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Real Reasons why Retail Traders lose money

  • #61
  • Jun 9, 2014 2:58am Jun 9, 2014 2:58am
Quoting Pipologist
There are thousands of retail traders around the world that make enough money trading to trade professionally. On the other hand there are also investment bank traders that lose billions and bust their company or department out. These cases are fewer than retail traders that bust out, but they are historically proven. There are a lot of false negative assumptions with this thread. Your distinction is "retail traders" vs. "professional traders". There are tons of retail traders that are professional traders. I think what you want to say is "retail...
Thanks for info ~65% of spot fx is for hedging risks for business to avoid huge loses, is this true? Do they put their money blindly regardless of technical levels, paterns,etc..?
  • #62
  • Edited 4:20am Jun 9, 2014 3:42am | Edited 4:20am
Quoting Mingary
{quote} .. ok so what if on a good quarter 73% of traders hold losing accounts - I do think 95 % is not realistic but that is not relevant. Even at 73% it clearly shows that over time trading the forex is a losing proposition. Of course there will be "extremes" (extreme success / extreme failure .. and everything in between) but on average traders lose quarter after quarter.... Isn't that obvious?
I was only offering facts to counter the doom-and-gloom remarks. If you feel it is a losing proposition, why are you here? It is also common knowledge that negativity breeds negativity, therefore, it is also obvious you are not a winning trader because you focus on negative results. So, why do you comment on forums if Forex is so terrible for you?

I am merely stating that your thinking seems distorted and might be the reason you are not having success. If God asked you if you would be willing to die for Him, would you answer yes? What if God asked you if you would be willing to live for Him? Does that confuse you? That is the difference between negative thinking and positive thinking. Positive thinking will make you rich. Negative thinking will keep you in the trailer park. To me, 27% of people winning seems a whole lot better than 5%. Besides that, the 5% number was made up by marketers about 4 years ago to promote their products to the unsuspecting masses when the market volatility was astronomical and you could make money by simply falling on a chart. It isn't a valid statistic AT ALL. By me offering the factual number, you insist on supporting the marketers instead of the traders. I am disappointed with your statement. The reason 73% of traders lose is because they are not traders. The majority are just ordinary people who lack skills and/or time to trade properly. A few are possibly traders who have distorted their minds or emotions and made mistakes. Nearly anyone can succeed if they want to. Even a complete moron can succeed by realizing he can't win and finding someone to do it for him. To me, the numbers reflect people with entrepreneurial spirit, but not enough experience...people with greed issues...people with gambling issues...and people with trust issues that think it is better if they do it themselves. All have valid reasons to attempt to trade, and obvious reasons for being unsuccessful.

The vast majority of governments in the world have socialist programs that make people think they are entitled to being taken care of. It is a shock to them when they come to actual capitalism and get their accounts wiped out. They are bred to believe their loss was out of their control, caused by some government or secret society, or conspiracy. HA Welcome to capitalism. It is supply versus demand. It is competition. If you lose, it is YOUR fault!! The key point I make in opposition to your remark is that 27% of traders are winning!!
You cannot be extraordinary by being normal
  • #63
  • Jun 9, 2014 3:44am Jun 9, 2014 3:44am
Quoting Pipologist
There are thousands of retail traders around the world that make enough money trading to trade professionally. On the other hand there are also investment bank traders that lose billions and bust their company or department out. These cases are fewer than retail traders that bust out, but they are historically proven. There are a lot of false negative assumptions with this thread. Your distinction is "retail traders" vs. "professional traders". There are tons of retail traders that are professional traders. I think what you want to say is "retail...
What a good post!
Gone to a better place
  • #64
  • Jun 9, 2014 10:07pm Jun 9, 2014 10:07pm
Quoting Naokia980
{quote} Thanks for info ~65% of spot fx is for hedging risks for business to avoid huge loses, is this true? Do they put their money blindly regardless of technical levels, paterns,etc..?
Don't know if your stat is accurate, but "they" in your sentence, that is "businesses that hedge risk with spot fx" probably don't put money in blindly. They have an idea of where they want to lock in a rate for their business. Do they use technical analysis? I suppose a few do, but most likely go by guy feel based on historical personal experience in working their import/export business. I'm sure they would find a chart interesting but irrelevant to their business. "They" are in the business of buying and selling a real product or service. FX traders are in the product of buying or selling an opinion.

