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Most traders fail because of no discipline!

  • #21
  • Jan 20, 2017 4:15pm Jan 20, 2017 4:15pm
My humble opinion is most traders do not have an exit plan. A good exit plan to get one's out of the trouble... Before you enter, one has to know how to exit, if things go not exactly as planned.

Second, it is obvious to me, almost 99% of all traders does not have an idea how the open/close pricing really works...
Maadik Hugiis. IQ 69.
  • #22
  • Jan 20, 2017 5:22pm Jan 20, 2017 5:22pm
Sorry to let your tyres down "techboy" but your thread should be titled "All traders fail".This is a losers game.
  • #23
  • Jan 20, 2017 6:52pm Jan 20, 2017 6:52pm
Quoting MoneyZilla
My humble opinion is most traders do not have an exit plan. A good exit plan to get one's out of the trouble... Before you enter, one has to know how to exit, if things go not exactly as planned. Second, it is obvious to me, almost 99% of all traders does not have an idea how the open/close pricing really works...
By all means, please elaborate.
My Threads: Trading is as simple as 1-2-3, Highest Open / Lowest Open Trade
  • #24
  • Jan 20, 2017 7:10pm Jan 20, 2017 7:10pm

When I started forex way back, I would hear people who were more experienced than me say psychology and discipline are far more important than a strategy, or things like a winning strategy can be just successful in the hands of a winning trader. I used to think that all those things are BS and I couldn't understand why they kept saying those things. A few years later I completely realized why.


Becoming a winning trader is much more important and so harder than having a winning strategy. If you are persistent enough you will probably find a winning strategy or even more than one, but the probability that you execute them profitably is very low. You may find some winning strategies in your trading life but you don't even realize that they are winning ones.


IMO a strategy should be defined in a package including a technical, fundamental, etc. strategy plus a trader. For example a strategy with the win rate of 55.5% or 60% is just successful when there is a trader who is very experienced and has a high disciple. On the other hand, suppose there is a strategy with the wine rate of 80%. This strategy in the hands of a mediocre trader turns into a run-of-the-mill strategy and if a poor trader lays a finger on it they can turn it into a losing disastrous one.


With that said I 100% agree with you and am sure that building a winner and a successful person is the most important part of anybody's life. How can one do that? There are various books you can read them but the most crucial factors are: having discipline, being persistent and not giving up easily, believing in yourself and wanting something so bad and practicing having that every day. You can't reach them if you aren't happy and full of hope so this one is necessary and it's impossible to become successful without it. Those are some small parts of psychology every one needs for being a winner.

  • #25
  • Jan 20, 2017 7:17pm Jan 20, 2017 7:17pm
"Most traders fail because of no discipline!"

Sounds believable.
Check the assumption.
Would having the attribute of discipline alone cause those who fail to succeed?
My Threads: Trading is as simple as 1-2-3, Highest Open / Lowest Open Trade
  • #26
  • Edited Jan 21, 2017 12:52pm Jan 20, 2017 10:19pm | Edited Jan 21, 2017 12:52pm
Yet another thread on why traders lose.......

Perhaps I might be permitted to list just a few of the reasons that have been posted elsewhere?

 No proven methodological edge
 Lack of knowledge and experience
 No trading plan
 Failure to accept losses (causes recovery systems, irrecoverable open losses, revenge trading)
 Poor or non-existent risk management (i.e. focusing on return over everything else)
 Making decisions based on P/L rather than market probabilities/behavior (focusing on the money, rather than the process)
 Undercapitalization (causes greed, overtrading, overleveraging) -- [NOTE: according to many br0kers, this is the most common cause of failure]
 Over-reliance on money management (including ideas like same-pair hedges, baskets, grids, averaging down recklessly, martingale variants)
 Complacency: a lack of respect for the market
 Laziness: trying to find a color-by-number shortcut to riches (i.e. make the most money in the shortest time with the least effort)
 Adherence to "$250 to $100,000 in 6 months" type notions
 Adherence to trading myths
 Lack of discipline
 Lack of patience
 Lack of resilience (unable to bounce back after losses)
 Lack of composure/nerve (afraid to "pull the trigger")
 Lack of stamina (quit too quickly)
 Lack of dedication (failure to put in the required number of hours of study)
 Failure to understand the importance of statistical validity, and the nature of statistical fluctuation
 Failure to keep a journal
 Over-reliance on automated systems (EAs)
 Over-reliance on technical analysis (using tools that "don't work")
 Exiting too early (should take higher RR trades)
 Exiting too late (should take lower RR trades)
 Hindsight bias
 Confirmation bias
 Recency bias
Apophenia
 Curve fitting
 Strategies that test profitably, but are not grounded in real market inefficiencies
 Randomness of price movement
 Letting outside noise affect your decision making
 Underestimating the effect of br0ker costs
 Underestimation of the amount of expertise that is required
 An inability to spell the word "lose" (just kidding)

And no doubt there are plenty more, that have slipped my mind.

