5 Reasons Why Traders Lose | Page 5 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

Why you lose money and will always lose 44 replies

reasons why traders lose 425 replies

Did we Lose any Brokers? Are we going to Lose a few? 1 reply

The one reason that trumps all other reasons why traders lose 262 replies

Real Reasons why Retail Traders lose money 75 replies

Attachments: 5 Reasons Why Traders Lose
Exit Attachments

5 Reasons Why Traders Lose

  • #81
  • Dec 22, 2013 3:07am Dec 22, 2013 3:07am
Trading is simple but not easy
  • #82
  • Dec 22, 2013 3:45am Dec 22, 2013 3:45am
1. High win rate
2. Close too early... (2 THREADS ON FF FOR POSITION TRADING? SAYS IT ALL)
3. Require profits every day
4. Obsess about entries and exits
5. Think you can gain an edge with a strategy instead of a mindset
tradewith60
  • #83
  • Dec 22, 2013 4:01am Dec 22, 2013 4:01am
Good thread lads! some of the reasonings are very true I think I have little discovery made on this point take a look if interested http://www.forexfactory.com/showthre...14#post7088414
  • #84
  • Dec 22, 2013 4:36am Dec 22, 2013 4:36am
Quoting moneytub
Good thread lads! some of the reasonings are very true I think I have little discovery made on this point take a look if interested http://www.forexfactory.com/showthre...14#post7088414
So you're saying traders need some sort of structured approach instead of lots of discretion or no plan at all.

It's a good post but the idea of fixed profit/exit would never come from a trader who had made lots of money trading. He would trust himself to milk the best trades for all they're worth, he wouldn't mind if the odd 3/1 winner came back to break even, because he would of experienced massive gains from holding his trades that developed into a longer term trend.

Structured stop loss is different, failed entries should make no bearing on profit long term because low win rates can and are massively profitable systems, in fact low win rates are more likely to generate higher returns because it will often mean the trader is holding for the bigger returns.

If traders only did one thing (take low risk entries and hold them) then all those other elements really would just be icing on the cake, but everyone wants high win rates and to get out of the market as quick as possible.... it's a brokers dream!
tradewith60
  • #85
  • Edited 11:40am Dec 22, 2013 5:09am | Edited 11:40am
Quoting 60minuteman
{quote} So you're saying traders need some sort of structured approach instead of lots of discretion or no plan at all. It's a good post but the idea of fixed profit/exit would never come from a trader who had made lots of money trading. He would trust himself to milk the best trades for all they're worth, he wouldn't mind if the odd 3/1 winner came back to break even, because he would of experienced massive gains from holding his trades that developed into a longer term trend. Structured stop loss is different, failed entries should make no bearing...
Hi 60minuteman thanks for the reply, i have to say I did not make lots of money yet . but trying out different approaches to trading for a long term run I have found that discretionary trading was a constant loss to me, when i picked out 1 thing out of the whole market and said to myself - I have to make u work!!! I tell u more this is only eurusd pair and this is only sell trades, ( well, this is my stuff and strategy, please don't ask me more) and I put it into strict frames (the set up itself and the conditions and the trade limits) look I can hit 7-8 out of 10 trades winners with 1:1 risk reward . And having this win/loss ratio u can put any amount of capital per your trade. This is what is valuable. some people chaise big pips and they don't understand the value of win/loss ratio, number of pips is nothing in this game, I get very few trades but quality is amazing, my point is placing strict limits on your conditions are giving u great chance in winnings, even 6 years old kid going to school if place a random trade in the morning , with risk reward 1:1 having no knowledge at all about the market, over the number of months will only lose spread multyplied by number of trades placed. and look at us, adult people we drain our money soooo fast - because we attempt to comprehend the whole market which is extremely difficult to do having huge number of uncertainties in the game.
  • #86
  • Dec 22, 2013 5:32am Dec 22, 2013 5:32am
Quoting moneytub
{quote} Hi 60minuteman thanks for the reply, i have to say i did not made lots of money yet . but trying out different approaches to trading for a long term run I have found that discretionary trading was a constant loss to me, when i picked out 1 thing out of the whole market and said to myself - I have to make u work!!! I tell u more this is only eurusd pair and this is only sell trades, ( well, this is my stuff and strategy, please don't ask me more) and I put it into strict frames (the set up itself and the conditions and the trade limits) look...
Hi Money...

