Why Do Some People Not Place Stops?

[Why Do Some People Not Place Stops?]

I keep reading of scenarios where someone has lost say $8000 on a trade gone bad or they ve got too greedy and i m puzzled as to why they just didnt use a simple stop to lock in profits?

 

Also why do people use mental stops rather than ones set with a broker ?

 

Stops seem to be the best defence a trader has at protecting their principal, nothing to lose yet plenty to gain

 

Don't worry too much about why some traders take losses beyond their trading plan as the result of not using a stop of any kind.

 

In fact, you should encourage it more because these traders are your competition and you want them to be on the other side of your trades. :rofl:

[Building Up Your $$]

...I have 3K that I can afford to lose right now. If I wanted to try day trading, what market would you tell me to look into?

 

To save you all some time, lets assume that I don't start trading until I've done months of studying, and practicing, and paper trading. Also assume that I realize pulling the trigger with my own money is a completely different animal from practice trading...

 

Hey Steve,

 

You're undercapitalized as in your small trading account puts you at a disadvantage to properly mange your trades due to the fact you're an inexperience trader.

 

Yet, if you feel you need to get involved in the markets...find a good data vendor and test your trade strategy on as many different types of markets to determine which market your trade strategy performs the best when traded. For example (hypothetical), if you did the proper backtesting and discover your trade strategy performs the best on Treasury ZB futures and performs poorly on Emini NQ futures...don't trade Emini NQ just because some anonymous poster at a discussion forum recommends its a good place to start. Also, don't trade Emini NQ just because your online friends are trading it.

 

The goal is to be profitable...not fashionable nor a member of the popular crowd.

 

Another example, I've met many traders that were "consistently losing" while trading a particular trading instrument not suitable for there specific trade strategy...then when they backtested their trade strategy on many different trading instruments...they discover they should have been trading something different. Then when they made the switch even to something they really didn't want to trade or knew few that were trading it...they then traversed from losing to either profitable or marginal profitable.

 

Thus, spend the dollars on a good data vendor that will give you access to data on many different types of trading instruments and test thoroughly your trade method to determine which trading instruments are suitable for your specific trade method..do such again if you experience a drawdown period.

[Why the Majority of Traders Lose?]

Bob, I want to thank you for your advice and I need further assistance from you,

 

your strategy works only in a ranging market but not in a trending market, since 80% of the time the market is ranging your strategy will work within that percentage, but how you handle the trending market, the other 20%?

 

I used your strategy for a while and I was making a $1000 a day before even taking a lunch, the problem is I was losing $10,000-$15,000 a day when the market was trending

 

Here I need your advice, how you know it’s going to be a trending day to switch this strategy?

 

There are many threads or messages here at Traderslaboratory and other forums that traders explains how to recognize range price actions and how to recognize trend price actions.

 

Thus, if you know your trade signals performs poorly in trend price actions...you have several options:

 

• #1) Identify its a trend in its early stages and then ignore any trade signals to trade "against" that trend.
   
   
  
• #2) Identify its a trend and then lower your position size, tighten your stop loss and lower your profit expectation if you don't have the discipline to ignore trading trend price actions.
   
   
  
• #3) Identify its a trend and use a different trade method that's suitable for trend trading. Thus, you have a trade method for range price actions and a trade method for trend price actions...overall two different trade methods for different types of market conditions.
  

 

With that said, most trends or strong directional price actions are the result of key market events (e.g. FED, IMF, ECB, Economic Reports, Global Economic Events and anything else along that path). Therefore, if you want to know when a trend has a chance of developing...you need to pay attention to those schedule key market events and the unexpected breaking news key market events.

 

Just think, you're losing 10k - 15k per trending day...you have great incentive to pay attention to how the price action reacts to these key market events. Also, it doesn't matter what the specific details (numbers) of the key market event...what matters is that you know there will be a price action reaction and that there could be a trend developed from the event. Simply, if price reacts and breaks outside of your identified range price action...you will then know which of the above options to use (#1, #2 or #3).

 

Also, if I was in your shoes and I knew I only make 1k on range days and lose 10k - 15k on trend days...I would start my own thread here at Traderslaboratory, post a lot of charts of what I consider to be range versus trend, discuss my trade strategy (from entry to exit) and ask for help in comparison to starting these types of discussions within a thread that has a completely different topic.

