Why do Newbies Lose?

I read you can do crazy stuff with options. For instance, you could put on a trade that somehow automatically increases leverage the more the position runs into your favor and the other way round. No idea how this works, but I definitely will look into that.

smikester, I checked my inbox and I don't have any PMs from you recently.

Most traders should practice demo with free information, then trade just ONE penny with a minimal account, that teaches everything of patience and discipline with exponential growth potential and lots of mistakes with minimal losses, one penny, then two pennys, then three, and shut everybody out to learn self reliance and because we don't really know who we are talking to behind the pseudonames, and don't buy anything, nothing.

The difficulty for most traders is winning more than losing, when bid-ask comes to the line but won't cross or stalls around, but it easily moves away 10, 30, 100 pips. Tested on forty platforms including ECNs and thousands of live trades, best seen in Demo 1m or 5m to save time, with any system, bid-ask lines (BA) visible, for example, Buy, and when BA reverses, close buy position and Sell, and when BA reverses, close sell position and Buy, and on and on. Place the mouse, for example, on Buy button and watch tick behavior, it usually freezes, reverses, and next bar changes color. It is likely reading MouseOnBuyButton() or equivalent. All markets move together correlated as seen in FreeStockCharts with settings comparison of any two or three things, futures, fores, stocks, indexes, funds - all brokers, accounts, platforms. Even precious metals are not a perfect inverse, room for manipulation.

An insider "wizard" admits that forex is all about "relationships" and was still making phone calls during the interview. Most traders should trade one penny and try to grow it or walk away. Enough said.

Before the trade opening is the only time when to define the risk. You have to define your initial SL and then determine the LotSize.

1st page
http://www.forexfactory.com/showthread.php?t=388399


Common Mistakes Done by Traders:
#1
If trader lost on last trade eg... 30 pips
Next trade target most probably is 30 pips, to cover loss. But MKT has no clue about trader loss & it trades technicals.
So better determine levels with technicals instead of Equity Curve.
#2
When trader catch a signal, sometimes, he/she waits for his/her desecion confirmation, does not enter trade & wait
Most probably that signal works. Then he/she gets mad to him/her self and while waiting another signal, trades in rush under pressure of missed winner & makes mistakes on entry/exit of rush trade.
#3
If trader can not Book Loss when needed or exit a Poss winner due high risk, this means he/she does not believe him/her self as he/she thinks, can not recover that Loss or can not find another Opportunity to enter.

Money Management Issue.

Here are my suggestions:

Emotions are the critical foresight instruments in any trading and must be applied at all times.

Using three simple money management rules: #1 manage the risk, not the reward; #2 manage the reward; #3 Repeat 1 & 2, the trader must answer one question: how much hard-earned money can I afford to lose without suffering any psychological trauma from financial ruin? Place the money in hand, count down, listen to feelings, and consider all dependents involved. The entire spectrum of Plutchik's Wheel must be grounded in Risk Management.

My suggestion: Never leave a trade unattended, Never trade EA robots not even the "smartest" ones, Always use stoplosses, again all based on Risk Management. Read my article under Rookie Talk: How often do u trade.

In 90% of the cases this is the answer

I have a question. How many here went long USD/JPY back in November or October?

I did, and currently trailing... I went long because of what bank of japan announced as monetary policy..., that's it.

Personally I find intraday very difficult because of noise, that kind of noise you can't control deriving from news/events. Furthermore the retail trader sees news minutes later than big sharks (which can afford expensive news packages) so even throwing a limit order randomly at bid/ask and exiting randomly, you will tend to lose overtime without counting commissions and spread. Experiment it, all moments of the day there is a news or something noisy affecting slightly how the book evolves, your orders will tend to be filled when it's less convenient for you and you don't know it yet, same thing for the random TP. The richer trader has more advantages, starting from direct FIX connections, anticipated news etc...

Suppose you are at bid with 1 lot, the opposite side knows it's more convenient from him to sell and you still cannot know that... there is where you lose, so as you can see, they have more knowledge, better tools etc... so forget your 50/50 chance. And of course if it wasn't convenient to sell for them, your bid would still be there... waiting to be filled , guaranteed, this is the losing trend you need to fight.

