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The reason why 95% of new traders consistantly lose money

  • #161
  • Feb 13, 2009 10:05pm Feb 13, 2009 10:05pm
Quoting tunera
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...
bro now a days the trend is to cut your profits short and let ur losses run or hedge them and from what I've seen some ppl seem to be quite successful at it.
  • #162
  • Feb 13, 2009 10:37pm Feb 13, 2009 10:37pm
Quoting fugly
bro now a days the trend is to cut your profits short and let ur losses run or hedge them and from what I've seen some ppl seem to be quite successful at it.
Maybe so but certainly Not For Me.

Pick Your Entries Very Carefully with a Target TP already in mind.
  • #163
  • Feb 13, 2009 11:32pm Feb 13, 2009 11:32pm
Quoting tunera
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...
you are right, most people don't know how market moves. market consist of Currency, Commodity, Stock market Index, and once you learn to read how this giant makes moves you come to know where opprtunity exist and what to pick. just simple moving average works with simple price pattern.
  • #164
  • Feb 13, 2009 11:39pm Feb 13, 2009 11:39pm
Quoting Bemac
Maybe so but certainly Not For Me.

Pick Your Entries Very Carefully with a Target TP already in mind.
Bemac..... Market don't know what TP in your mind, best aproach is take action as market conditon changes, else market takes SL instead of TP.
  • #165
  • Feb 13, 2009 11:44pm Feb 13, 2009 11:44pm
Quoting ramdas
Bemac..... Market don't know what TP in your mind, best aproach is take action as market conditon changes, else market takes SL instead of TP.
OK.
  • #166
  • Feb 14, 2009 12:11pm Feb 14, 2009 12:11pm
Quoting fugly
bro now a days the trend is to cut your profits short and let ur losses run or hedge them and from what I've seen some ppl seem to be quite successful at it.
Oh yeah it's a good strategy, i saw some traders do it and have good results for some months
  • #167
  • Feb 14, 2009 12:47pm Feb 14, 2009 12:47pm
Quoting tunera
Oh yeah it's a good strategy, i saw some traders do it and have good results for some months
Yes I know, cos I do it sometimes!
Im hedge scalping the bolinger range, but I dont keep the loosing trades
open hoping that the price will return to positive outcome, I simply close
the trades when Im satisfied with the total profit(-lossing trades)!
There is no question about that the hedging can be profitable,
but you need to know what are you doing, and especialy when
to get out of all trades while still positive!

Regards
forexflash
  • #168
  • Feb 16, 2009 6:35am Feb 16, 2009 6:35am
One of the main reason why people lose is that 99% of the people in the business are followers. They’re not creative and they’re not willing to rely upon themselves to make decisions, so they rely upon other people. When the decision is right they take credit for it, and when it’s wrong they point fingers at other people. And out of that one percent who do make their own decisions and create their own tools, 99% of them are going to be wrong, so you’ve got about one-tenth of one percent that are going to be right.The market is [full of lemmings] :everyone feeding off one another, following the media, and following a trend.
forexflash
  • #169
  • Feb 17, 2009 2:40pm Feb 17, 2009 2:40pm
I think scaling into a position can be a very good strategy, but averaging down a losing position is dangerous. The two concepts are very similar but there are some important differences.

Averaging down a loser works like this:

  1. You open a trade. (Let's use a LONG trade in this example.)
  2. It goes against you.
  3. You add to the position at a lower price. This will effectively lower your average entry price (it will be a lot-weighted average of the different entry prices).
  4. Repeat step three as price keeps going against you until it eventually turns around above your averaged entry price. Then you can exit for a profit.


The danger is the fact that traders who average down their losers might be tempted to keep adding and adding. They might start to think that they HAVE to win every single trade. They will not be able to accept a loss. This will eventually lead to them risking too much on one trade (because they keep adding to it), until they blow their account.

Scaling into a position is different in the following ways.

  1. There is a limited amount of risk that is predefined for each position. This means that if a trade goes too far against you, then you exit the trade at a loss.
  2. There is probably a limited number of times you will add to the position, but more important is the first point (the limited risk).


The limited risk prevents you from blowing your account on any one position.

  • #170
  • Sep 10, 2009 6:12am Sep 10, 2009 6:12am
  •  FxChi
  • | Joined Dec 2007 | Status: Cash Rules Everything Around Me | 749 Posts
Quoting FXTitan
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...

