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95% traders go broke, only 5% survive

  • #381
  • Mar 15, 2014 10:22am Mar 15, 2014 10:22am
Quoting Mingary
{quote} Stream of consciousness from a day in the life of a forex trader Lose and lose and lose some more, go on a Guru search and systems and indicators and spend lots and lots on the "sure fire" things and so called experts and do training some more and more books more systems and more money spent and lost in the market. Now out of money?, no problem. go to bank borrow money, second mortgage and credit card and pay day loans and pennies found on the street and borrow money from friends and lose it all. Now totally out of money?, friends and family?...
Stream of consciousness from a day in the life of a forex trader, Win, and win, and Win some more, go for a 2 hour workout, then to the grocery and come home and find that your limit has been hit in one of your trades for another 40 pips. Now have more money?, no problem. Start trading larger lot sizes, form a LLC taxed as an S-Corp around your trading business to financially engineer 401k retirement savings and health insurance premium writeoffs. Look for a Forex Conference in a neat part of the world so you can go on a week vacation and write off ALL expenses against your trading profits in your business. Trading a Live Account full time and you are able to tell your boss and your job goodbye because you are making a lot more with less headaches!. Finally Free of all constraints and able to do WHAT you want WHEN you want it!
  • #382
  • Mar 15, 2014 10:37am Mar 15, 2014 10:37am
Quoting yazzie
{quote} Stream of consciousness from a day in the life of a forex trader, Win, and win, and Win some more, go for a 2 hour workout, then to the grocery and come home and find that your limit has been hit in one of your trades for another 40 pips. Now have more money?, no problem. Start trading larger lot sizes, form a LLC taxed as an S-Corp around your trading business to financially engineer 401k retirement savings and health insurance premium writeoffs. Look for a Forex Conference in a neat part of the world so you can go on a week vacation and...
When reality does not match one's perception it is called Cognitive Dissonance at best, at worse it's called Schizophrenia.
Your description of "the way things ought to be" is always on the mind of the protagonist in my metaphor.
After all, who in his right mind would put on a trade just to see it lose... (:
  • #383
  • Edited 12:43pm Mar 15, 2014 12:26pm | Edited 12:43pm
Quoting Vitez
{quote} ok you sound like you've been there...may I ask did you loose 20k quickly or were you loosing a few $1000 accounts coming back like "ok this time I'll make it" is forex the only bad boy? I wonder what are the stats for futures, equities, stock options etc....is it Forex or trading in general?
In 2005 I took a demo account from $2000 to over 2 million in three months trading equity cfd's long during a bull run. Whenever price came down I bought.
I really believed I was some sort of trading genius. I really believed I could see something no one else could.

In October of that same year I borrowed 10k at high interest. I really believed I was going to repeat the performance with real money and that I would retire a millionaire by Christmas

the market went down I bought, it went down further I bought, It kept going down and I kept buying. After two weeks I had lost half of my account. I was a psychological mess. I managed to get the account back up to $9000k before completely wiping out 3 months after I had begun. That was my introduction to trading

I turned to forex with a secret weapon I had learned about - Japanese candle sticks! I lost the next 10k over the next 2 years chasing my initial loss with smaller accounts

It took another three years to lose another 10k, so 5 years and 30k down. My kids missed out on holidays and came home from school every night to their dad stuck in front of the pc.

For the next two years I traded demo and a 1k micro Oanda account. Last year I did not trade at all.

Quoting hamedmohd
{quote} my special word in to my family is ( what is gone it is gone ) so how are you now in forex ?
Very wise words
Although my initial losses were devastating, I recovered and paid back my debt. Calculated over 7 years it works out around $80/week on my forex habit. I know people who spend more than that on cigarettes and alcohol. Ive learned alot about trading, myself and life so not a total loss. Im a happy man today

This year I have 10k saved up to start trading again. My boys have grown up and I now have a loving partner who has 5 kids of her own.
I have promised her that if I drawdown 20% I will give it up altogether. I have put just 10% of that into an account. After a bit of a shaky start getting back into the groove, Ive settled down and I am trading well. I dont spend hours on it or miss any family stuff because of it. I am busy with work and I think I took just 1 trade last week with less than a few minutes screen time. I have a trade explorer