Actually there are many things that we need to know before we start forex trading. newbies don't bother to study some basic things and start trading which is The main reason of loss.

Newbies lose money, cause they don't have any experience and they want to make money quickly. I think that newbies think that to learn the forex is very easy... But for ex I started it and understand that it's a really hard work, and you need to spend many time and brains for it! The main advice to earn money on forex is "don't hurry up!"

As a newbie, this thread is a MUST read for me.

Agreed but to be fair, most of them think MM is just another candy on the offer..

it is not 50:50 at all if you use a coin with two sides would you guarantee that a side could appear after one false try so it will be a 50:50 chance actually you have 1-100% chance with infinity square that you will see one side more than the other try it out .that way you can not apply possibilities to this market or what they call martingale trading .you have three simple rules in this market that you should use and trade with
first find a good entry point at extreme ends of price move choose it carefully you will fail at first tries but you will succeed at end in knowing where to enter with high possibility of wining the trade so don't run after a move run in front of it .
second place a stop loss that will be difficult to be hit unless price changes direction i use many ways after finding an entry point i look to previous candle and place stop loss at its low price if long or high if short i use the 4 hours candles for more strong stop loss you can use the daily candle .
Third thing is to take profit in a 3:1 ratio to stop loss so wait for your profit to run and never rush out fast .
if you follow this three rules you will probably end with 50:50 chance ratio with profits as you need three losing trade to take one wining trade profit out .
using a 1-5% risk in your trade giving that you use the same lot will end with profit from -0.3 to -7.5 % if you lost all trades to 1.2 - 30 % profit if you win all trades so great ratio i guess .
taking 4 trades per week is the most best way to make sure you have good concentration on good chances only .
the profit you can gain will be big and if you lose you will still have a chance next week to make things up you will have the same chance again .
but you should use the same size of trade until you make your first withdraw because this is the rule to keep the above equation right .
forex is so easy and don't need a lot of time to master just minimize your trades number concentrate on entry with tight stop loss and good profit take ratio.
all have a nice day and good luck
as i have read the wining ratio have increased from 5 % to 17% so only now 73% lose i wish you all not to be from them
all have a nice day and god bless

I believe that newbies cannot possibly fully understand what they are getting into when they first start trading forex, I know I didn't when I started. I did read on forums like this that it usually takes a couple years or more to become profitable. But I didn't want to believe that or I just plain overlooked it.

This may describe the path to profitability for many traders, most people wouldn't have the patience or the stomach to go through this whole process:

(Note: I use the terms "he" and "his" below, no sexism intended, feel free to insert "his or her," etc.)

1. Person hears about trading, maybe an infomercial on TV or a web page where claims are made of big earnings whether the market is up or down, etc.

2. Person looks into this, does some "research" and decides to try it.

3. Trading system or EA is bought on eBay or the like, and trader can't understand why it lost money.

4. Aspiring trader realizes more research is needed, finds a forum like this one and picks a system with lots of posts where many appear to be having great results. Trader demo trades a little bit with a few profitable trades and decides he is ready to go live again.

5. Losses start happening, trader panics and starts taking trades to try to win back the losses, only to make it worse and blow the account.

6. Now trader realizes this may take more time than first thought, after some soul searching decides to get more serious and continues to research.

7. Trader stumbles across recommended reading such as "Trading in the Zone" or other books that are touted by many traders as important reading.

8. Our aspiring millionaire looks at several systems, reads about people saying you have to find a method that fits your own style, and tries to put together a method that will do this.

9. Trader backtests more carefully, starts to learn more about liquidity at various market times, and seemingly optimizes a method that is sure to work.

10. Trader funds another account, has some success but then has some losses and ends up net negative, but stops before blowing the whole account.

11. Trader realizes more work is needed to discover a workable method. Trader starts to spend many hours looking at charts trying to unlock the code and find repeating patterns and their associated reactions.

12. Trader gathers significant prior data, learns to advance metatrader 1 bar at a time, and does this over several trades. Trader develops a sure winning profitable system, but doesn't realize he may be form fitting, changing the rules as he goes along, or deciding after a trade setup shows itself to be a loser "I wouldn't have taken that trade because of (x, y, z, news, s/r, pivots, or any number of things)" and doesn't count those in the paper trading results.