 

You must be rich and can afford losses like that because there's a lot of trend days in any given year, 20 - 30% per month or 1 - 2 per week depending upon the trade instruments you're trading or the numbers you mentioned are via simulator results.

[Why the Majority of Traders Lose?]

The 95% traders losing statement is false, inaccurate and misleading that was perpetrated by internet chatter in the late 1990s.

 

In contrast, there were research by the SEC (Securities Exchange Commission), NASAA (North American Securities Administrators Association) and other market government agencies did their own research between 1998 - 2002 of stock traders that show 60% losing, 30% profitable and 10% marginal profitable arise after a research analysis of brokerage accounts of "retail" (those individuals doing their own trading and investing).

 

There's also research by the NASAA of one particular stock brokerage firm that 70% of public traders (retail traders) lost "everything" in their accounts.

 

In contrast, a pssst off employee of a futures broker released confidential data at a discussion forum of retail trading clients of all the clients of that one particular broker he/she had worked for back in 2008 for the prior year of 2007. The data showed 89% losing, 7% profitable and 4% marginal profitable. If I remember correctly, there weren't more than 500 names (clients) in that data.

 

Although the above info is just a "small sample size"...I do not believe (I could be wrong) there has actually been an extensive research of most brokers on this planet that would represent most retail traders on this planet. Also, as to comparing the profitability of retail traders (you and I) versus the profitability of traders on the floor, banks, institutions and others...it's comparing apples to oranges.

 

The other point I'm making...the 95% is a myth perpetrated by those that have a strong bias against day trading back in the late 1990s. Further, in today's markets, depending upon what you trade / country / broker...profitability of day traders can dramatically change. In addition, those that were not day trader such as those that didn't open and close positions in the same day...their profitability level was very similar. Thus, it's also a myth that swing traders outperforms day traders.

 

It doesn't really matter if its 55%, 60%, 70%, 80%, 90% or whatever number someone post on the internet that represents losing traders. The fact remains that most retail traders will lose regardless if you're scalping, day trading, swing trading, position trading or longer term trading.

[Noticing More Poor Fills]

There is debate on this... it is also said the HFT have caused a decrease of institutions to sit at the limits which could increase slippage. There was a report. I think it might be true. if the institutions decrease their trading on the futures then the retailers will follow suite.. hope the exchanges are paying attention.

 

You used the word "if"...there is no if. The fact is that they have decreased their trading and so have retailers to the tune of about 10 billion dollars so far in January in comparison to January last year. In fact, there's been a record amount of money pulled out of the markets in comparison to prior years of trading activity and investing activity...depending upon which report you read they are saying its the most amount of money they've seen pulled out of the markets in the past 5 - 7 years.

 

The HFT did not cause this...its caused by the global economic crisis. There's just a lot folks (traders) keeping their money on the sidelines and as usual the result will be wider spreads, more slippage and less trade opportunities.

 

How does the markets usually respond to us retail traders when such occurs?

 

Well, every time I've seen something similar to this before in the past...yet not as a record amount of money being pulled out of the "trading arena"...trading fees will usually increase, data vendors increase fees on accessing their data and so many other things start to increase in cost that most retail trailers will have a very difficult time in adjusting to the increased cost of trading.

 

In fact, I've seen LESS interest in trading discussions at most forums that's its easily noticeable while noticing MORE trading discussions by the veteran traders that trading has become more difficult.

 

You can see all of this in how "traders and investors have responded" via the price action of the $VIX or $VXX (take a look at their daily and weekly charts). They're getting lower and lower as many key participants and the average Joe retailer in the markets continues pulling their money out of the markets in record numbers.

 

Lets put it this way, when brokers start making phone calls to encourage more traders to trade under the facade of "I'm just calling to see how things are going for you"...that's when you'll know its really bad.

[What to Do with Success on Paper]

Been trading a paper account for a while with pretty good success. What are some next step's to taking this into really making some money? The real account is really too small to do this organically.

 

I'm thinking joining a prop shop or showing paper trading results and trying to get a job based off of it, to seeking a few private investors and running a small fund. Anybody have some ideas or related experiences?

 

• No job will hire you based upon paper trading results unless there's more info to the story that you didn't want to mention for whatever reason. For example, your best friend works for a fund and can get you in the door with your paper trading results.
   
  
• Running a small fund is a possibility but you need a lot more credentials than paper trading results along with the resources to manage a fund.
   
