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5 Reasons Why Traders Lose

  • #161
  • Dec 29, 2013 1:56am Dec 29, 2013 1:56am
Quoting Chicky
{quote} I don't know from where he got this method, but must admit that he is very close to the best system I ever came across. The only issue with him is not fixing his risk tolerance. However, the most strange thing I find is his win rate of 97%. This should be around 50%. This system uses few deeper techniques but the basic concept comes from the fact that this market always moves in cycles.
It's really not a special 'system' (or necessarily a very good one) that's making it work, its essentially just the fact that "...this market always moves in cycles.". Well, except when it doesn't. Hence the drawdown. It''s isn't his risk tolerances, but more to do with no knowing what to do when the cycle changed.

What I don't understand is why after having such a long drawdown he wasn't able to counter his position during that long negative move against him. After peeling off a succession of wins, is he so addicted to his 97% win rate (which actually means nothing) that he wasn't able to accept a loss (offset by a series of wins) and keep trading with a far higher level of available equity? (Note: This sounds very similar to Beginner Joe's trading tactics.)

This is a serious flaw in his mindset and his trading strategy/system. If you get to a point where you forget that you can be caught 'unexpectedly' at any point in time - even when the charts say otherwise - you are creating a dangerous trap of having a bad position get much worse, sometimes dangerously so.

I can't emphasise enough that everyone who trades without SL's needs to plan how you're going to trade when your system fails (due to changes from ranging to trending, loss of volatility, etc.) and you're left with some positions that the market seems to have left high and dry. Keep a negative outlook about every trade you make - as it could be the one (or the few) that are left dangling.

Dealing with these 'lost' trades is exactly the reason we keep a decent amount of capital in our accounts and is also one of the skills you need to acquire if you're going to trade without SL's. You can't just wait out the market, as at some point the market will move just far enough to take you out...and possibly then go right back the other way. :-/
  • #162
  • Dec 29, 2013 2:08am Dec 29, 2013 2:08am
Quoting hanover
{quote} Chicky, Your post caused me to ponder whether losing traders actually know the reasons for their failure. After all, if somebody knows exactly how and why his trading is deficient, then doesn’t that suggest that he must have an inkling as to what he should be doing? And if he knows how to trade profitably, then why isn’t he winning? Hence I’d respectfully suggest that, if the vast majority lose (as is apparently the case), then the vast majority who’ve posted in this thread aren’t qualified to answer the OP’s question. Hence I doubt that...
Like most here, I too really don't know why most not succeed in this business. But one thing I know is that many ignore the risk side. Don't know if I am right, one may summarize all that has been said here to poor risk management. Chicky's Gambling Rule #2 "There is no limit to how much one wants to gain, but there is a definite limit to how much one can lose". In other words, one can reach his/her losing limit but can never get to winning limit because there is no such limit........ without such limit, it is just a matter of time.

Happy holidays to you too David.
The Thief of Wall Street
  • #163
  • Dec 29, 2013 2:20am Dec 29, 2013 2:20am
Quoting Nefser
{quote} It's really not a special 'system' (or necessarily a very good one) that's making it work, its essentially just the fact that "...this market always moves in cycles.". Well, except when it doesn't. Hence the drawdown. It''s isn't his risk tolerances, but more to do with no knowing what to do when the cycle changed. What I don't understand is why after having such a long drawdown he wasn't able to counter his position during that long negative move against him. After peeling off a succession of wins, is he so addicted to his 97% win rate...
This method is all about balancing. Market has a rhythm. You dance with this rhythm with proper tools. This is indeed not a holigrail method, but very much designed to how CURRENCY market moves. It is a sure suicide if applied to stocks or commodities.
The Thief of Wall Street
  • #164
  • Dec 29, 2013 2:27am Dec 29, 2013 2:27am
Quoting Chicky
{quote} Like most here, I too really don't know why most not succeed in this business. But one thing I know is that many ignore the risk side. Don't know if I am right, one may summarize all that has been said here to poor risk management. Chicky's Gambling Rule #2 "There is no limit to how much one wants to gain, but there is a definite limit to how much one can lose". In other words, one can reach his/her losing limit but can never get to winning limit because there is no such limit........ without such limit, it is just a matter of time. Happy...
I like this Chicky, my thoughts exactly.... small risk, constant participation, exponential returns....

