The reason why 95% of new traders consistantly lose money

Winning is not all about "winning".

Winning is knowing when to control losses as well.

I guess, most people dont want to lose and kept holding on to loser positions till it hurts badly.

Once we get this out of our system, then we can start being true winners.

Cool topic, thanks

YOU & Only YOU are the Team.
We can Beat these Guys But we Gotta Play as A TEAM.

OFFENCE:
You're doin' Great Guys. Just slow down a smidge because I see some judgement calls that are putting us on our back foot. If the Play Aint there... Ground it. We'll take another Down. {486th if need be}

DEFENCE:
Helluva job Boys. Hang in there until the 'O' gets us Rollin'.

BOTH:
YOU can Do This. Now Get Out There & Keep Your knowledge of This Game & the Belief You can WIN {because you can}

This method is called averaging down. The most dangerous thing about it is that it works so well most of the time so you are fooled into thinking it's a good idea. Eventually it will kill you. Did you really think there was a perfect strategy, one that never loses? When you use this method and it inevitably loses, you will lose big, very big.

You said so yourself: You can't predict the market. One day, you will buy near the all time high for the year (because you couldn't predict that it would be the high). You will then keep trying to buy small up moves in a major down trend. You will end up with several open trades that are hugely negative. Eventually you will get a margin call.

How could all of this happen? It can happen because from the beginning, you made a prediction: The market will never move against me so much that I can't pull out of it. It can.

Returns always regress to the mean. Without an edge your mean is $0. The only question is how long until it happens.

I think you and I agree that this method will eventually fail. However, a series of number does not have to regress to its mean. What makes things more complicated is that as new prices come out, the mean keeps changing. It doesn't matter if you're using a moving average or a standard mean (always averaging all the data).

Consider the following sequence: 1, 2, 3, 4, 5, etc. Now at any given point in "time", n, the mean of these numbers is: n(n+1)/(2n) = (n+1)/2, which is always less than n (except when n=1). So as long as this sequence keeps rising, it will never return to its mean. In fact, it will keep getting farther and farther away.

Of course price doesn't move steadily in one direction forever. We assume it will come back, but we can't predict how far it will run away before it comes back. And that's the problem.

First order series, ie: price data, always regresses to a moving average. Second order series, ie: returns, follows a normal distribution over time and has a mean. That mean may change a little over time as investment strategies do, but it's quite quantifiable. This allows calculations like Sharpe Ratio, alpha and beta.

A method w/o an edge, whether based on volatility or directionality, based on something else like an arbitrage strategy with fast execution, whatever it is, a method w/o one has a mean of $0. It's just like a casino, the law of large numbers wins.


Standard moving average, yes. For all numbers > 1. 0, 1, -5... etc, kindof fail.

But that's the point, as long as the sequence keeps rising price will be greater than it's average. But price will not keep rising indefinitely.


Right, but we can predict that it will come back.

i can almost hear people saying " well dude, even if your martingale make 100.000% daily, one day it will fail".

were all you paying attention to the Fxtitan claims? 100% almost every week. The question is whether his system really had these resulots, if it is true, then it is certainly worth trade.

if it is difficult to believe in such fantastic results, on the other hand he doesn't accept PMs, e-mails, neither links in his signature pointing for blogs to sell systems, courses, t-shirts, etc.

this is better to spot scams than detailed stements.

No it's not true that 95% of people lose on Forex. It is 100% of people who lose. : ) Even the big dogs! What do you think the reason of this global economic crisis is? What did the big banks do? They risked money on forex! And they lost. Ok, maybe not on THAT forex that you know, but on something very similar. They risked money they did not have on currency trading. We all know the outcome. You will end up just the same way

Forex is a game of roulette, if you do not see it, you are a fool. In roulette only the casino wins. In forex, only the brokers. Wake up!

I basically found the same conclusion. My only thing I would add is a to develop a way to win pips incase your open position is losing. Personally I use small lots on a trading range I know it will eventually hit within the next 2 hrs or less than 24hrs.

That's where I'm at right now... I'm too lazy to read all the post on here but from what i saw there is some hate.... understandable, my technical friend who trades the same pair as me can't figure out how I do it. I show him my statements and it just kills him.

Normally within a week I close all my trades, the rule i have for my self now is after 25 wins in a row i consider to close one losing trade if there happens to be one.

Right now I'm at about 91% 252 out of 277 won with one trade open at -77pips after 4 weeks. I don't hedge exactly like FXtitan, because I like to get in and out and i put in 50-75 trades a week. With small lots and let the wins add up.

I'm just glad I'm not alone on this and someone found a way to make it work for them. I just do things differently because I want my money now and know how it feels to have a winning trade go against them. Also, I do what I can to maintain a 5000% margin level as i have like may have 5-7 trades open.