  
• Private investors is a possibility but they'll need to see some real trading results to go along with the paper trading results. Those that don't ask for real trading results...really don't understand what they're getting involved with via giving you money and probably aren't going to react well when things go wrong.
   
  
• Prop Shop is a possible solution and such may require you to relocate unless there are already prop shops in your city.
   
  
• Trade a small account to accumulate real trading results. This will show others that you understand the true risks of trading your own money which will also give you more realistic expectations of trading someone's else money.
   
  
• Best solution is to just raise your own money via working multiple jobs. Yeah, you'll have to wait a few years but its well worth it. It's what most do in your situation and you can continue perfecting your trading plan in the process until you have the capital to trade your own account...markets will be here tomorrow...no rush.
  

 

I worked three jobs, down scaled my lifestyle for several years to raise my trading capital and I saved most of it. I know many others that did the same. You should be able to do the same especially if you're serious about trading unless there's good reasons why you can't work other jobs.

 

In addition, private investors will be "more impressed" with your work ethic when they learn about how you raised your initial trading capital and you'll have some real trading results under your belt via your own capital.

[Technical Analysis Book Recommendations?]

I've just recently started looking into trading and I'm interested in buying a book about technical analysis. There are hundreds of books on technical analysis, but I have no idea which one would be best for me. Aside from reading posts from a few websites and reading Trading for a Living, I really don't know much about technical analysis or trading for that matter. Could you guys recommend a good technical analysis book for a beginner to pick up?

 

Use Traderslaboratory book "reviews" @ TL! Reviews

 

Next, do the same at other trader forums (read their book review section) and then go to something like Amazon.com and type in the name of the book you're interested in to get more active/current reviews of any of the recommended books.

 

Yet, just be aware that profitable trading involves more than just "technical analysis". Thus, depending upon what you want to be doing with your trading (hobbyist, part-time, trading for a living et cetera)...it will determine other types of books you should be reading/learning that has nothing to do with technical analysis.

[The Market is Dead]

this guy is spamming forums with this same message all over the internet.

he probably hired a marketing kid to post the messages; I don't think he knows what he is talking about. He just want to divert traffic to his website.

 

I thought he was "re-quoting" something from Reuters.

 

Also, I've seen more complaints by retail and institutional traders about the price action the past few weeks than I have all year. In addition, I heard bloomberg, CNBC, other major financial networks and floor traders talk about "unusual low volume" or "unusual low volatility" the past few weeks.

 

You saying its a big lie.

 

In contrast, I did see some good price action today between 4am est - 11am est. Still early in the year...plenty of trading to be done.

[Price Action @ Confluence Zones]

Hey Guys,

 

I wanted to get the feedback of fellow traders new and experienced on the way they take reversals and continuation in confluence zones in trending markets between 5m-4 hour charts. In the spot fx market.

 

I understand that continuations make up 65-70% of developed market patterns and reversals make up 30-35%.

 

To my understanding for price action to make a continuation it usually stabs through the Support/Resistance zone or a momentum candle then pullbacks, which may been seen in lower timeframes for it to hold to make a continuation. Reversals usually make a pin bar reversal signal at a major structure level or between 38.2 - 78.6% fib level at times a double pin bar. I also seen at times price hugging the S&R lines especially in the Asian session coming into Europe for price to pullback and breakout only for it to fake out and then breakdown or a true breakout after a false breakout. Also, price tends to have a control point at 00 numbers with it either poking through and reversing or blasting through and continuing.

 

What's your experience been like? Please stick to the topic.

 

Yeah...I see this also in forex currencies, EuroFX 6E futures and U.S. Dollar but not often. I remember a few years back there was a discussion thread about this by someone over at ForexFactory.com that actually used this as his/her primary method. I don't have a link but the thread may have developed and has been continuing since it was started.

 

By the way, I notice you're posting the exact same thing over at T2W.com and BabyPips.com...you should investigate ForexFactory.com discussions involving forex currencies for more in-depth discussions about Forex in comparison to T2W.com and BabyPips.com...the latter two forums don't get too deep into the advance price action discussions like ForexFactory.com

 

You should also research this via those traders using some of Nial Fuller methods because I believe he gets into this type of price action analysis. Yet, I'm sure you already know such because its commonly known amongst forex traders that have heard something about Nial Fuller trade methods.