70%win rate, 2/1 RR???? no thanks... good luck with that equation! (although it took me a long time to see it)
tradewith60
  • #165
  • Dec 29, 2013 2:56am Dec 29, 2013 2:56am
Quoting Chicky
{quote} I don't know from where he got this method, but must admit that he is very close to the best system I ever came across. The only issue with him is not fixing his risk tolerance. However, the most strange thing I find is his win rate of 97%. This should be around 50%. This system uses few deeper techniques but the basic concept comes from the fact that this market always moves in cycles.
He designed the method himself after hundreds of hours of chart study, and trial and error. The 97% win rate comes from the fact that he doesn't close orders that are in loss; he waits for them to return to profit. Hence he has hundreds of 5-15 pip winners, and a few unrealized losses of several hundred pips that have been open for up to 6 months, while he waits for GBPNZD to fall back to around 1.88, where his entries were.

I've also been following Claudia1's thread. She has recently had a sequence of more than 50 consecutive wins. If I understand correctly, this has likewise been the result of trading without SLs, and adding to losing trades. However, unlike my client, Claudia is an ex-bank trader who trades for a living, hence I assume that she knows what she's doing:

Quoting claudia1
I think that's 63 wins 1 loss and 2 b/e it's silly little amounts but it's growing. That's since 6 December. Very good high risk fun.
Quoting claudia1
..........I trade purely on price and time of day is important. I start around 3.00 pm London time look at the 1 hour then the 15 min then the 1 min I trade off. My potential risk/reward is very very bad but I don't lose to often. The secret to this way of trading is simple. No stop loss and keep adding to losing positions. Eventually you win but you need a good account size and nerves of steel. I know I will get knocked to hell for saying that but results speak for themselves. Stress doesn't come into it. This is very high risk stuff and I can...
  • #166
  • Dec 29, 2013 3:06am Dec 29, 2013 3:06am
Quoting hanover
And it’s also highlighted just how insidious markets can be, rewarding a trader for a long period of time, while he breaks all of the established rules, before finally coming back to bite him.
This has nothing to do with markets, and everything to do with people. People are stupid, and that's a bankable fact.
Congratulations ScalaFX for coming out of the closet!
  • #167
  • Dec 29, 2013 3:17am Dec 29, 2013 3:17am
Quoting nubcake
{quote} This has nothing to do with markets, and everything to do with people. People are stupid, and that's a bankable fact.
all people?
tradewith60
  • #168
  • Dec 29, 2013 2:21pm Dec 29, 2013 2:21pm
Quoting hanover
I have a client for whom I’m writing an EA. However, he also trades a live account manually, using a completely different strategy. His manual trading involves trading GBPNZD only (because it has the highest daily pip range). He takes his entries on M1, buying at the top of the Bollinger band or regression channel, and selling at the bottom. He also considers overbought/oversold on other timeframes, as shown by the CSM indicator that I wrote, which are effectively filters. Hence he frequently has multiple positions, both long and short, open simultaneously;...
Such is human nature... I'm still baffled though at the lengths people can go to fool themselves, sometimes completely denying the reality, just to be right.
"To hold, you must first open your hand. Let go." - Lao Tzu
  • #169
  • Dec 29, 2013 3:00pm Dec 29, 2013 3:00pm
think because they are high impact member they are a winner
  • #170
  • Dec 29, 2013 7:11pm Dec 29, 2013 7:11pm
Quoting nubcake
{quote} This has nothing to do with markets, and everything to do with people.
Agreed. Re-reading my post, I guess it did sound like I was suggesting that 'Mr Market' has a will and personality all of his own, LOL. But the equity of many trader wannabes does seem to survive a surprisingly large number of ups and downs before their inept risk management finally catches up with them.

Compliments of the season to you, Nubs. I look forward to more of your posts in 2014.

David
  • #171
  • Dec 30, 2013 1:36am Dec 30, 2013 1:36am
love this 5 reasons... they are just the truth!! come on fella, do some reviews!
ya Rabbi sholli ala Muhammad
  • #172
  • Last Post: May 25, 2014 9:44pm May 25, 2014 9:44pm
bump im bored
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