13. Trader funds another account, things don't work again, and now trader is extremely frustrated, angry, and at his wits end. The thought of looking into developing another method and doing all the testing without being certain of results is overwhelming.

14. Trader's wife or significant other and family members or friends start to question why he is spending so much time on something that isn't working. Trader answers with power of compound interest and other trading buzz words only to receive blank stares.

15. Trader finds an inner resolve to keep going in spite of so many things piling up against him. Trader can see the potential of successful trading and that there is always price movement and opportunities to make money.

16. Even though trader is frustrated he has learned many things in this journey and now has much greater understanding of market movement and how different forex pairs tend to move compared to when he started.

17. Trader knows he must find a true edge that works over time and in different market conditions. Trader studies thousands of setups and is honest about the results. If certain variables prove unprofitable he removes those and keeps working on the method.

18. After many more hours/days/weeks/months/etc. of paper trading, then using a trading simulator, then demo trading, then trading live with a small mini account at a penny a pip, all with profitable results, trader feels at last another attempt with real money can begin.

19. Trader experiences success, then some losses but doesn't panic, might tweak the method a little but the core of the system remains.

20. Trader continues to show overall profitable growth.

21. Trader gets overconfident, a few bad days humble him quickly, and he comes to his senses and returns to the basics.

22. Trader is still net positive even after a few bad trades, and resolves never to give up.

23. Trader reaches a state of enlightenment and confidence with humility, knows that the journey continues and nothing is guaranteed, there will be bad days and bumps in the road, but with discipline and a consistent approach he knows there is a light at the end of the tunnel.

24. Trader continues to improve discipline and has more consistent positive results.

25. After a couple more years of this, trader has finally made profits of a significant nature that can actually have a significant positive impact on his family's security, i.e. paying off debt and having substantial savings, being able to contribute to charitable causes, and freeing up personal time to now spend happily with the same significant other that was questioning him previously (if she is also a very patient and supportive person) or a new person in his life.

I believe I am at point 22 above right now, but I could be proven wrong and actually be around number 10 or so.

It takes many, many hours of screen time to have a chance to be successful in this business. But the rewards for success are potentially much greater here than in any other business endeavor in my opinion.

Newbies are very unlikely to be profitable for any significant length of time from the beginning. But the newbie can take encouragement from the fact that we are all newbies at some point, no one is born with a knowledge of the markets. Maybe some are inherently more gifted in the area of discernment and can become profitable more quickly than what I laid out above. But I think for most people these 25 points are pretty accurate.

Perfect, that says it all and if you were to draw up a graph to correlate the points listed above with the newbies progress, it would be interesting to see if they correlate for real..

Hi I think newbies (and some oldies) lose for a variety of reasons
Not sticking to a strategy long enough to learn it and make it work. If you keep jumping around adding indicators, changing win/loss ratios etc then in the end you never get to have confidence in your system or any data to really know where adjustments may be needed.
There's the obvious reason of making mistakes, such as wrong lot size, wrong orders, not including spread into calculations, trading the wrong pair etc

Then there is the biggie - not planning the trades and just jumping in without planning for every eventuality. This seems to be the biggest downfall of people new to forex trading in my experience. Trading on emotion rather than logic is a killer on your account and your nerves.

Newbie loses in Forex because they are lacking of proper knowledge and experience and greed factor is also high in them and lack of patience is also there so it is recommended that newbies should learn first in demo account and then begin trading in real account.

Why do newbies lose... and all traders big and small ... Do you really want to know?

Speculating / trading is a lot like prostitution.
If you are NOT a losing trader, you are not doing your job. Bad on you.
To be of benefit to a society in a free market economy speculators MUST LOSE.
90 % of traders are doing their job to help the economy -- they facilitate price discovery, bear the risk and provide liquidity for the benefit of the producers: the REAL CONTRIBUTORS TO SOCIETY.
Speculators / traders are a necessary evil. They are the whores of the financial world. And in the same way as in prostitution, a market economy must tolerate traders -- as long as they fulfill their role, that is, to lose.
Without this grease on the wheels of the free market, it would grind to a halt.