 

Anyways, lots of price action confluence discussions on the internet the past 3 - 5 years in comparison to when I first saw such heavily discussed back around year 2000 and then it dried up for many years to only reappear again around 2007.

[What Contract to Trade?]

All the demo accounts I have found only work for up to a month. Can anyone recommend me a site that has longer lasting demo accounts or should I open a new one every month?

 

Most broker accounts have simulators these days for clients and demos for none clients. Simulators via a broker will last forever assuming you keep money in the account via their required minimum balance.

 

Thus, if you want a longer lasting demo...you're going to have to open a real trading account with a broker and then only use their simulator. This is more practical and allows you to practice on the exact same trading platform you're going to be trading with real money.

 

Therefore, instead of looking for a demo...you should be looking for a broker...preferably one that offers different trading platforms. In addition, don't use a demo or simulator until you have an actual trade method to prevent developing bad trade habits. Thus, if you're still in the process of designing your trade method...you should only be doing backtesting.

 

As for an answer to what futures contract to trade?

 

Easy answer...backtest your trade method on as many as possible and let the backtest results help determine which to trade instead of getting advice from someone that's using a different trade method suitable for their own trading instrument. Thus, what's good for someone else may not be good for you unless you two are using similar trade methods, same time frames and same trading durations.

[A Beginner Wants to Make It, but Needs Advice]

well how do I know if that trader is really that good? I mean it's always good to have more opinions and he is somewhere else now where I am. Considering that he is managing basically millions of dollars (not only stocks) and I am talking about not even 3k.

 

Yeah I am planning to follow that strategy, but I am also afraid that it is going to stop working one day (maybe soon?) so already now I am loking for something that would keep me even busier. Another strategy that I could try, maybe really something that would work for me for position trading, where the requierements aren't that huge...

 

Its an easy solution...

 

Backtest his/her trade method on what ever trading instrument you're going to trade. In addition, simulate trade it.

 

Also, there's "no guarantee" that any trade method will work forever. Thus, the goal is to exploit the method as much as possible until it stops working and then adapt that method for current market conditions at the time when it stops working. Hopefully, by the time when it stops working, you'll know enough via market experience and trading experience to be able to adapt the method to make it profitable again.

 

As to the capital you have...you don't have enough money for full time trading assuming you're living on your own. Yet, if you just want to get involved in trading as a hobbyist, being supported by someone else or you have another job to support yourself...

 

2-3k is OK to play around with.

 

Regardless, do not replace what you already have with those mentors and trading group have considering you've said it works...it may be your ticket to getting more capital, getting more trading experience and getting more market experience prior to going into day trading.

[data provider]

any good data provider?

 

You should say what you're trading, how much you're willing to pay and what types of goodies you want provided with the data to prevent getting answers about a data provider you won't try.

 

Also, have you tried using Google to get your list of data providers because they have them all via researching. In addition, most brokers these days offer data, charts for free assuming you're trading.

 

Does your broker offer data and charts of your trading instruments ?

 

You monitoring data and charts of something that's important to your trading but it's not something you're trading (e.g. tick index) ?

[A Beginner Wants to Make It, but Needs Advice]

Hi everybody,

first of all, I am fascinated by the world of trading. I see a lot of potential there. I've never been the kind of person who would think that a 9-5 job is the way to live well.

 

I would like to ask for advice on how to become successful.

 

I am part of a little commodities trading group, where two succesfull mentors are teaching their strategy. It seems to be a great working strategy, but the problem is that the specific occasion occurs only 2-4 a week. (it is a special kind of bar, specific point on the CCI, eventually the MACD). It is very difficult to be watching the graphs for several hours a day and wait for it to occur only 2x a week and thus makes it actually quite difficult. I would like something that I can do more actively, rather than be the hunter who waits for his prey for hours/days. Also, I understand that the commodities market can be riskier for a beginner. (even though I only try to start with eminis).

 

I am also curious to start with stocks now.

I talked to a good trader who recommended me that I could start with two things,1. look at the stocks in let's say NASDAQ that do the best or the worst in the first 4 minutes after the market opens. They should gain or lose at least 4%, then either buy or sell them and hold them for a few hours. Do this with 2-3 stocks.

 

2. use a slow stochastic (80 and 20), 3 MAs (20, 50, 200) and based on those enter trades. If the stochastic is over 80 then sell, if under 20 then buy. Also based on the 20 and 50 MAs to cross and follow the trend by the 200 one.