What are doing Naokia? Writing a research paper for college?
  • #65
  • Jun 9, 2014 10:37pm Jun 9, 2014 10:37pm
Quoting Fractalist
{quote} What is obvious to me is that average people suck at everything. Solution? Don't be average. I completely agree that most people lose. They lose because they believe what they hear without testing it for themselves. Those are the people who deserve to lose, right? I don't have a problem with people losing in forex. I don't have a problem when I lose. I am totally for helping out the downtrodden in the regular world. But forex is a voluntary arena of total competition and everybody who steps in the door must be ready for battle. If people...
I bet 80% of the entire market is comprised of average guys and women, even from the institutional side, there are always losers and always will be.Some people are just helpless, doesnt matter how good tools you give them , edutation or whatever, they will still screw up.

But the institutionals have an advantage, so it doesnt take you much sweat to make billions in a hedge fund, even a total newbie could do it.But it takes skills to get hired in the first place.

Its hard to get into a big HF , but once you get inside one, unless you screw up and get fired, the road to the billionaires is almost guaranteed.

So probably every average guys with "connections" could do it.

But what about the retail, setting aside the losers, which could be 80% 90% 95% 99% doesnt matter, but the ones who make money consistently, are the real pro traders.

Because they rose from the ashes, started with a few bucks and made millions, they know the markets better than any institutional trader with the order book in front of it.

I know its a rare example, but there are people who started with nothing and made big bucks.They are the champions of the markets.

BTW I`m terrible at fishing, i caught 2 fish in my entire life, but i`m a good trader
"There's a sucker born every minute" - P.T. Barnum
  • #66
  • Jun 10, 2014 10:36am Jun 10, 2014 10:36am
What if the average loosing trader is taught how to be an average loosing trader? If you search the internet for trading methods you will find all kind of nonsense and old strategies. Some work indeed but usualy are stock trading strategies tailored to forex or old school strategies used in modern markets. You will see beeing preached strategies going from Point and Figure Charts to phases of the Neptune to advanced mathematics. But in the end it is just a mess of information scatered around that mostly confuses the average noob.

Unfortunately whoever posts somewhere something educative related to trading has one priamry goal: to gain recignition. Doesn't matter if his intentions are pure like "I want to give back" or he wants additional income through paid curses or services. He wants recognition. And recognition will come through followers and to attract followers you need interesting content. For someone who is an ammateur and has at most 3-4 hours each evening the boring content is just boring. How many of us have read books about intermarket relationships? How many of us have read books about what really moves the markets? How many of us have any vague interes in those topics? I certanly don't. But I do have enough books about chart reading and trading strategies. We deep in our subconcience think that the chart is the reason. The truth is that the chart is the result.

What can the average retail trader do to improve his situation?
First he must accept the charts for what they are. Just a footprint. The mathematical skills would be put to better use if instead of designing better indicators, to design better money management strategies.
Second, a better understanding of how the markets work and how to read the market conditions. Two years a go Chicky asked who has the ballz to short the euro. My system gave me a signal for short and I had the ballz. The result was a losing trade. Why? Because I was basing my decision exclusively on the EUR/USD daily. Nothing else.

Unfortunately these topics are not covered as much as chart reading because they are not so sexy. I often find myself searching for these topics in Google. For the money management I couldn't find anything useful. For the other things (can we call them fundamental analysis?) whenever I find something I get bored and I move to the next tab. Heck, I don't even know what should I be looking for.
  • #67
  • Jun 10, 2014 11:18am Jun 10, 2014 11:18am
Quoting KMidas
What if the average loosing trader is taught how to be an average loosing trader? If you search the internet for trading methods you will find all kind of nonsense and old strategies. Some work indeed but usualy are stock trading strategies tailored to forex or old school strategies used in modern markets. You will see beeing preached strategies going from Point and Figure Charts to phases of the Neptune to advanced mathematics. But in the end it is just a mess of information scatered around that mostly confuses the average noob. Unfortunately whoever...
Yes the information on the internet is confusing, that i why i design and plan everything alone without any interference from other guys.
So this way if i lose or win that will be my merit.However i still pay attention to internet forums and news because you can always learn.
I already have a core knowledge about the markets, i pretty much understand every aspects of it, i know what moves the price, but this knowledge alone wont make money.The implementation requires skill and experience.

Of course there are many nonsense approaches and discussion on this forums, but there are good and useful ones too.Like i saw systems based on tarot cards and astrology ,which would be interesting to just have fun with it but one has to be very stupid to actually trade based on those

Disregarding completely the retail herd could be a mistake, but also taking them too seriously is also a mistake.

The mathematical approach is also interesting, because i`ve not really seen any statistical method which would be profitable on long term, except the HFT traders, but i guess nobody here is HFT.

