The reason why 95% of new traders consistantly lose money

What is the "right" attititude and emotional reaction?

I can be in a great mood and lose money. I can play a perfect hand, and lose pips.

Try to calm yourself and try to see a bigger picture---say, your monthly trade result, for example.

For me, I have printed manual backtest result and charts for every trade I made---in backtest, I mean. If I loose in today's trade and start to have emotional roller-coaster, I took them out and pour over it. Focusing my attention to monthly result instead of trade by trade. And then evaluate today's trade to see if I have enter and exit trade as my strategy tells me to. If I have, I look for the same condition---enter and exit trade exactly as my strategy but still loose---in my backtest, then look at the end result of the month when it's happen.

Not as easy as it sounds. I still have to do it today. But now I have better control than when I started.

One caution though: You should have your manual backtest as honest as possible. I have to do it three or four time before I think the result is as honest as possible.

Again, easier said than done. But not impossible.

before you start giving advice, maybe you can post some live statement showing how successful your "zen tactics" are. you know, looking in the mirror and telling yourself it's going to be a profitable month....

i was making a point w/ bundyraider.... not making a public outcry for help...

Ouch, sorry, guess I didn't read the whole context.

About my live statement... What do you want to see from a $30 account? I've been wacked good through forex, if that's what you want to know.

Wow, this thread sure took off!!! I miss a couple of days and this thing goes off like crazy

Hi Titan,

I do understand your system (which is kind of a grid) and the way u can grow ur account until a "confortable" size when u will close everything and get the benefit of your trading (the losing positions being offset by the new big winners).

The thing is the system work as long as you monitor it day by day. If you are losing on some open positions, you can keep going hedging and win the other way... But what if you can't trade? For any reasons.. (like holidays ). In this case you will stop win because you don't trade but your losing positions COULD keep going against you untill a margin call! How do you manage this? For me the most important question...

Regards,

yes u are right even if nobody wuld accept what u are saying. i hav also been managing accounts for some few persons for some months. i have placed a lot of trades and in 99% of them hav not used stop loss, i only place a stop loss to cover profits. the issue here is if i find out that the trade is against me and will powerfully continue to be against me, then i quickly hedge it, go away from the market to allow it move to wherever it wants, come back and analyse properly to determine what to do about each trade. if i am sure that the loosing one will neutralise later, i leave it on and close the profitabu one when i know that it has almost completed that trend.
the point here is i close my loosing trades myself and dont allow stop losess to close trades for me. this is working for me because i am employing a strict account management system , i mean here not overtrading and not trading too large lots and besides the approach to volatile curencies is different o , bcos dos one can move north remain there for 1 year with no return journey.
summarily, i have not used a single stop loss in the past 4 months now, i trade everyday, my account is growing fatter, without a single reduction below my investement.

long-time lurker, first-time post..............

i think some people could trade without stops and be successful, but i'm not sure i understand the case against having any. i personally use a very wide stop upon entry (with a 1/2 position size) and if it gets hit, i'm wrong and i move on. it's automatic and safe. letting emotion come in for discretion on whether to stop or not is dangerous to me. I lost plenty of $$$ as a newbie trading futures 5 years ago with that mentality. if you can do it, good luck.

i think a bigger deal for newbies, and some experienced traders, is whether to ADD to winning positions to make the reward/risk worth trading in the first place. i scale in with wide initial stops then double my size and tighten everything to still keep my loss at 1R (of course this is a swing system--no scalping for me). stops are important, but in my experience trading, adding to winners is the real difference between losing/breaking even and making a great profit.

"The reason why 95% of new traders consistantly lose mone"
The reason not ready to trade do not have enough expirience trading and most want to make money fast .... HUGE mistake .;] this is my thought ...

hi again

i have not posted for a while because i find forums get tedious to work at after some time and i lose interest. i call it forum fatigue...

i have read all the posts here and it seems all the traders that use hedging techniques are doing well and then there are all the others. i know from experience that most 'traders' on forex forums are there because they are losers and are looking for something else. i don't mean to insult anyone, but this was also my personal journey before the lights came on.

my personal strategy is to try and trade the larger longer term swings using the weekly charts to guide me and the daily charts to time my 4hr entries. i use 2% gearing. i try and look for profits that are at least 2-5 times my 'risk'. that means trying to book profits at price projections that are 200-500 pips from my entry point, although i am flexible.

