Why do more than 95% traders fail?
1. Many inexperienced traders do not try to maintain capacity of absorbing 10 to 12 or maybe few more consecutive losses. If trading edge is the probabiility of more positive outcomes in long-run, one should be ready to accept a series of negative outcomes. Despite knowing how my edge works, I still feel depressed after getting more than two losses in a row - human nature. I am damn sure if at some point of time I hit a series of five or six losses, no one would visit my already somewhat deserted and boring journal.
2. I am not sure about other threads, whenever on EURUSD thread, even a few pip change in PA direction creates havoc among traders. Some relaxing their TPs and others getting out or partially closing trades, shouting in excitement, revising their plans by hundreds of pips on a 10 pip but sudden move, etc. etc. All indicating that they are either not aware of or do not accept volatile nature of forex market.
3. Their brains can be easily polluted and thoughts manipulated with any kind of BS that is convincingly presented. They do not want to look at the things from their own perspective and test at least logic in what is presented before them. They want to "believe" in and do not want to "test" any new or old idea. It took me several years to believe that there is some truth in "trend is a friend". However, see many traders blindly following this phrase. Another is "cut your losses down and let your winners run". Blindly following such "universal truths" is probably the greatest hinderance in their learning.
4. Then there are "holy grail" methods. I spent hours and hours, day after day, month after month and year after year to find a flaw in various gambling and speculative businesses. Believing that there should be one and that would give me a risk free edge. But this thought never ever crossed my mind that I should check if someone is selling a "holy grail". Why? because a "holy grail" is simply not something that one would put on sale, and by whom? a trillionaire? . But it is unbelievable that many traders spend thousands to buy and try such BS systems. If any automated or mechanical system can work the way new traders perceive, there would have been no markets by now.
5. Then there is a calculator, a certain percentage and certain number of trading days. 1% a day and 365 days a year makes it 365% a year. Discount it for working days and contingencies it comes to 150% a year- Wow!. Compare it against investment return by banks, and boom - here we go!. Once this is conceived, the next step is to check in how many days, weeks, months or years a $5,000 investment will multiply to $20 million and more probably $200 million. Apply some sensitivity analysis by chaging certain assumptions or percentages and we get $200 million in 8 years from an initial investment of $2,000 in a micro account. This does not stop here, on trading live, these years get converted to days and days get converted to hours at a leverage of 1:400 and with almost nothing or lunch money to lose.
6. Then there is a small loss, next position is bigger than previous. Again a loss and again even more bigger position after a few minutes. Again a loss, but no issue. Here comes a "once in a lifetime trade" with almost 100% assurance. The whole farm (or whatever is remaining) goes off.
1. Many inexperienced traders do not try to maintain capacity of absorbing 10 to 12 or maybe few more consecutive losses. If trading edge is the probabiility of more positive outcomes in long-run, one should be ready to accept a series of negative outcomes. Despite knowing how my edge works, I still feel depressed after getting more than two losses in a row - human nature. I am damn sure if at some point of time I hit a series of five or six losses, no one would visit my already somewhat deserted and boring journal.
2. I am not sure about other threads, whenever on EURUSD thread, even a few pip change in PA direction creates havoc among traders. Some relaxing their TPs and others getting out or partially closing trades, shouting in excitement, revising their plans by hundreds of pips on a 10 pip but sudden move, etc. etc. All indicating that they are either not aware of or do not accept volatile nature of forex market.
3. Their brains can be easily polluted and thoughts manipulated with any kind of BS that is convincingly presented. They do not want to look at the things from their own perspective and test at least logic in what is presented before them. They want to "believe" in and do not want to "test" any new or old idea. It took me several years to believe that there is some truth in "trend is a friend". However, see many traders blindly following this phrase. Another is "cut your losses down and let your winners run". Blindly following such "universal truths" is probably the greatest hinderance in their learning.
4. Then there are "holy grail" methods. I spent hours and hours, day after day, month after month and year after year to find a flaw in various gambling and speculative businesses. Believing that there should be one and that would give me a risk free edge. But this thought never ever crossed my mind that I should check if someone is selling a "holy grail". Why? because a "holy grail" is simply not something that one would put on sale, and by whom? a trillionaire? . But it is unbelievable that many traders spend thousands to buy and try such BS systems. If any automated or mechanical system can work the way new traders perceive, there would have been no markets by now.
5. Then there is a calculator, a certain percentage and certain number of trading days. 1% a day and 365 days a year makes it 365% a year. Discount it for working days and contingencies it comes to 150% a year- Wow!. Compare it against investment return by banks, and boom - here we go!. Once this is conceived, the next step is to check in how many days, weeks, months or years a $5,000 investment will multiply to $20 million and more probably $200 million. Apply some sensitivity analysis by chaging certain assumptions or percentages and we get $200 million in 8 years from an initial investment of $2,000 in a micro account. This does not stop here, on trading live, these years get converted to days and days get converted to hours at a leverage of 1:400 and with almost nothing or lunch money to lose.
6. Then there is a small loss, next position is bigger than previous. Again a loss and again even more bigger position after a few minutes. Again a loss, but no issue. Here comes a "once in a lifetime trade" with almost 100% assurance. The whole farm (or whatever is remaining) goes off.
The Thief of Wall Street