I agree 100% with you, setting a strict structured approach will be a massive step for most traders.... and I know that 70% 1/1 is massively appealing, and maintainable for periods of time (just search this forum for 1/1 and see how often it's mentioned!!!)

But..... you will make money slower than the burger tossers at Maccy D's....

If you really want to grow your profits exponentially then you have to look to the bigger wins.

This post from No Brainers is food for thought
http://www.nobrainertrades.com/2010/...placement.html
tradewith60
  • #87
  • Dec 22, 2013 5:46am Dec 22, 2013 5:46am
Quoting 60minuteman
{quote} Hi Money... I agree 100% with you, setting a strict structured approach will be a massive step for most traders.... and I know that 70% 1/1 is massively appealing, and maintainable for periods of time (just search this forum for 1/1 and see how often it's mentioned!!!) But..... you will make money slower than the burger tossers at Maccy D's.... If you really want to grow your profits exponentially then you have to look to the bigger wins. This post from No Brainers is food for thought http://www.nobrainertrades.com/2010/...placement.html...
Hi again thanks for suggestion, but I tell u exponential growth of the curve is not a problem at all with this approach , if u place 10% of your balance per your 7 out of 10 trade, and after u collect 10 wins you have doubled your balance. then take a systematic way up approach to it as well, on the next step u put 10 % of your new ballance per your 7 out of 10 trade collect 10 wins and you doubled your balance again, and so on... as u know if u double 1000eur 10 times u'll get a million- dream of every new trader.this can be done and no burger tossers at Mc Donald's will ever catch up with u financially.
  • #88
  • Dec 22, 2013 6:03am Dec 22, 2013 6:03am
Quoting moneytub
{quote} Hi again thanks for suggestion, but I tell u exponential growth of the curve is not a problem at all with this approach , if u place 10% of your balance per your 7 out of 10 trade, and after u collect 10 wins you have doubled your balance. then take a systematic way up approach to it as well, on the next step u put 10 % of your new ballance per your 7 out of 10 trade collect 10 wins and you doubled your balance again, and so on... as u know if u double 1000eur 10 times u'll get a million- dream of every new trader.this can be done and...
I'm going to presume you know how likely it is you blow your account up trading that way?

http://2ndskiesforex.com/strategies-...u-should-know/
tradewith60
  • #89
  • Dec 22, 2013 6:22am Dec 22, 2013 6:22am
Quoting 60minuteman
{quote} I'm going to presume you know how likely it is you blow your account up trading that way? http://2ndskiesforex.com/strategies-...u-should-know/
very true IF big IF u continue trading your 10% after u have gone step down, in this case it is crucial to get to 10% per trade for the relevant level, this way u will never bust the account having the loser streak , when comes winner streak u will easily get up to the previous level . just structure your way up to million in 10 levels - in each level u take only relevant 10 % per that level. this is like in the playstation game - u go through 10 levels . u fight the Dragon and u win!"!! and this will only work if u have that 7 out of 10 wins ratio
  • #90
  • Dec 22, 2013 8:00am Dec 22, 2013 8:00am
FEAR and GREED, fundamentally speaking. love the comments and feedback from the members here. most make sense. still need to up the learning curve on some areas to know about the other reasons.
  • #91
  • Dec 22, 2013 3:08pm Dec 22, 2013 3:08pm
Quoting 60minuteman
1. High win rate 2. Close too early... (2 THREADS ON FF FOR POSITION TRADING? SAYS IT ALL) 3. Require profits every day 4. Obsess about entries and exits 5. Think you can gain an edge with a strategy instead of a mindset

Good links, many thanks for sharing.