I am hands-on with my trading and monitor my charts at least every 4 hrs if i perceive a possible trade, but mostly i look at the charts 2-3 times a day. it just takes 5 mins, so i am free to do what i want every day. i make sure that i can access the i-net always and my laptop is with me when i have to go somewhere for long periods of time.

sometimes i look for clear divergences to enter and to exit trades even when the price is not near my profit targets. i make sure i exit every trade with profit.

what is assumed here is that i hedge every single trade...

that is not so. it would be absolute stupidity to keep trading shorts in a very obvious trending market. that will quickly lead to margin calls!

if i take a trade in a certain direction {long} where i have spotted maybe a positive divergence, over sold conditions or a crown/ head and shoulders formation, i enter and set a profit target. if the market moves against me, i leave the trade open until it eventually moves into positive territory. that implies that some trades would never move into positive territory and that i will have to take the loss when i close the account. that is ok, because that trade, at that time, with that gearing, would be a small percentage of my total account and actually just be pocket change.

remember, what i am looking for is to have my actual equity at the end when i close my account, be a few hundred times more than my starting capital. that is possible because of the compounding principle. the effort to avoid losses during a 12 month period is just a strategy and i am fully comfortable with the idea of taking losses in the end.

you see, when you use a stop loss and it gets hit, your loss is immediate. in my world i give the market months to turn that loser into a winner! i call it insurance.

i am going to share with you my weekly results, compounded weekly, over the last 3 months, since i moved my account to a different broker.

apr
wk 1 = 2%
wk 2 = 7.3%
wk 3 = 6%
wk 4 = 9.9%
wk 5 = 7.8%

may
wk 1 = 52.6%
wk 2 = 99%
wk 3 = 12.3%
wk 4 = 0.9%

june
wk 1 = 14.1%
wk 2 = 5.3%
wk 3 = 16.2%
wk 3 = 8.1%

i think this is not so bad since i use low gearing and i trade without any stress. i am not concerned about what might happen in the markets, because i am prepared for every occasion.

i use trendlines, fibs and major support and resistance to guide me and a simple oscillating indicator to help me determine over bought/ over sold conditions and divergences. this is not rocket science. i feel the simpler i keep things the clearer i can think.

the nonsense comes in when the market becomes sideways for extended periods of time. obviously you take profits all the time, but your unmet profit targets accumulate and weighs on your margin and available equity. this can become a problem e.g GBP/USD. i had to exit a few of my accumulated longs before their profit targets {which would have been very handsome} were hit, because i was unsure when and which way the breakout would go. you don't want a situation where the breakout occurs and runs away and leave you with too many open positions in the wrong direction.

so, i prefer to trade my strategy in a trending market. you make money quicker. as you can see in the beginning of may, many of my open shorts were hit at the same price target and i scored big time.

this is as much as i am going to reveal to you guys ever again. i am sure there are traders out there who are much more successful than me and i congratulate them. this thread was not started to create conflict between the 'hedgers' and the 'stoppers' and fight about who is best etc. grow up! this is a discussion about how i found the market out and am profiting from it. those of you that argue against hedging have never really stretched your brains to understand the concept {or are agents of the evil broker cabal, deceiving the lambs} and have chosen to stay in your closed minded boxes.

hedging have been used by sophisticated share traders for years by using put and call options to reduce their risk.

hedging works if you put it into its proper context.

fxtitan

FXTitan,
I'm a very new trader, but I find your "against the pack" mentality/ideas to be very interesting - it does make sense, when looked at a very basic level - if 95% of traders are unsuccefull (the "pack"), why follow them?

However, I do find myself leaning more towards a more fundamental approach to forex - the effects of economic data (intrest rates and so on). Perhaps this is more because I find it extremely difficult to get my head around technicals! Would you have any advise to give on trading at a fundamental basis?...

You are kidding me ? Not so bad ? This is fantastic results !!!

If you keep on this track you should be millionaire in no time

Heh. A lot of traders lose money because they focus too heavily on entries and put none on their exits. The exit is what actually makes the money.

Frankly speaking, I dont think he even understand how great his made-up profit are...... too many faker these day.....

The title of this thread caught my eye.

I have a question that I have wondered about for a long time.

How do we know that 95% of forex traders lose money?

Where do these statistics come from?
Who compiles them and publishes them?
Who submits the raw data?

Brokers are the only ones who could possibly be the source of the raw data.
Even then, they wouldn't really know.
I could have a standard account with IBFX making 100K a year and 5 mini accounts with 5 other brokers losing 1K a year.

That would get chalked up as 1 winning trader and 5 losing traders, if sent and compiled to a central location.

It's not. Brokers have no reason to go to the trouble of gathering such data and sharing it.

No one would have any interest in compiling it all and there is no entity that has the authority to do that.

We don't know how many people lose money or how many make money. It's all a guess.

This is something that someone made up. It sounded good and so it got repeated until we assume its the truth.

Ricardo made a comment on this subject. I hope that he doesn't mind me sharing it here:

"I think that the statement "95 % of traders fail" is wrong, it should be "95% of people who want to become a trader fail".

Most fail because they don't have a good system. Also, because they trade intra day instead of the bigger picture. Also, I don't believe in the "think" and grow rich philosophy that others talk about ... that will send you packing in forex real fast--- thoroughly backtested and well executed systems are all that count.

One years up please come back and tell us how you did, we know your reading this win or lose theres nothing to be ashamed

TJ I very much doubt bunnygirl got close to that.

First thread in a long time that made me think.....