Everybody has their favorite (and no doubt some folk will say that some of the above are reasons for success, not failure). So take your pick.
_______________________
[EDIT] Just to be clear: I'm not necessarily saying that I agree with all of the above, I'm merely repeating what other forum traders have posted.
  • #27
  • Jan 21, 2017 12:57am Jan 21, 2017 12:57am
Quoting executivefx
{quote} Many traders lack discipline because forex trading is just a side hustle to them but the day you walk out of your comfort zone and the only source of income left is forex trading thats the last day you will ever struggle with being disciplined.

Best comment of the thread so far!!!
The survival instinct kicks in and somehow you adapt to whats required to be a successful trader.
  • #28
  • Jan 21, 2017 4:13am Jan 21, 2017 4:13am
Different people fail for different reasons, Different people succeed for different reasons...
  • #29
  • Jan 21, 2017 6:44am Jan 21, 2017 6:44am
People fail because they lack knowledge, or discipline, or patience, or they’re trading in conditions that are unfavourable to trading, because they can’t focus, and so on and so forth. There is no singular reason for failure, I think.
  • #30
  • Jan 21, 2017 7:27am Jan 21, 2017 7:27am
Quoting hanover
Yet another thread on why traders lose....... Perhaps I might be permitted to list just a few of the reasons that have been posted elsewhere?  No proven methodological edge  Lack of knowledge and experience  No trading plan...........
Excellent Hanover!! Once all of the above have been addressed and rectified, then, and only then, will a trader become a real trader.
  • #31
  • Jan 21, 2017 10:09am Jan 21, 2017 10:09am
Great list, Hanover. I agree with all of it.

But I would like to make just one small adjustment:

 No proven methodological edge
 Lack of knowledge and experience
 No trading plan
 Failure to accept losses (causes recovery systems, irrecoverable open losses, revenge trading)
 Poor or non-existent risk management (i.e. focusing on return over everything else)
 Making decisions based on P/L rather than market probabilities/behavior (focusing on the money, rather than the process)
 Undercapitalization (causes greed, overtrading, overleveraging) -- [NOTE: according to many br0kers, this is the most common cause of failure]
 Over-reliance on money management (including ideas like same-pair hedges, baskets, grids, averaging down recklessly, martingale variants)
 Complacency: a lack of respect for the market
 Laziness: trying to find a color-by-number shortcut to riches (i.e. make the most money in the shortest time with the least effort)
 Adherence to "$250 to $100,000 in 6 months" type notions
 Adherence to trading myths
 Lack of discipline
 Lack of patience
 Lack of resilience (unable to bounce back after losses)
 Lack of composure/nerve (afraid to "pull the trigger")
 Lack of stamina (quit too quickly)
 Lack of dedication (failure to put in the required number of hours of study)
 Failure to understand the importance of statistical validity, and the nature of statistical fluctuation
 Failure to keep a journal
 Over-reliance on automated systems (EAs)
 Over-reliance on technical analysis (using tools that "don't work")
 Exiting too early (should take higher RR trades)
 Exiting too late (should take lower RR trades)
 Hindsight bias
 Confirmation bias
Apophenia
 Curve fitting
 Strategies that test profitably, but are not grounded in real market inefficiencies
 Randomness of price movement
 Letting outside noise affect your decision making
Underestimating the effect of br0ker costs
 Underestimation of the amount of expertise that is required
 An inability to spell the word "lose" (just kidding)

--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The Trading game is negatively skewed by default for the retail traders. WHY?

Because as OTC FX retail trader you are ALWAYS consumer of liquidity, and never provider. You never buy at bid or sell at offer (like you can in the stock/futures market). This means that you do not actually participate in the real market. You are not actual market participant (trader). You are just consumer who buys a product. (or places a bet. if you will)

Not to mention that the trading cost in retail is usually double and triple of what the professionals pay. And this is VERY important!

