i have asked the moderators to give you an infraction.

If you cannot responde in a decent manner then please refrain
I think you relish and invite responses like this.
Everything you post has a confrontational undertone.
You state what you perceive as "fact", which is infact nothing but speculation and conjecture on your part. Then you sit back. Wait for someone to disagree with you so that you can play the victim. Run to the mods and ask for a wrist slapping to take place on your behalf.

People on here are not as stupid as you hope they will be.

Respect is EARNED, not just given by default.

I'm sorry to say, but to me, it is quite obvious why you are a failure.
If you don't like to hear people telling you that you are talking out of your arse. Then stop doing it. Simple as that.

Go on, bring on the infractions... I'd gladly take one every time I reply to you.
Carpe Divitiae
Quoting Time
Thanks you for your honesty.

Here are my thoughts. Forex is virtually impossible if you depend on indicators and wanna day trade. The only way your gonna make a success of forex is when you take long term positions. If you keep your positions open for weeks and even months. Obviously with the correct money management.

There is just NO way ur gonna make a succes of forex if you intraday trade. A lot of people will disagree with me and they are welcome to.

But in the end they will all lose their money.

I have a thread where i asked traders to post their live account statement so everyone can see how profitable they are. Very few are willing to do it. For obvious reasons. And that is reason enough to tell me they are all in your situation.

There is a reason why every forex broker says: "Dont trade with money you cant afford to lose"
Time, you should read 'millionaire traders' by kathy and boris. Real good stories. I'm more impressed by their dedication and the obstacles they had to overcome.

One guy had to take months just to save $1000 and now he's a full time traer taking only few pips/day using automated mechanical system.

No there are no live statements in the book, but they are real traders who make a living out of it. They also have a trader who make about 20%/year holding positions for weeks or months at a time. I believe I am like him. I like trading, but I don't see myself daytrading and trying to make a living out of it (too demanding!)

But the point is that there are many ways to make money in forex. You just gotta use your brain and throw your ego and ignorance to the side.
Working towards CME membership
Hilmy83 is right, Kathy and Boris' book is very interesting, and it will make you realize your problems are similar to what all traders face at first.

There's actually a post about a course that has great info about pitfalls new traders fall into, and it teaches some very solid money and risk management techniques for newbies.

It was in the news section yesterday. I went through it last night, and it's fantastic. I recommend it for new traders. Here's the link:

http://www.pfxglobal.com/index.php?o...141&Itemid=345
Sounds good, thanks for the insight.
Hi again

You must understand my reason for starting this post. I wanted to share with you my experience in working something out that is against everything we have been taught by people who have a vested interest in us traders either trading many times a day or losing consistently.

I turned the traditional paradigm on its head and used what I have learned {over the years} does not work and designed a system that now works like a bomb.

If I post my charts and my live account statement, I will then give my strategy away to all of you clever guys out there who will be able to work out exactly what I do. So, unless I start selling my system for $1000 a pop like other online vendors, I do not feel that I need to prove anything to anybody.

If the market just takes off, like someone stated, you do not need to be net long when the market goes up. Why? Because you will be identifying turning points in the direction of this strong trend as well and will continue to hedge your long entries, as well as your short short. This means that even when the market just goes up, you will still make money on the hedge trades that are in the direction of this strong trend. You thus win on your short and long trades because those trades will be long and short at the same price. This also means that every profit you take will be higher than the last one because you will be using bigger lot sizes as your account grows.

If you then started trading using 0.01 lots and after 6 months you are trading using 100k lots, then the loss that you are carrying on the 0.01 lots will be only a fraction of your account size. Does that make sense?

I though do have a continual, average drawdown of about 20-30% {I think} on my account at any given time. This doesn't worry me, because my account balance keep growing and my drawdown stays a constant percentage of my account balance. My aim is to grow my account to such an extent that my available equity will be 100 times more than my initial account balance. That is the point. It's about how you finish the game.

If you can double your account every month, you can turn $500 into $2mil in just 12 months if you don't withdraw anything because it just keeps compounding! Who do you know that even got close to that?

After 1 year {if I remember}, I will post my live account minus some details to prove that this strategy is the only one that will stand the test of time... and then I'll sell it to you! Ha Ha Ha... {evil laugh}

Later!
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