I'll see how things go this year, and once i get back to break even you guys should be able to spot me in the Interbankfx mini account contest by june. That way u can verify I'm just not full of shhh. I'm in recovery mood right now.. MM is important!

its definitely not a scam no question about that.

it was a very sincere post by Fxtian he truly wanted to help us

the question is did his method work?

I hope he comes back or else we'll never know.

Even if he doesn't come back you can find out for yourself. Try it in a demo account so you don't risk any real money. You'll see what happens.

At the end, it is again all about TA, if you suck at it, there is no hedge in the world that will help you win!!!

Can I get an AMEN!

AMEN!

What's TA?

Technical Analysis.

Preach it.

Absolutely correct. The response by Euclid (post #87) to PearsonFX's detailed example (post #85) demonstrates why. It's interesting how some people understand the illusion for what it is (e.g. Djmetric, post #90), and some don't (e.g. Daisygirl, post #101). A bit like Gambler's Fallacy, perhaps?

Regardless of whether one looks at the net position (like Euclid does), or the individual positions (like PearsonFX does), the end result is exactly the same P/L, i.e. 'hedging' (in this context, offsetting positions in the same currency pair) offers no added benefit. People apparently 'hedge' in this manner to avoid the psychological connotation of loss, but it actually results in an equivalent forfeiture of potential profit during the periods when the positions offset each other.

I used the word hedge in inverted commas, because as I understand it, this is not a true hedge. The latter is, for example, when one buys the 10 best performing stocks on an exchange, and sells the 10 worst performing. Then, regardless of which way the market as a whole moves, as long as the top 10 continue to outperform the bottom 10, the trader is pocketing the difference. There are also more complex hedges that can be performed by using different instruments. But that is the key: different instruments, as opposed to simply going long and short on the same pair.
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Can you explain how?

If, for example, I exit using profit targets, then (everything else being equal) setting closer targets will decrease the win size (less pips made per win), but increase the win rate (the closer target will be reached more frequently). Setting more distant targets, vice versa.

Alternatively, if I exit using trailing stoplosses, then (everything else being equal) tighter stops will result in earlier stopouts, i.e. more potential 'home run' trades being truncated prematurely, but will give back less profit on average on all trades, when price retraces to hit the stop. Wider stops, vice versa.

Hence, unless there is some proven statistical (e.g. a frequency distribution of the length of moves), or technical (e.g. exit at higher probability reversal points, S/R perhaps) basis for exits, i.e. a strategy that somehow exploits an aspect of non-randomness in price movement, then I can't see how exits can provide a real edge.

Conversely, entries allow the trader to choose to enter the market at points where price behavior is not necessarily completely 'random'. Hence I can see how entries can potentially provide an edge, but not exits.

What am I missing?

Thanks,
David

I know why 95% of people who want to become traders fail:

They fail because everyone fail at the beginning, everyone have burned 2-5 live accounts, trading is a long run that require money and time (3-6 years), and must be treated as a business.

And i would also say, that the famous 95% statement is compatible with the fact that 95% of people give up after some bad burn or after some years of losses, only 5% continue their studies (pratice), and day after day they start understanding how market work and how it must be traded to have a positive result.

If you are not ready to spend at least 5 years and 8hours/day upfront a computer, don't trade at all.

And for the beginners, you will loose all your money, more then one time, one day you will think "hey now i have learned the lesson" "now i understand" "now i have a good system" etc.. you will loose all your money again, and again, it's normal. But one day, you will found yourself trading profitably, and will think: "oh, all my efforts, my losses and my time finally are paying out".

Market is like a live entity, a really complex entity, but he is always right.

My advices:
1) The most important thing in trading is PATIENCE.
You must learn to have patience, and not enter in the market without a GOOD reason.

2) Cut your losses.
Every trader made bad trades everyday, it happen to make a bad judgement, and when you buy and a big big red candle show upfront you, the first think is: "damn, i was +5pips now i'm -30pips", well, it all depend on tf, for me -30 pips is like to say "ok, i was totally wrong", so the first thing to do is close the position, and fuck to the 30 pips, close your positions as soon as you realize that your entry is wrong.

Looks simple, cut your losses short and let your profits run, but you find yourself closing all your trades in loss, better don't trade this way right?
No, if it happen it's just because you enter in the market without a strategy or without a good reason, thinking: "well if it goest against me i'll cut the loss when it's still little", just remember that 10 losses of 30pips are like one big loss of 300pips, cut your losses shorts, but don't use this "exit strategy" as a incentive to trade, trade ONLY when there is a clear setup, when there is a clear trend.

Sometime all you need is a macd, or 2 moving average