Quoting MapleLeaf
{quote} I could even bet M.A.C.Doug
Im not sure why you dragged me into this, my posts are in agreement with you. You are correct, I cant take your bet, maybe If I had a 100k account I would have a crack at 3% per month and risk losing the bet but, trading is psychological. You must do everything possible to reduce the psychological pressure. Taking a public challenge is hardly a sensible approach when the odds of success are already so low, is it?
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  • #384
  • Mar 15, 2014 2:00pm Mar 15, 2014 2:00pm
Quoting M.A.C.Doug
{quote} In 2005 I took a demo account from $2000 to over 2 million in three months trading equity cfd's long during a bull run. Whenever price came down I bought. I really believed I was some sort of trading genius. I really believed I could see something no one else could. In October of that same year I borrowed 10k at high interest. I really believed I was going to repeat the performance with real money and that I would retire a millionaire by Christmas the market went down I bought, it went down further I bought, It kept going down and I kept...
Hi MACDoug,

If I had gone through all the pain you went and seen all the pain you've seen, I wouldn't be trading again unless I knew I had a proven edge. Ask yourself this, do you have a proven edge, or are you hoping to prove your edge? Be honest to yourself answering the question. Trade only if you have a proven edge, and keep in mind that even a proven edge might draw down 20% depending on MM. If you're hoping to prove you have a edge, then don't trade. Walk away. There's no shame in it. Move on. There is so much more to life than forex. You have a family, and I'm sure you can find something else where to put your talents to good use.

As for Mapleleaf, just ignore the guy. He can't read.

Hope you don't mind the cheap advice from a random internet stranger.

Best wishes,
vox
"To hold, you must first open your hand. Let go." - Lao Tzu
  • #385
  • Edited 3:13pm Mar 15, 2014 2:57pm | Edited 3:13pm
Quoting vox dei
{quote} Hi MACDoug, .... Hope you don't mind the cheap advice from a random internet stranger. Best wishes, vox
Hi vox dei

Dont mind friendly advice as thats pretty much all I do on here anyway
The edge was the easy part, a simple moving average for trend and an entry trigger on retrace will give you that. The psychology is what needs the hard work I have found

Back to the topic, here is a quote direct from Boston Technologies. This is what they tell the brokers who use their services

"most small retail traders have no experience and 95% of them will lose money. In this model, which is more like gambling for the customer, most customers spend 95% of their deposits in 2-3 months"

This is from a company that provides services to market makers. They are trying to sell the business model of being counter-party. If they could say 99.6% of all forex traders lose, they would, because it would make the business they are selling sound much better.

Note that they say 95% of small retail traders with no experience will lose. Therefore, you would expect the percentage among experienced traders to be better than that

Also, back in the day, the broker I was using had whats known as a "B" book. These were the new and unprofitable traders they could trade directly against. The 'A' book were profitable traders who the broker needed to hedge. If 99.6% of all forex traders lost, there would be no need for an "A" book cause the losses of 996 traders would easily leave plenty of profit for the broker after the gains of the 4 profitable traders were paid out

So, from the horses mouth, its 95% of inexperienced traders will lose. We also know from the statistics that mapleleaf provided us that 99.6% of all traders, which would included a mix of new and various degrees of experience, fail to be profitable for four consistent quarters. That is useful information for any new trader. He/she can base their expectations on realistic profit projections and that alone will improve their chances of success
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  • #386
  • Mar 15, 2014 3:57pm Mar 15, 2014 3:57pm
Quoting M.A.C.Doug
{quote} Hi vox dei Dont mind friendly advice as thats pretty much all I do on here anyway The edge was the easy part, a simple moving average for trend and an entry trigger will give you that. The psychology is what needs the hard work I have found Back to the topic, here is a quote direct from Boston Technologies. This is what they tell the brokers who use their services "most small retail traders have no experience and 95% of them will lose money. In this model, which is more like gambling for the customer, most customers spend 95% of their deposits...
Hi MAC,

Glad to hear that you have a edge to trade. For me it was the other way around: edge = very hard work, psychology = easier work. Possibly because I have a psychology background.