But IMO trading is much more about strategy than mindset. Self-belief and discipline count for nothing if your entries and exits are merely random guesses. You can take mindset out of the equation by simply running an EA, so why isn't every EA profitable? Because it's underlying strategy lacks an edge.
  • #92
  • Dec 22, 2013 3:47pm Dec 22, 2013 3:47pm
Quoting hanover
{quote} Good links, many thanks for sharing. But IMO trading is much more about strategy than mindset. Self-belief and discipline count for nothing if your entries and exits are merely random guesses. You can take mindset out of the equation by simply running an EA, so why isn't every EA profitable? Because it's underlying strategy lacks an edge.
Most EA's are unprofitable because of the mindset of the person programming it i'm afraid hanover.

Remember, just because someone says the fib retracement is 50% of the last upswing and the h4 trendline has broken blah de blah... all entries and exits are random guesses. There are 2 elements that are not a guess, 1. how much you will lose when your stop loss is hit. 2. How long you are going to hold your random guess that is winning.

Most people's mindset is that win rates are important, but statistically higher R/R systems make much greater profits but have low win rates, the entries could be identical but it's the mindset that is leading most down the wrong path of not losing instead of larger wins, less often.

A simple counter trendline break profits max out at 25/1 R/R.... does anyone even consider holding trades that long? you would have to say no based on the strategy threads here? But, have a look at the trade performance of some of the hedge funds....

Now we get onto the subject of your beloved EA, an EA to manage all the positions in a system that holds trades for 25+/1 R/R would I presume be very hard to program, especially for it to perform better than the trader that was smart enough to realize, most basic entries will generate massive gains from always participating.

I like our debates Hanover but I think simple for human is often very complicated for a computer, stupid for a human on the other hand is very easy to compute.
tradewith60
  • #93
  • Dec 22, 2013 10:34pm Dec 22, 2013 10:34pm
Quoting 60minuteman
{quote} Most EA's are unprofitable because of the mindset of the person programming it i'm afraid hanover. ........
Ah, I see where the confusion lies. What you call "mindset" (e.g. how long you hold trades for; what rules are programmed into the EA; etc) I would describe as integral parts of the strategy itself.

For me:

  1. strategy (or 'method') = the rationale and rules behind both the entries and exits;
  2. MM = how much of the account is placed at risk on each trade, i.e. position sizing;
  3. mindset = the patience, discipline, nerve, self-confidence etc needed to consistently execute the strategy.

My view was shaped by Elder's Trading for a Living (he describes what he calls the "3 Ms": method, money, mindset).
But at the end of the day it's all just semantics and terminology.

  • #94
  • Edited 3:20am Dec 23, 2013 1:29am | Edited 3:20am
Trade on low TF chart, the spread versus lose/profit ratio is too high.
Example: 2 pips spread
SL: 20 pips, 10%
TP: 50 pips, 4%
Chances of sucess, 1 out of 3. You wont be able to make profit and still in a lose position.
The market swing up/down, those with narrow SL will be wiped out first.
My recommendation H4 and above, D chart should be more appropriate.
Face both Win and Lose bravely
  • #95
  • Dec 23, 2013 3:00am Dec 23, 2013 3:00am
Quoting hanover
{quote} Ah, I see where the confusion lies. What you call "mindset" (e.g. how long you hold trades for; what rules are programmed into the EA; etc) I would describe as integral parts of the strategy itself. For me: strategy (or 'method') = the rationale and rules behind both the entries and exits; MM = how much of the account is placed at risk on each trade, i.e. position sizing; mindset = the patience, discipline, nerve, self-confidence etc needed to consistently execute the strategy.My view was shaped by Elder's [url=http://www.amazon.com/Trading-Living-Psychology-Tactics-Management/dp/0471592242]Trading...
yes maybe mindset is not the right way to describe it.

For really large gains, the most reliable approach is to build a position in the market and remain for as long as possible. You need to react what has happened and not try to impose your will on the market.

So many traders think (mindset) that the best approach to making profits is to work out exactly how many wins they're going to get, how big they are, how many filters they need to reduce losses a little bit more, and the end result is they win 20 or 30 pips. But to them their 10 trade run of 4 break evens and 6 30 pip wins is going to make them not only an income but rich beyond their dreams....

People want rules to tell them what the trend is...if you have 5 shorts surviving, the trend is short mate! no need for a rule.