I'm curious to know whatever happened with this strategy (lately been thinking about hedging and remembered this thread). Anyways, as we all know market conditions were extremely volatile 3rd Quarter 08 through 1st Quarter 09, so please pop up FxTitan and let us know how you did. Are you sippin Pina Colada's in the Caribbean?
"Wishful thinking dies hard." Igor T.
  • #171
  • Sep 10, 2009 7:33am Sep 10, 2009 7:33am
Quoting FxChi
and let us know how you did. Are you sippin Pina Colada's in the Caribbean?
or hiding from investors in Nowhere Land?
  • #172
  • Dec 21, 2009 1:49pm Dec 21, 2009 1:49pm
Quoting PipStar
Depending on your strategy, you dont necessarily need to use stop losses.
Stop loss is bread and butter for brokers. Everyone has to make a living.
The conventional way to trade forex is a losing strategy proven by the 90-95% of traders losing. Those who win dont follow the same strategies as the herd, that's for sure.
Amen brother. Especially with stop hunting. And especially in the case of people using stop losses with 10k lots on a USD 1000 account.
  • #173
  • Dec 21, 2009 5:20pm Dec 21, 2009 5:20pm
FXTitan are you still alive? Were you murdered by secret agents working for brokers?
  • #174
  • Dec 21, 2009 10:34pm Dec 21, 2009 10:34pm
From the first glance, forex looks so easy and cool. Grab net 40 pips a week and depending on your pip value, calculate the time it will take to make $ 1 million.

Yes, just net 40 pips a week !!

But in the end, 95% of traders mess up triggering margin call and wiping out the accounts.

I have heard this line - life by default is simple. We can extend this line to forex trading as well to a certain extent: Forex trading by default is simple.
  • #175
  • Dec 31, 2009 6:59pm Dec 31, 2009 6:59pm
I explain why I believe 95% of trades fail on this FF thread:

http://www.forexfactory.com/showpost...&postcount=212
  • #176
  • Jan 20, 2010 7:22pm Jan 20, 2010 7:22pm
Quoting mathematician
I think scaling into a position can be a very good strategy, but averaging down a losing position is dangerous. The two concepts are very similar but there are some important differences.

Averaging down a loser works like this:[list=1][*]You open a trade. (Let's use a LONG trade in this example.)[*]It goes against you.[*]You add to the position at a lower price. This will effectively lower your average entry price (it will be a lot-weighted average of the different entry prices).[*]Repeat step three as price keeps going against you...
Very nice write up.
  • #177
  • Feb 27, 2010 7:39am Feb 27, 2010 7:39am
FXTITAN, Where the heck are you, you mentioned on Feb 19 2008 that you would post your winnings for the year and show us or sell us your edge. I am still waiting to hear from you and it is getting close to March 1st.
  • #178
  • Feb 27, 2010 7:57pm Feb 27, 2010 7:57pm
Quoting hharrington
FXTITAN, Where the heck are you, you mentioned on Feb 19 2008 that you would post your winnings for the year and show us or sell us your edge. I am still waiting to hear from you and it is getting close to March 1st.
FXTitan has not posted from July 2008 ! Thats nearly two years ago !
  • #179
  • Mar 30, 2010 5:19pm Mar 30, 2010 5:19pm
Hi All,
I read all the thread in a day. For sure this thread is making me thinking a lot but unfortunately I did not quite get the best way to use this method yet and to prove it it works or not for me.

It's not just a simple hedging every position. It seems to be more a mixture between a good system or TA capabilities, proper MM and hedging some positions (not all of them if I understand correctly) under certain circumstances (and this is exactly where I am getting lost) in the hope that the price sooner or later will go back to the same level. If not the loss is around 2% of the equity or so...which should not be a big deal over the time if the account grew bigger. More important, not using SL. Not so easy.

What I find interesting in this strategy is the fact that it is quite likely that the price hit the same level at least twice in a certain period of time, therefore if you wait enough there is hope...

Anybody our there using this method who can still share some insights? Some tradign examples? Good timing for hedging? I believe this could help everybody to understand if and how this method could fit.

Unfortunately FXTitan is not postign any longer. It's a pity because his posts are very interesting, no matter if you believe in the system or not.

Thanks to all the contributors.
  • #180
  • Mar 31, 2010 10:30pm Mar 31, 2010 10:30pm
The fact he is not posting may tell you something about the system....
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