I agree with the quote you've provided and your comment. Although I think it should be directed at Mapleleaf (the 99.6% guy) and not to me. Please note that I do not subscribe to his views.

I wish you a good trading journey,
vox
"To hold, you must first open your hand. Let go." - Lao Tzu
  • #387
  • Mar 15, 2014 8:37pm Mar 15, 2014 8:37pm
Based on my experienced I've been through, and still learning stage now, what I need for trading is:

1. Psychology.
2. Good money management.
3. Find our own trusted indicators and make it into system.
4. Back again to #1.

Psychology is more into how to control what you feel when things in good situation or also if things in bad situation, control your ego, emotion, don't be greed, always remind yourself the main purpose and daily target then stick with it at least.
I put it #1 because personally I think these is the most important first.. We often know it, can do it, but when market is moving, we are all often also get blind and forget these..

Good money management is more on how you calculate your risk, margin you trade, the risk that will come, at what point you will put protection if the trade against you, or what point will you exit trade with green pips. But I see it more into the how you calculate your risk and margin.
These money management is a continuous learning process time to time..

Good Trading system is speak itself, no need more details.. I think these is the mostly first things people's are chasing it.. Which is not wrong, but I think that's a common mistake... We should learn to dong the Trading system by experience, maybe with demo account. While... Do the #1 and #2 also..

Not mean to give lecture. People have their own style to trade, these just my personal opinion. And want to share it ^^V
I've failed many times, but I took the lessons,and never give up.God Bless.
  • #388
  • Mar 15, 2014 9:26pm Mar 15, 2014 9:26pm
Quoting vox dei
{quote}. For me it was the other way around: edge = very hard work, psychology = easier work.
I believe your case is rare. I believe people come to the market to fix something they see as wrong with themselves or life. This mindset is not conducive to profitable trading. This is at the heart of the matter of low success rate. The mind is what needs changing and this is difficult work because what is really going on is,

1/ hidden from view and hard to find

2/ not pretty to look at and admit as true once found

3/ long and slow process to address

Most people live and die without facing these hidden issues of mindset and thought. Others come close to finding the truth of these matters but sweep them under the mat and fall back into unconsciousness. There are short cuts as far as trading is concerned though. That is my opinion based on nearly eight years of experience

Quoting vox dei
{quote} I agree with the quote you've provided and your comment. Although I think it should be directed at Mapleleaf (the 99.6% guy) and not to me. Please note that I do not subscribe to his views. I wish you a good trading journey, vox
It was not directed at you at all, it is a separate part of my post getting back to the thread topic in general. I wish only the best for you also, thank you
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  • #389
  • Mar 15, 2014 11:39pm Mar 15, 2014 11:39pm
Quoting M.A.C.Doug
{quote} Hi vox dei Dont mind friendly advice as thats pretty much all I do on here anyway The edge was the easy part, a simple moving average for trend and an entry trigger on retrace will give you that. The psychology is what needs the hard work I have found Back to the topic, here is a quote direct from Boston Technologies. This is what they tell the brokers who use their services "most small retail traders have no experience and 95% of them will lose money. In this model, which is more like gambling for the customer, most customers spend 95%...

Don't feel offended but , Based on your trading explorer you put , it seems obvious that you are gambling too.
More than 40 % draw down in 1 freaking trade by any mean is Pure gambling.

revenge trading is your biggest psychological problem and which apparently you haven't mastered after 10 years of experience.
no wonder your friend ended up blowing account so fast.