You want to know when to exit?... when a trend starts against you, but don't close it all, why would you want to do that?

You want to know when to enter? doesn't matter really if you hold your entries longer, at a change in direction is a good start though.

People will fight against this mindset though, passionately, they want instant gratification, they want daily profits banked, they want to be out of the market as quick as possible, their mindset is that is the best way to trade, I guess that's why we have so many brokers to choose from, supply and demand?
tradewith60
  • #96
  • Dec 23, 2013 3:27am Dec 23, 2013 3:27am
Imho.

Quoting 60minuteman
1. High win rate
1. High or low win rate is not important - if you have a low win rate and your making money, great! if you have a high win rate and your making money also great! There is no wrong or right in win rates - right is if your profitable and making money, and its possible to do this with both high and low win rates.

Quoting 60minuteman
2. Close too early...
2. No and Yes, sometimes closing early "because facts change" is correct and should be done - being stubborn costs money, but you have to find a balance, there are trades which are worth to hold on to, and thats when its wrong to close early and in this case - closing early will cost you money in the long run.

Quoting 60minuteman
3. Require profits every day
3. Correct, this is a huge mistake most people make, they want too much, and this "i need to trade, i need to trade now" mentallity will cost money and nerves - gotta accept not everyday is "my day".

Quoting 60minuteman
4. Obsess about entries and exits
4. Better not to be obsessed with anything, when your obsessed with something, you cant see whats happening in the meantime around - obsession = jail.

Quoting 60minuteman
5. Think you can gain an edge with a strategy instead of a mindset
5. Best point you make - without the correct mindset profits will not be consistent, you will be jumping around from strategy to strategy hoping to find the holy maccaroni but eventually ending up desperatley looking at the charts with your 100 templates and indis without any idea what actually to do - without the mindset and a strong personality the market will eat you and spit you out.
consistency wins
  • #97
  • Dec 23, 2013 5:11am Dec 23, 2013 5:11am
Quoting iTrader
Imho. {quote} 1. High or low win rate is not important - if you have a low win rate and your making money, great! if you have a high win rate and your making money also great! There is no wrong or right in win rates - right is if your profitable and making money, and its possible to do this with both high and low win rates.
the question was... why do most traders lose...

Im not saying one is right or wrong, im saying most lose because they want to achieve high win rates, often sacrificing decent wins to maintain that.


{quote} 2. No and Yes, sometimes closing early "because facts change" is correct and should be done - being stubborn costs money, but you have to find a balance, there are trades which are worth to hold on to, and thats when its wrong to close early and in this case - closing early will cost you money in the long run. [/quote]again most lose because their win rates average out at 50% and there wins are usually smaller or equal to their losses, thats not my opinion thats retail broker data.
tradewith60
  • #98
  • Dec 23, 2013 5:15am Dec 23, 2013 5:15am
Quoting 60minuteman
{quote} the question was... why do most traders lose... Im not saying one is right or wrong, im saying most lose because they want to achieve high win rates, often sacrificing decent wins to maintain that. {quote} 2. No and Yes, sometimes closing early "because facts change" is correct and should be done - being stubborn costs money, but you have to find a balance, there are trades which are worth to hold on to, and thats when its wrong to close early and in this case - closing early will cost you money in the long run.
  • #99
  • Dec 23, 2013 11:09am Dec 23, 2013 11:09am
Quoting 60minuteman
{quote} yes maybe mindset is not the right way to describe it. For really large gains, the most reliable approach is to build a position in the market and remain for as long as possible. .......
Understood.
  • #100
  • Dec 23, 2013 2:23pm Dec 23, 2013 2:23pm
My view is this:

One has to have

1. A decent system/strategy
2. The correct mindset


The system/strategy has to deliver more wins then losses. The wins have to be greater then or about equal to the losses. From then on you have to view trading forex like any other business.

If you're experiencing more losses then wins then your system/strategy needs changing!


I don't agree that one needs to start with a huge account balance. Doing so can lead to reckless over-leveraged trading. One can start with $100 if your broker allows .01 (microlots) it's OK
0 traders viewing now