 

Does any of this have sense? would anyone improve that?

Where do I find good live stocks chart data for free to start with?

How do I find a working strategy for myself in the neverending amount of information that there is out there?

 

I plan to start with approx. 2000-3000 USD.

 

Thanks for the help.

 

1) Trading as a newbie will be a lot more difficult and require more time & energy than most 9 to 5 jobs. Thus, its not going to get easier...professionally and personally for a long time during the first few years. :doh:

 

2) You're part of a trading group that has two successful mentors teaching you their strategies along with you having a support group (trading group) and you want to instead try something else that will require you to start from scratch. :crap:

 

3) You've been talking to a good trader that's giving you advice about his/her method involving stocks. Yet, you're now asking others if the method recommendation by that good trader makes sense. :helloooo:

 

4) You're undercapitalized. Save your money and only simulate trade and backtest the new method you plan on designing until you have enough money that equals a minimum of one year salary of your current job.

 

5) Your questions involving data, software et cetera are newbie questions and I highly recommend you aim them at the two mentors you're currently have or at least learn how to use Google (its all there). In addition, I highly recommend you don't abandon something that's already working well. Thus, when you're properly setup with capital...add day trading to what you're currently learning from that trading group instead of using day trading to replace it.

 

Learning how to trade profitably is not all about a trade signal. Simply, those profitable mentors you have will be able to teach you things that's arguably more important than a trade signal assuming you don't get lost trying to do something else.

[Why Do More Than 90% of Traders Lose?]

I agree that most businesses fail within 3 years, but to attribute that to traders this 90-99% figure is wrong as many people including myself would not enter this industry if that were the case. Also, do you understand that a lot of traders stay away from forums and only for the advanced who know how to trade? I have seen many traders on live chat rooms banking in the pips most of them with the odd loser and to say 95% of them are losers is outright wrong. Also, what does it mean by failure rate blowing an account or losing a few dollars here and there?? I am fed up hearing this and will not accept it surely with these forums and help on the net there are more communication and discussions to become successful than unsuccessful.

 

I doubt most "potential traders" would run the other way prior to taking the big leap into trading if they read messages by anonymous strangers at forums saying "most traders will fail".

 

I don't know what chat rooms you've been visiting but the chat rooms and forums I've visited have most traders "losing" in regards to the part-time and full-time traders. In contrast, most of the hobbyist traders and drive-by-shooters (traders)...they seem to be profitable but that may be due to the fact its very difficult to keep track of the latter types of traders.

 

I've been visiting free chat rooms consistently since 1999.

 

In addition, there have been brokers that have stated most of their clients are not making money. Further, there have trading competitions where the results of most in trading competitions did not make a profit. Also, as a reminder, most to the trade journals I've read that have verification of the trades...most were not profitable.

 

Regardless to our difference in perspective...it doesn't matter if its 20% or 90% that don't make it beyond the first critical 3 years. Your goal is to not become one of them.

[Why Do More Than 90% of Traders Lose?]

I don't believe the 90% lose money because there is no reliable source or independent research or study that has been done that confirms this so I feel it’s a marketing gimmick to put most people off at trading...

 

Depending upon which statistical research you're willing to side with...most say the average failure rate of a business is around 80% along with failing within 3 years.

 

Therefore, the failure rate must be higher for traders because most traders are trading with a trade method but without a trading plan let alone a business plan to manage their trading in comparison to most business that do fail while having a business plan.

 

In addition, look at all the trade journals you see online...most don't last beyond a few months and only about 10% of them are profitable during those few months in reference to those that have verification about the daily results. Further, the forum members that say they are full-time trading...most of them are gone within a few years.

 

Simply, only a small percentage of traders are profitable in reference to those that are part-time or full-time and not those that are hobbyist nor those that are drive-by shooters.

[Trading Pullbacks Intraday]

Ive spent quiet a bit of time on candlestick and been using them since the start of my trading. But it just seems difficult to get any sort of risk to reward edge with candlesticks on say the 5 minute chart on the ES.

 

I don't know how your using candlestick pattern let alone pullback price actions. In addition, I don't know what exactly you're having problems with because you're using generic explanations without any chart examples.

 

Anyways, its absolutely critical that you post chart examples with any of the stuff you've been asking questions about or have used along with your interpretation of what you've been doing that's problematic. Without it...you're going to find yourself continuing asking questions whenever someone shows up and mentions another method for using with trading pullbacks.