I advise you to forget your losses till today and forgive yourself for your foolish belief that easy money could come that way. Be grateful everyday for your family. Go fishing with your grand kids. Forget you ever saw forex. Spend the rest of your life looking for opportunities to give love instead of take profit.
  • #390
  • Mar 16, 2014 3:09am Mar 16, 2014 3:09am
Quoting M.A.C.Doug
{quote} ... Finally, after doubling down a number of times over about 4 months and 700 pips, her entire account was gone.....
She lost everything in 700 negative pips? That sounds like a bad Money Management... Not that I haven't been there, but not with such amount of money. I am beginning to believe that if you know how to trade, then long term your initial investment does not need to exceed 20 USD, and I am not kidding. If you don't know how to trade, not even half a million will help. I actually talk with the guy who lost 0.5 million in about 4 months...
  • #391
  • Mar 16, 2014 3:28am Mar 16, 2014 3:28am
Quoting M.A.C.Doug
{quote} I believe your case is rare. I believe people come to the market to fix something they see as wrong with themselves or life. This mindset is not conducive to profitable trading. This is at the heart of the matter of low success rate. The mind is what needs changing and this is difficult work because what is really going on is, 1/ hidden from view and hard to find 2/ not pretty to look at and admit as true once found 3/ long and slow process to address Most people live and die without facing these hidden issues of mindset and thought. Others...
It's not that I'm a rare case. I am as psychologically vulnerable/human as everybody else when it comes to discretionary trading. It's that I have an heightened awareness of how contra human nature consistently profitable trading really is due to background. If the enemy is too strong, the only way to win is to avoid the fight. Trading can be automated: More automation, less psychology. ​The bulk of my live trades are performed by EAs. If one wants, having the right mindset (attitude) basically can sum up all the psychology trading will ever demand.

Thanks for clearing up the 99.6% comment. It makes perfect sense now.

Best wishes,
vox
"To hold, you must first open your hand. Let go." - Lao Tzu
  • #392
  • Mar 16, 2014 3:45am Mar 16, 2014 3:45am
Quoting IndigoPingvi
{quote} She lost everything in 700 negative pips? That sounds like a bad Money Management... Not that I haven't been there, but not with such amount of money. I am beginning to believe that if you know how to trade, then long term your initial investment does not need to exceed 20 USD, and I am not kidding. If you don't know how to trade, not even half a million will help. I actually talk with the guy who lost 0.5 million in about 4 months...
If you know how to trade then you wont risk much per trade. Reward being proportional to risk, trading a 20 bucks account into a large figure account would take a long time. Capital matters too.
"To hold, you must first open your hand. Let go." - Lao Tzu
  • #393
  • Mar 16, 2014 10:26am Mar 16, 2014 10:26am
Quoting M.A.C.Doug
{quote} Very wise words Although my initial losses were devastating, I recovered and paid back my debt. Calculated over 7 years it works out around $80/week on my forex habit. I know people who spend more than that on cigarettes and alcohol. Ive learned alot about trading, myself and life so not a total loss. Im a happy man today This year I have 10k saved up to start trading again. My boys have grown up and I now have a loving partner who has 5 kids of her own. I have promised her that if I drawdown 20% I will give it up altogether. I have put...
impressive and good luck
  • #394
  • Mar 16, 2014 1:08pm Mar 16, 2014 1:08pm
Quoting vox dei
{quote} If you know how to trade then you wont risk much per trade. Reward being proportional to risk, trading a 20 bucks account into a large figure account would take a long time. Capital matters too.
Capital matters, this is true.
If you could consistently make 100% per year (i.e. double your capital) it would take over 15 years to make a million out of $20.
If you simply want to take a salary then you need twice the imagined salary as a stake to reliably get close over a year.
Carbon-Dioxide: the gas of life! https://youtu.be/ttJBdr6eBuo
  • #395
  • Mar 16, 2014 1:22pm Mar 16, 2014 1:22pm
i don't quite understand this, please care to elaborate?

for me, i might have 1 trade per week. for instance, if i know my win rate is 60% with RR 2:1, then i can grow my equity much faster by betting heavier? isn't it the case? i do admit the DD probability is raised too, but the general impression is with a not-bad win rate and RR, heavier position size (10%) grow the equity much faster than 2%. i mean, exponentially faster. that's why i feel a little more risk (to DD) is acceptable (or even advisable).

on the other hand, my method cannot find more entries than 1 per week, that's why i think that i might choose 'heavier bet'. please explain/criticize.