The average spread on the professional venues for G10 pairs is 0.3pips.(0.2 for EURUSD) and the average commission is only $10 per Million. ($1 per 100k)
The average spread on the retail platforms for G10 pairs is 0.6pips. and the average commission is $30 per Million. ($3 per 100k)

If there are people who are reading this, and consistently lose money and yet cannot understand why all of this is extremely important - please, make sure you stop trading until you understand!

Read my explanation here http://www.forexfactory.com/showthre...02#post9381902

and this(advanced!):
Attached File(s)
File Type: pdf academic studie.pdf   257 KB | 1,423 downloads
  • #32
  • Jan 21, 2017 10:27am Jan 21, 2017 10:27am
Quoting hanover
An inability to spell the word "lose" (just kidding) And no doubt there are plenty more, that have slipped my mind. Everybody has their favorite (and no doubt some folk will say that some of the above are reasons for success, not failure). So take your pick. _______________________ [EDIT] Just to be clear: I'm not necessarily saying that I agree with all of the above, I'm merely repeating what other forum traders have posted.
Certainly is annoying.
Screams ignorance.
My Threads: Trading is as simple as 1-2-3, Highest Open / Lowest Open Trade
  • #33
  • Jan 21, 2017 10:31am Jan 21, 2017 10:31am
Quoting alphaomega
Read my explanation here http://www.forexfactory.com/showthre...02#post9381902 and this(advanced!): academic studie.pdf;2149721 {image}
Nice presentation, alphaomega.
Cheers!
My Threads: Trading is as simple as 1-2-3, Highest Open / Lowest Open Trade
  • #34
  • Edited 11:23pm Jan 21, 2017 1:48pm | Edited 11:23pm
Quoting executivefx
Many traders lack discipline because forex trading is just a side hustle to them but the day you walk out of your comfort zone and the only source of income left is forex trading thats the last day you will ever struggle with being disciplined.
An interesting perspective. I believe it ultimately depends on how an individual copes with pressure. The higher the monetary stakes, the greater the pressure; if trading is your only income source, then even more so. Sure, you can less afford lapses in discipline, but the issue is: does this strengthen your resolve? Or does it generate increased anxiety, and bring greater emotion into your decision making?

If trading is your only source of income, and after a few losses you fall behind the target needed to pay this month's bills, will this motivate you to even greater discipline, or will the temptation to play 'catch up', i.e. overtrade/overleverage, become irresistibly great?

A lot of aspiring traders are successful in demo. But, as everybody knows, the vast majority blow their real money accounts, and quit. To whatever extent ill-discipline was their biggest problem, they failed to cope with the added pressure.

Quoting shrips
Best comment of the thread so far!!! The survival instinct kicks in and somehow you adapt to whats required to be a successful trader.
Like being thrown in the deep end of the swimming pool: either you quickly discover how to swim, or you drown?
But is profitable trading the same as swimming? Or does it require more than merely a "survival instinct", e.g. some knowledge and experience?

Quoting alphaomega
 Underestimating the effect of br0ker costs
The Trading game is negatively skewed by default for the retail traders........
Agree 100%...... and costs are possibly the biggest reason why reversing a 'losing' system doesn't create a winning one.
I suspect that most systems are ineffectual rather than 'losing', i.e. given enough time, they would generate an approximately breakeven result, if costs didn't exist.
  • #35
  • Edited 3:39pm Jan 21, 2017 3:08pm | Edited 3:39pm
Quoting hanover
{quote} Agree 100%...... and costs are possibly the biggest reason why reversing a 'losing' system doesn't create a winning one. I suspect that most systems are ineffectual rather than 'losing', i.e. given enough time, they would generate an approxinately breakeven result, if costs didn't exist.
Yep! I have done extensive algo testing and simulations in the past ( a few years ago) just to prove it for myself. And the results confirm what the academics say.
Over 99% of all mechanical systems with rigid repeatable rules tend to produce trade expectancy = 0 (before cost)
Only a few systems produce very small deviations (positive or negative).
In most cases the deviation is Insufficient to cover the transaction cost.

It doesn't matter what the system is. You can come up with any combination of indicators, patterns..rules......whatever......the result is the same!
The end conclusion is that, rigid rules purely based on technicals = ZERO edge in 99,99999% of the cases .

One of the main reasons why retail trading even exist(and is so popular), is because the vast vast majority of traders do not understand the implications of the above.

