The reason why 95% of new traders consistantly lose money

I am familiar with this idea from Robert Weist's success as a money manager and book, You Cannot Lose Trading Commodities, but he would only scale down.

Out of curiosity, where did this number come from? I've seen it quoted in just about every forex forum I've read. It seems to be the universally recognized "failure" percentage in this business.
Is there an actual study that someone could point me toward, or is this just the general consensus?
It doesn't really matter (or change anything). I would just be interested in knowing if it is based on any real facts or if it is only arbitrary.

FXTitan, thank you for sharing your trading strategy. I must tell that I am learning to trade forex four years now and I am still not profitable. Your trading system opened my eyes and I hope that this system is right way to earn money from market.

Can you tell us, are you still successful with this strategy?

Best luck!

It is a fact that more than 95 percent of forex traders lose their money easily in this market. They do the biggest mistake of neglecting the major factors that are necessary to learn in the beginning to achieve success in this business. Understanding the system, gaining the right knowledge and trading with confidence are the basic secrets of success in this trading.
Your trading strategy is of no use if it is not based on technical and logical base. Most of the traders try to learn this system by involving in day trading as suggested by several prevailing courses in the market. But what you need to understand is day trading is extremely risky and is not at all suitable for new traders. It is for this reason that almost all of the people who attempt to learn this way fail miserably within first week.
You cannot follow and implement any mechanical system unless you understand it clearly first. Theoretically learning a forex system is easy but implementing it practically is difficult. You will learn with experience that success rests with you and not with vendors, brokers or friends.
Another common mistake done by new traders is they try to predict the future movements and go against the market. There are n numbers of factors that affect forex and commodity markets. It is just impossible to predict future movements of the markets. A better strategy for beginners is to purchase high and sell higher. Moving in the market direction is easier and result in profits almost 90% of times.

It is one of the dumbest idea that I ever heard. Now... it will be funny, because me also I will say that I'm not a newbie(and really I'm not!). So... for everyone here reading that post... it's your common sense which will dictate if he was right or it's me who is right.
Personally, I would say that it's exactly the opposite giving the fact that markets have an abnormal distribution (it's not perfect bell shaped) and... if you are able to cut looses when the fat tails hit, you will be OK, while on the other occasion when the market will be in your favor, and that fat distribution will be in your favor, you will let your profits run.

I posted this just because I was shocked by his statement.

What he describe can be compared with writing naked options... it will work great until the sh*t will hit the fan and your account will be wiped out.

Interesting point. I'd like to know, too. Where does that 95% come from?

My guess, it's related to the Pareto Principle, or "80/20 Rule". The rule states that 80% of productivity (or profits) is attributable to 20% effort. On the flipside, that means 80% of our efforts account for only 20% productivity.

Yes, this rule pertains to 80% versus 95%, but the same logic might apply. In other words, 95% of traders lose money, or make only 5% of the profits; while 5% of traders make 95% of the profits.

Come to think of it, I've heard the same thing mentioned about the wealth in America...that 5% of the population hold 95% of the wealth. Maybe that's where it comes from?

I think the reason most new traders fail is because they have un-realistic expectations, to make money in forex trading you shouldn't be focusing on your pips daily, but rather take a yearly view, too many expect to make money every day or every week, but that isn't the case in trading, you have to be able to stomach the volatility and down months, automated trading can make this easier, but ultimately its up to the trader to make it work in the forex markets over the long haul.

I lost my black swan!

Has anyone seen my black swan!?

here swannie, swannie, swannie... come out, come out, where ever you are.

I tried hedging my black swan and then it ran away with all my money...

here swannie, swannie, swannie...


How do you hedge a black swan? If you try hedging a black swan, it will surely run away with all your money.