Quoting vox dei
{quote} If you know how to trade then you wont risk much per trade. Reward being proportional to risk, trading a 20 bucks account into a large figure account would take a long time. Capital matters too.
  • #396
  • Mar 16, 2014 2:36pm Mar 16, 2014 2:36pm
Quoting Exodus
{quote} Capital matters, this is true. If you could consistently make 100% per year (i.e. double your capital) it would take over 15 years to make a million out of $20. If you simply want to take a salary then you need twice the imagined salary as a stake to reliably get close over a year.
Why 100% per year? I am constantly upgrading my method and I can say I am very close to a holy grail. I don't claim I am the best trader, as I have seen what some traders can do, but in terms of % I think 8%-27% per week is doable, that would mean 1 to 3 years to get to 3M. I started again last week, 15 trades, all win, 450 pips, 200+% gain. I don't claim that it will go every week like this, hell no! But with good wining % you can risk more, much more, and here I agree with charvo. The bad side is that I have a day time job and I can't be in front of computer all day long...
  • #397
  • Mar 16, 2014 3:13pm Mar 16, 2014 3:13pm
Quoting IndigoPingvi
{quote} Why 100% per year? ....
...because that can be achieved with modest risk ...and first you must do your apprenticeship.

I am pleased for you that you make at least 8% per week, but you have not been doing this since day #1.
If you never have a negative week then that is exemplary, and you are to be congratulated.
My best ever monthly win was well into 3 figures percentage-wise, I never repeated that.

100% is a target that proficient traders should be able to achieve.
Carbon-Dioxide: the gas of life! https://youtu.be/ttJBdr6eBuo
  • #398
  • Mar 16, 2014 4:27pm Mar 16, 2014 4:27pm
Quoting Exodus
{quote} Capital matters, this is true. If you could consistently make 100% per year (i.e. double your capital) it would take over 15 years to make a million out of $20. If you simply want to take a salary then you need twice the imagined salary as a stake to reliably get close over a year.

The amount of capital required to make trading worthwhile may vary widely from individual to individual depending on a multitude of personal factors. I'm a believer that time is money. For me the minimum amount of capital to start trading with must be able to generate enough return to cover living expenses while allowing modest compounding at low drawn down. Otherwise, a regular job paycheck ability to pay bills and generate savings at virtually zero risk should not be discarded.

Quoting charvo
i don't quite understand this, please care to elaborate? for me, i might have 1 trade per week. for instance, if i know my win rate is 60% with RR 2:1, then i can grow my equity much faster by betting heavier? isn't it the case? i do admit the DD probability is raised too, but the general impression is with a not-bad win rate and RR, heavier position size (10%) grow the equity much faster than 2%. i mean, exponentially faster. that's why i feel a little more risk (to DD) is acceptable (or even advisable). on the other hand, my method cannot find...

I don't think there is always a linear right/wrong answer. There are many factors to consider, many shades of gray in-between. Ultimately, it may all come down to: 1) what kind of losses your edge can deal with, and 2) what kind of losses you can cope with psychologically (risk appetite vs. risk aversion). The 10% risk per trade you've mentioned would be totally unacceptable for me on accounts of both points 1 and 2, but then again I don't know your edge to tell what kind of losses it can reasonably withstand, nor do I know you well enough to tell what kind of losses are within/outside your psychological comfort zone. Only you can choose your own risk profile.
"To hold, you must first open your hand. Let go." - Lao Tzu
  • #399
  • Mar 16, 2014 5:05pm Mar 16, 2014 5:05pm
Quoting Exodus
{quote} ...because that can be achieved with modest risk ...and first you must do your apprenticeship. I am pleased for you that you make at least 8% per week, but you have not been doing this since day #1. If you never have a negative week then that is exemplary, and you are to be congratulated. My best ever monthly win was well into 3 figures percentage-wise, I never repeated that. 100% is a target that proficient traders should be able to achieve.
About 8% ... I meant hypothetically... I am not there yet but I feel my method grow to the point that I could do that. Time will tell. First week of the new account was unexpectedly large at 200% gain... we'll see...
  • #400
  • Mar 16, 2014 5:54pm Mar 16, 2014 5:54pm
Quoting IndigoPingvi
{quote} About 8% ... I meant hypothetically... I am not there yet but I feel my method grow to the point that I could do that. Time will tell. First week of the new account was unexpectedly large at 200% gain... we'll see...
Carbon-Dioxide: the gas of life! https://youtu.be/ttJBdr6eBuo
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