Other than that you can see many gambling systems offered by mathematicials, which could be the best gambling systems, but still gambling systems which lose money on long term.

The best traders must be flexible minded, too much maths may hurt basic understanding of the markets, i know this because i experienced this on my own skin.I wasted 6 months of my life searching for a mechanical holy grail, with statistical tools just to find out that there isnt any.

So since then i rethinked the whole approach and found out that discretionary trading is the best aproach out there.

As for the education, well i think that any person who has a bit of logic can distinguish the good info from the bad info.
"There's a sucker born every minute" - P.T. Barnum
  • #68
  • Jun 10, 2014 2:43pm Jun 10, 2014 2:43pm
Quoting Fractalist
{quote} What is obvious to me is that average people suck at everything. Solution? Don't be average. I completely agree that most people lose. They lose because they believe what they hear without testing it for themselves. Those are the people who deserve to lose, right? I don't have a problem with people losing in forex. I don't have a problem when I lose. I am totally for helping out the downtrodden in the regular world. But forex is a voluntary arena of total competition and everybody who steps in the door must be ready for battle. If people...

We all know you don't make a living Trading RETAIL FOREX. BTW, you could take my BET, but you can't because you will LOSE.

The stats are based on OFFICIAL Stats reported by the RETAIL FOREX BROKERS to the US Gov, these stats are PUBLIC. If you were not average and mediocre, you could easily find these stats.

Again, 99.6% of people lose money after 1 year of trading.

There is nothing else to add. For now.
The Black Swan: The Impact of the Highly Improbable
  • #69
  • Jun 10, 2014 3:15pm Jun 10, 2014 3:15pm
Quoting MapleLeaf
{quote} We all know you don't make a living Trading RETAIL FOREX. BTW, you could take my BET, but you can't because you will LOSE. The stats are based on OFFICIAL Stats reported by the RETAIL FOREX BROKERS to the US Gov, these stats are PUBLIC. If you were not average and mediocre, you could easily find these stats. Again, 99.6% of people lose money after 1 year of trading. There is nothing else to add. For now.


yeaah
  • #70
  • Jun 10, 2014 4:19pm Jun 10, 2014 4:19pm
Quoting MapleLeaf
{quote} We all know you don't make a living Trading RETAIL FOREX. BTW, you could take my BET, but you can't because you will LOSE. The stats are based on OFFICIAL Stats reported by the RETAIL FOREX BROKERS to the US Gov, these stats are PUBLIC. If you were not average and mediocre, you could easily find these stats. Again, 99.6% of people lose money after 1 year of trading. There is nothing else to add. For now.
I do agree retail trading is mediocre at best....That was the route I followed but only as a method to assess FX trading programs, platforms, and corrective algorithms (better to loose a little money than a lot of money).
Gregory D. Alexandr
  • #71
  • Jun 11, 2014 7:44am Jun 11, 2014 7:44am
Quoting MapleLeaf
{quote} We all know you don't make a living Trading RETAIL FOREX. BTW, you could take my BET, but you can't because you will LOSE. The stats are based on OFFICIAL Stats reported by the RETAIL FOREX BROKERS to the US Gov, these stats are PUBLIC. If you were not average and mediocre, you could easily find these stats. Again, 99.6% of people lose money after 1 year of trading. There is nothing else to add. For now.
I haven't won yet.
You won't win ever.

I try.
You cry.
  • #72
  • Jun 11, 2014 12:03pm Jun 11, 2014 12:03pm
Quoting MapleLeaf
{quote} We all know you don't make a living Trading RETAIL FOREX. BTW, you could take my BET, but you can't because you will LOSE.
Let's look at a practical example:

Let's say EUR/USD is at 1.3500.

You enter a 1 Lot Long Position at 1.3500. Now because of the spread and the commissions, you are immediatly in the red, the bid price might be 1.34995 minus commissions the bid would be 1.3499.

Now the Trader that opened the trade is in a uncomfortable situtation becuase, unless the Trader is a magician, he/she does not know where the price moves next. He thinks that it will go up but it does not have to be that way. The chances of a winning is 50/50.

Now let's assume the Price moves down to 1.3490. The Trader is now 100$ in the red. Now what do you do? Get out, realize the loss or wait until it turns back into the green?

The Trader is still convinced that the price will move up and decides to wait until the next morning 10am. When he turns the Computer back on, he realized that the price has fallen heavy, and he realized that he was completely wrong with his initial guess. The price is at 1.3450, the loss is now 500$. Now what does he do? Exit the trade or wait again?