 

My point is that there's a possibility that you already have a good method of trading pullbacks whatever that may be. Yet, you're just using it incorrectly or you have poor trade management after entry. Further, such can't be verified because nobody really knows what's on your monitors when you trade. That's why when it comes to talking about technical analysis methods...at some point you really need to see it (visual representation).

[Trading Pullbacks Intraday]

I understand what your saying and iam trying to read that information through volume and CD. How do you read the volume/interest? However without candlesticks, how do you decided this is point i get, its going to stop around this area.

 

Stick with what you know. If you know Japanese Candlestick analysis and I assumed you did because you mentioned Hammer patterns...there's no explanation why you wouldn't continue using it unless it didn't work for you in the past.

 

Simply, if it ain't broke...don't fix it.

 

In contrast, if you don't know Japanese Candlestick analysis and only mentioned it because someone else is using it or you have been using it without success...post some charts involving that "pullback" price action you've described that have Hammer patterns if you want some help because these are topics that easily get lost in explanations without chart examples.

 

If you're not willing to do that...move on to something else that already contains plenty of chart examples to go along with the explanations to help you understand so that you can integrate (merge) into that price action you've been describing about "pullbacks".

[Trading Pullbacks Intraday]

Iam talking about generally trading the first pullback after a strong momentum wave up for down. Wasn't meant to sound like a specific case. For example the ES may have a strong directional move at the open, how can one trade the pullback to this move. Or the market may range at the open and then we get a strong breakout, how does one trade the pullback?

 

You've essentially answered your own question in your prior message post...try using Japanese Candlestick analysis to look for trade signals in those price pullbacks considering it seems like you're already familiar with using Japanese Candlestick price actions. Start with the Hammer patterns in those pullbacks.

[Trading Pullbacks Intraday]

Lets assume that we are really good at spotting range bound markets and we wait till the market makes a strong move in one direction. (Lets say 2-3 strong candle breaking out into a new high for the day). Then we get a pullback in price to some point but higher than the pervious low. A signal appears, for example a hammer candlestick. What can we as intraday traders look at to confirm that firstly this move is a retrace not the start of a reversal and that the low of the hammer is the end of the retrace?

 

Sorry for those who dislike candlesticks, i would be interested to hear what you use to intensify turning points.

 

Hi,

 

Please post a chart example of that type of price action you're trying to describe because at first glance I've vision several different types of price action scenarios that fits the generic price action you've described.

 

If you can't find a chart example...it's probably something you shouldn't worry about.

[Rally To Candlestick Formation]

Hi,

 

Can anyone experienced in candlestick formations tell me if this hammer is stronger as previous coloured candles are all bearish leading upto the hammer as a major structure point?

 

My point is if some of the candles leading upto the hammer are green does that make the hammer at a major structure point weaker? How about the size of candles leading upto the hammer?

 

Thanks.

 

It's not a hammer line nor a hammer pattern. In addition, Japanese Candlestick patterns were designed to work with market context. Thus, do not use them alone. Simply, your chart lacks an identity (what trading instrument is it?) to determine the market context for Japanese Candlestick analysis involving that chart.

 

Happy/Safe New Year

[Why Do More Than 90% of Traders Lose?]

...

 

WHY DO 90% LOSE?

 

Who thinks 90% of traders trade off chart patterns and/or indicators?

 

...Maybe theres no edge after all in TA?

 

There's no single reason why the few are consistently profitable and why so many are consistently losing. Thus, there are many reasons for each individual trader.

 

Also, most traders can't handle the fact that it takes an entire (complete) trading plan (e.g. money management, proper capitalization, proper trading environment, discipline, good trade method and so on) to determine is he/she will be profitable or a loser because on any given trading day one of those things will be more important than the other components in the trading plan.

 

Therefore, most prefer to concentrate on one thing like their trade method instead of ensuring everything else in the trading plan is working smoothly together especially when things go wrong (losses). That's why there are many traders running around saying there's one reason only because they treat their own trading that way...to only get confused when they determine they were wrong and then they start looking again for another primary (number #1) reason.

 

Thus, you need to take with a grain of salt what the thread starter (emg) has been saying at various different trading forums on the internet amongst many different message posts in saying the following...

 

#1 reason why traders lose is because they are under-capitalized

 

Week later he will then say the following...