I just read the original post to this thread and I have a pretty good idea of why the OP isnt heard from. I wouldnt say that someone out there couldnt make something like this work, but one better have a bit more on the ball than just buying and selling price points without a care, thinking all is well because its "hedged" ,, you will open a giant can of whoop ass on your account if you dont understand the variables of market conditions and exposure, it will happen it is just a matter of time. The returns posted are way to large for the timeframe indicating large position sizes for something like this and that would kill it in short order if something gets long legs on the downside of the hedge, letting losers run while taking quick profits is another red flag, that snowball on your tail (negative side of the "hedge") is getting larger and moving faster, and sooner or later you will have to step out in its path and fully expose the unrealized loss of that negative side,, you better know when to step out and what to do if your wrong or your so called profits and rest of your account will vaporize in short order.

Now if you do know how to play this particular method and Im sure many of us do life is grand, as your usually hangin on to the longer timeframe trend while counter trading decent pullbacks usually making money both ways. But if anyone asks none of us do this LOL.

Why is it that whenever someone offers a solution that is not "by the book" he is usually shut down, attacked, ridiculed...name it. The thing is: If I were being attacked like this after I start a thread, If I were profitable I honestly wouldn't come back to prove it to you because then I would be doing the same people who ridiculed me a huuuge favour.

I have learned from experience and a rather shocking series of account blow outs that almost everything mainstream about Forex is a lie. In order to succeed one would have to unlearn and invert a lot of crap that has been fed to us. The truth is the first time I was truly successful trading (trippled my account) I never used a stoploss. Eventually I blew the account because I was inexperienced and was over leveraged but didnt realise it at the time. SO I unlearned the strategy that actually works and went in search of the elusive holy grail. My trading became worse and worse until it hit me: when did you actually win?? Answer: at the beginning of my forex career when I didnt take stop losses seriously. Isnt that ironic? I was more successful as a newbie than after gaining "experience".

Truth is as a newbie things were simple: no indicators..just trade in the direction of the trend. No bias. No CNBC. No mentors. No Forums. I was just more confident. The more "research" I made the more afraid I became of the forex markets. It was like information overload. Too many approaches...too many systems...too much advice from self-proclaimed gurus. Awwww come on!!!

You MUST come up with your own strategy that works for you! Thats the only way you will truly have confidence in it. Coz you will only have yourself to blame if it fails. If you still believe someone will sell you their "holy grail" for $97 a pop...then Alice, you are yet to find out exactly how deep the rabbit hole goes.

I salute you, Fx Titan for not only coming up with a "think-outside-the box" system but also for being willing to share at least a portion of it on this forum. Personally, I think with a bit of tweaking and customising, your system IS the holy grail.

Have you ever gotten into scenarios of huge running losses that never turns around in your favor?

do allow me to answer on his behalf
he probably had a couple of long positions(maybe 3?) in GBPUSD, which he mentioned he most traded it.
probably at the $2 level, at 1:1 leverage like he preached and risking 1% on each lot.
the drop to $1.7 already cleaned him out, if that didn't, the drop to $1.4 did it.

Why should an open loss be any different than an open profit?
once you have both in your account do all you can to minimize the open loss and do all you can to maximize the open profit.

I googled "bull****" and clicked " I'm feeling lucky"
And now I'm on this page.

Why waste time with a google search. All the bullshit you will ever need is at Forex Factory.

it happens because they consider forex trading just as a hobby and not as a serious work.

True.
and also
no stops = fail
oh my oh my what's a poor forex trader to do.

I don’t know about hedging, but I agree with no SL theory.
If you only have TP, you’ll only profit,
until,
one day,
your loss is bigger than your account size.

Agree, hedging helps not to blow up, but if and only if you totally understand the whole thing about it. Some newbies think that they hedge all the money just made at some moment locked orders. They will be very confused when they will lose.

Time to resurrect a 'dead' thread, lol.



Now the question... What do the TS mean about the profits is in bigger lots than the losing trades as time goes on? I had trouble comprehending this statement for so many years. It seems that it is implied that the hedging trades is in progressively bigger lots than the losing trade which also can mean that the newer trades is in bigger size lots than the early losing trades? Does he trades all the trades by total %equity or total %balance? What is the effect having fixed risk base on account percentage? I also heard that some traders have negative pips overall but having positive balance/equity? How is this possible? I hope its not martingale? Is it prudent to have fixed lots( only trade 1 lots on all trades) or to have different lots based on total account?
TQVM