This is a practical example Traders, and especially full time Traders are facing everyday. Since there are no mechanical strategies that work on a Long term Basis, decicions have to be made to which there isn't a clear answer. It's unlikely that a Trader is in the green after a year, because the losses will exceed the winnings in those scenarios
Forex is a losers game.
  • #73
  • Jun 11, 2014 1:34pm Jun 11, 2014 1:34pm
Quoting trader121
The chances of a winning is 50/50.
The chances are 50/50 only if you enter randomly. If you enter according to a market statistical bias that you researched earlier, the chances are better than 50/50.

But your average MT4 EA is not a professional statistical trading system.

So the mistake is believing that since no publicly available EA works, that no automated system works, not even those professionally built, with custom management interfaces and which access the market through APIs like FIX.

Put another way, you cannot win an F1 race with a car that you and your buddies built in the garage with pieces from a junk yard. But that does not mean that no one can win an F1 race. Some people with the adequate resources can.

Here is an example of a professional HFT strategy: does the movement in the first 5 seconds from a minute predict the movement in the rest of the 55 seconds? Does the movement in the first minute of an hour (H1 candle) predict the movement in the next 59 minutes? And there is a profound reason why these kind of strategies work: many automated trading systems analyze the market at the beginning of a candle, thus their actions will be concentrated in the first few seconds after a new candle begin. Of course, the edge is very small, and hard to extract, because lots of people are doing it.

But this is also a kind of strategy that is impossible to backtest in MT4, because it doesn't have tick data, and other reasons.
  • #74
  • Jun 11, 2014 2:20pm Jun 11, 2014 2:20pm
Quoting Proximus
{quote} I`m aware of this, thou i though its more like 95%, but doesnt matter. Whats your point ? That the systemical approach to trading is invalid ? Because then i have to enlighten you because its not the case. Yo preach so much against systems and gambling approaches to trading, but there are so many profitable systems, even with indicators ,so i dont see where is the problem. The fact that so many lose, i think its because of other things. I saw many ex pit traders, from CME who used fkin moving averages for 20 years, and were full time traders....
@MapleLeaf.....

I must agree with Proximus....system develop by Quants, Institutions, and retail traders is simply minimizes the probability of lose, thereby eliminating the element of emotion altogether. To compare trading (which is a business) to gambling would suggest all traders have the same illness as gambling addicts.

I belong to a group of professional traders who have meeting twice a week (web cast), an conference every quarter, and annual meeting, the group consists of 1200 traders, men, women and younger family members who are aspiring second and third generation traders. I am a organizer and speaker at these meetings, in the years we have been meeting we have 1% of members who go bust for one reason or another, we have a low member turnover and they are responsible, have families, mortgages, insurance, and car payments which are met every month without sacrifice to their family or careers, does this indicate to you and or anyone the similarities drawn in your summary of gambling addicts. Over 15 years of organizing and attending this group, if we now use the current enrolled members 1200 and deduct 1% = 12 members, the numbers simply do not support your conclusions.

If indicators were not effective for traders, they would not use them. Many people need the visual to support their analysis, indicators, oscillators are great tool for many reasons.

I know its not for everyone, and if you devise a system which does not use indicators, if you develop trading, research or mining software and you have something so different from what is available on the market. I am sure there are many people who would be interested, including myself (not just purchasing, development and implementation of software product)....It seems as though development of trading software has reached its peak, and now, there is a regurgitation of indicators, oscillators, and software. However, hardware has improved for institutions which has trickled down to the retail side. Which has helped retail traders make some money, the problem within the retail side is the person without trading experience, mentor (whether that be family, friend or any other person) or attempt connect to others, and the reality of this situation, most traders who make any serious money is basically unreachable. I believe without a standard for becoming a trader and being so accessible for any person who can throw down 25 dollars, is a cause and effect scenario.

What is a successful trader?
Gregory D. Alexandr
  • #75
  • Jun 17, 2014 1:51pm Jun 17, 2014 1:51pm
It must not be such an exhaustible market destined for everyone to lose. Otherwise, it would collapse if there was no profitability, and everyone would bow out, which is incredibly unrealistic.
  • #76
  • Last Post: Jul 21, 2014 1:53pm Jul 21, 2014 1:53pm
People don't work hard enough and then think it can't be done, you need to eat breathe and sleep forex if you want it to work. I mean putting everything else on hold for months/years on end, so much so it annoys people, even your own family. Then you have to find your OWN method, yes by all means find the basis from ff, but make it your own and find the high probability setups.
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