I find it funny and tragic, that most books and gurus, suggest that to succeed in trading you have to have your system set in stone, and then apply solid discipline, and follow your rules religiously.

Too bad. Because this is the exact type of behavior which INSURES that you will lose money in the long run.
Now let's talk conspiracy, and who is pushing this agenda.....
  • #36
  • Jan 21, 2017 3:13pm Jan 21, 2017 3:13pm
" Undercapitalization (causes greed, overtrading, overleveraging) -- [NOTE: according to many br0kers, this is the most common cause of failure]"


AND TO CLARIFY EVEN FURTHER, UNDERCAPITALIZED IN RELATION TO:

TRUE RISKABLE CAPITAL (DON'T LIE TO YOURSELF ABOUT THIS. IT'S THE LIE THAT CAUSES THE PANIC AND LEADS INTO MELTDOWN TRADING METHODS, PSYCHOLOGIES, BLIND GAMBLING)

TIGHTEN UP




Solutions ONLY!!!
  • #37
  • Jan 21, 2017 3:35pm Jan 21, 2017 3:35pm
Quoting alphaomega
{quote} Yep! I have done extensive algo testing and simulations in the past ( a few years ago) just to prove it for myself. And the results confirm what the academics say. Over 99% of all mechanical systems with rigid repeatable rules tend to produce trade expectancy = 0 (before cost) Only a few systems produce very small deviations (positive or negative). In most cases the deviation is Insufficient to cover the transaction cost. It doesn't matter what the system is. You can come up with any combination of indicators, patterns..rules......whatever......the...
Good information and thats why a trader needs to be smarter than the market...
100% KENYAN.
  • #38
  • Jan 21, 2017 4:07pm Jan 21, 2017 4:07pm
Every successful trader had failed at some point of his career, there is no other way around. And it's a good thing, as there is no better lesson than a big FU from the market. Learning from your own mistakes is the best and the most consistent way to learn because you associate the painful experience with the mistake which makes you less likely to repeat it again. The problem people face is a lack of persistence and not enough endurance / emotional fitness to cross the "dessert". There is obviously 1000 other reasons why so many people fail and hanover did provide a very useful list above so not gonna repeat after him. The life of a professional trader is a 24/7 job and it is not for everyone - I've seen many people either getting fired or giving up because of the pressure it brings. it requires a mindset of a professional sportsman - you lose Champions League finals one day, but the day after you forget everything as you have to be ready to kill it in a league match.
  • #39
  • Edited 4:59pm Jan 21, 2017 4:39pm | Edited 4:59pm
Quoting alphaomega
{quote} Yep! I have done extensive algo testing and simulations in the past ( a few years ago) just to prove it for myself. And the results confirm what the academics say. Over 99% of all mechanical systems with rigid.....
. Too bad. Because this is the exact type of behavior which INSURES that you will lose money in the long run. Now let's talk conspiracy, and who is pushing this agenda.....
Â
Big post, hitting away from the mark Too bad. It's good stuff though.Â
Â
But.....who is talking about mechanical systems?? What stone rules??
What 99%???
Â
About 10-15% of traders make money. Fact.
No doubt big banks make money too.
Â
Yes, discipline is crucial.
Yes, experience and NOT greed is necessary!!!
Yes, you need a system. An edge. A plan.... (and my invention - knowing when NOT to trade....And NOT trading pathetic fake currencies!!!)
Â
But who's talking about MECHANICAL?????
Â
GL all.
Â
PS:
I just read your post above that. About spread. Sure you are (ab)using the red letters.
Â
So if the retail traders, like me, cannot handle miserable 0.6 pips spread, and that's the reason they lose money...... wow...wow. Jump in the river!!!!
10 years ago the spread was 2 pips!!!!!!!!!!
Beware of robber banks (RB), bad advisors.
  • #40
  • Jan 21, 2017 4:48pm Jan 21, 2017 4:48pm
Quoting hanover
Yet another thread on why traders lose....... Perhaps I might be permitted to list just a few of the reasons that have been posted elsewhere?  No proven methodological edge  Lack of knowledge and experience  No trading plan  Failure to accept losses (causes recovery systems, irrecoverable open losses, revenge trading)  Poor or non-existent risk management (i.e. focusing on return over everything else)  Making decisions based on P/L rather than market probabilities/behavior (focusing on the money, rather...
LOL but totally agree.. listed....

While I think Exit is important. I certainly think ENTRY is more important. Exit is a choice.
Frank Fadi
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