[Tradewinds]

Thanks for that article. If the topic is discussed for long enough and deep enough, then it will come to the issue of, "Should the government regulate and attempt to control risky behavior?"

[Mantiso]

Statistics are as good as jokes! ... The most secure transportation in winter in Sweden is Motorcycle & most secure sport in south East Asia in Summer snowboarding! (so far the statistics)
.... But you are right, most of traders are losing money ... But why? For me is The Answer easy, it is not really harder to make money as a trader then other professions, but the most people think, to make money as a trader is as easy as walking around ...
Everyone learn a profession and has to make an education and has to be always updated in the profession.
The reality is, There is no easy way to make Money, maybe less than 10% could understand it and are also ready to work hard also as trader for the money....

[estate1997]

Originally Posted by SIUYA »

its a numbers game and like many rewarding experiences there is a pointy end at the top of the pyramid.
(I would like to know how much money the top 1% make)

They take 40% of all the money.

[jaaks]

Traders lose primarily because the primitive part of the brain is wired to avoid loss and the primitive brain makes all the decisions. Once we incur a loss trading, we try to recoup the loss. This usually means riding the loss down to greater losses until the pain gets too great. Then we bail at a huge loss, with a lot of emotional pain. This loss is burned in our memory and subconsciously we we start trying to get the money we lost back. Let's be clear. This is occurring subconsciously. You are not aware it is happening. That is why you repeat the same behaviors, and lose over and over again even thought your higher brain know it is wrong. By the way, the higher brain will think of sort of excuses to justify the primitive brains actions. None of which are true.

How do you counter this strong, unconscious force? First you need a plan. The first part of the the plan is cash management. You need goals based on the type of trading you are doing. You need strict loss stops above all, how much money you are willing to lose for the type of trading your are doing and if you hit it, you are DONE! The same go for profits. Once you reach you profit goal, never, never lose it. You can keep riding the the profit train in the market let's you but if it reverses and returns to your min profit level, you are OUT! Once you have experience in the market, you can alter the latter part by taking partial profits and increasing your position size for really obscene profits but never, never violate your daily loss rule. Never. Keep a log and study it. You will find the best ratio of win to lost based on your trading style.

Why is the stop amount so important other than the obvious? Because starting out, you are likely going have more losing trades than winners. But you can still make money: Say you set a stop at $100 and it cost $2.00per buy and sell and the slippage is $.01/share and you profit goal is 4 times your loss amt. This means you could lose 3 times for every win. A 75% loss rate in trades. After 3 losses, you will have lost $312 + the slippage. That amount is based on the number of shares. Let's say it is 300 shares. so the slippage is $3. So your total loss is $315. The next trade in profitable, so you gain $396. You have profit of $81. If you do this every day, your profit is $405/wk. Couldn't live on this amount in America, but by increasing the amount, you can get to the point you could. But the best way is getting a win / loss ratio greater than one. Then you really make money. The only way to do this is accumulating trading time. If you could get to 3 wins for every loss, then your gain per day is 873 or $4365/wk. You could live on that! Note: this would be a very good winning ratio and depends on the stocks you trade and the type of trader you are.

The fist part of your plan is cash management. The next is a plan of when to buy, when to sell, when to take profit, when to increase your position size. Is there one better than another? Yes, depending on the type of trader you are and the market. Also different plans are needed in different market phases. But every plan fails if you don't relentlessly stick to it. Never vary, never vary, never vary. You can alter your plan when you are not trading, but while you are trading, sick to it. Is there a fool proof trading method? No. If there was, that method would soon get all the profit in the market and everyone would use it, resulting in it's failure as the rules would now have changed. Anyway, if you had a system, would you let anyone know about it? Not likely! At best, you could come up with something that work for the market conditions at that moment but would fail when the conditions change. "The market is always the same, the market is aways changing." There are plenty of adaptive black box systems that supposedly are using fuzzy logic and neural programming. From what I know, their ratio is 35% winners, 65% losers. And they make money hand over fist because they have strict rules and they never vary from them.

[peterjerome]

Re: Why Do More Than 90% of Traders Lose? interesting thread.

so...if 90% are losing, 10% must be winning?
seems reasonable some of those 90 percenters are on this board sharing their secrets.
are there any ten-percenters here too?
if only there was a way to tell the difference.

perhaps we generate the results we think we deserve.

peter

[Tradewinds]

Originally Posted by peterjerome »

are there any ten-percenters here too?
if only there was a way to tell the difference.

peter

Even though I will take good information from anywhere and anyone, I do put some value in what people are telling me by the way they behave. And I tend to think that the real truth is a mix of what different people are telling me. It's natural for people to go to extremes in their beliefs, seeking non-existent, absolute certainty to make them feel secure.

When I listen to a politician, I like what they are saying, and it seems good. Then I listen to another candidate, and I like what they are saying, and it seems good. Then I listen to yet another candidate, and a lot of what they are saying seems good. But then I realize that they are opposing candidates with polarized view points. But they only communicate the positive and constructive side to their plan. So it all sounds good, because you never hear about the downside.

If someone becomes evasive in telling me what the "cons" might be, then I get very suspicious. I try to get a sense of whether someone is sincere, confident and secure in what they are communicating. Many people want to be lied to. This is typical in business management. If you tell management the truth, they won't like you, so many people fall into a trap of needing to tell management what they want to hear so you don't get a bad performance review.

Trading is as much about how a person deals with the bad news and the difficulty as how good their strategy is.

[SIUYA]

Originally Posted by estate1997 »

They take 40% of all the money.

only 40% ??
another "statistic" to throw around.

when it comes to who to listen to, and who says what......
listen to a lot and make your own mind up based on what works for you. If you cant do that then trading is not likely to be the hooby/pastime/profession for you.
You would be better off being a broker....they figure heavily in who makes the money.

[ra189663]

Most people lose money for a combination or reasons, primarily lack of knowledge and lack of discipline. Lack of knowledge: not having a trading program; having one and not knowing what type of market it works best in; not knowing what the loss rate is with the program; not having an alternative program when the market changes; the list goes one and on.

Discipline: not sticking with the program; not knwoing how to control losses; not controlling losses if one knows how; greed; fear.

Thinking that the process of making money in the market is fairly easy to master (underestimating the whole process and the variables that go into it); lack of preparation (which gets back to lack of knowledge).

Lizard brain thinking that there really is a holy grail out there.