 

#1 reason why traders lose is because of their broker

 

Week later he saids the following...

 

#1 reason why traders lose is because they're using unregulated vendors

 

Week later he saids the following...

 

#1 reason why traders lose is because they're gambling

 

Week later he saids the following...

 

#1 reason why traders lose is because they use TA

 

There's other #1 reasons but you get my point. :doh:

[Why Do More Than 90% of Traders Lose?]

...The conversations above seem to illustrate part of the reason why: because people seem confused about what is required. For example: discipline is not an edge, it is simply a requirement for most people if they are to repeatedly execute the steps required to deliver their edge(s)...

 

Hi Kiwi,

 

Although you understand that having discipline is important to some traders...I disagree with your view that discipline is not an edge. No matter how you change the word...edge, advantage, requirement or whatever...it will be the same. Thus, if someone can show via their own trading a statistical advantage (profits) in the results via having the discipline in executing their trade method as designed versus not having discipline resulting in not following their trade method...

 

It is an edge, advantage, requirement or whatever you want to call regardless to the play of words. Just a case of semantics.

 

Just the same, one can say having a good trading method is one requirement to deliver profits. Simply, of course discipline and having a good trade method is requirement. Once again, if you can statistically show having such as an advantage in your trading versus not using such...it is an edge, advantage, requirement or whatever you want to call it...it is a critical piece of the puzzle for "some" traders although others say discipline is not important to executing a trade method efficiently and consistently. Therefore, to those others, discipline is not an edge nor requirement.

[Why Do More Than 90% of Traders Lose?]

There are various (numerous) different types of "edges" for a trader and they don't all involve math, formulas, mechanical systems, automation trading, indicators, patterns and so on along that line.

 

Thus, if a trader is profitable without one of the above, that trader obviously has an edge that has nothing to do with the above. For example, if someone is a discretionary trader and is very discipline in following his/her trading plan...resulting in consistent profits. That discipline is an edge although not the only edge in comparison to that same trader trading without discipline that results in consistent losses. Simply, if a trader can prove that he/she is profitable with "something" while not profitable without that same "something"...trading with that "something" is an edge.

 

Therefore, all profitable traders have an edge and such becomes more apparent as each year goes by. Yet, that edge just may not be "something" you're able to recognize or you may not think its not important whereas in contrast its extremely important to the other trader. Simply, most profitable traders have other "edges" (plural) that are independent of their trade method but works well with the trade method.

[Help 4 Struggling Trader]

...This is a great post and should be a model for others as an example. The system you mentioned may work but I find it hard to accept it is that simple wouldn’t 95% of retailers be making bucket loads if it was like that? What about market structure, trends looking and past trend lines etc. you seem to miss all this out where the experts as well as my own experience say these are a requirement.

 

Happy new year.

 

I think you forgot that most "retail traders" refuse to follow advice and only want to hear what correlates with their own assumptions or theories. Simply, they really didn't want advice...they wanted confirmation to what they are thinking about involving how to approach trading even if they are struggling or losing money.

 

Therefore, here's good recommendations to you...

 

1) Stop asking for advice and its time for you to take it to the next step.

 

2) Trade your method with real money for a few months.

 

3) If it doesn't work (your not profitable)...you can always return back here and be specific in stating what aspect of your method that you "think" is the problem and you can then ask for help with that specific problem.

 

The above will be more useful than posting your trade method as you did in this thread and asking for others to tell you what's wrong with it as if you didn't know but in reality its now obvious that you specifically do know what's wrong with it and the advice so far have not given you answers to the specific problem in your trade methods (plural).

[Patterns That Have an Edge?]

The patterns you've now specifically mentioned (e.g. Inside Bar) are actually "timing signals" (trade signals) to look for within a pattern (e.g. double top/bottom). Simply, patterns and timing signals work together (they are not the same) and the ones you've mentioned are dependent upon occurring within patterns. Further, patterns (not timing signals) help with the critical market context you're trading although patterns is not market context all by itself.

 

The point I'm making is that you've skipped the process of finding your patterns and/or market context to test the merits of your "timing signals" as if the edge is one component when in reality the edge is the trading plan. This gets back to the issue I've explained in my first reply about why some traders are very profitable with win rates less than 50% due to the fact their edge is the trading plan and not one component (e.g. timing signal).

 

Tendencies and market behaviors are not timing signals.

 

Lets put it this way, if you continue having problems in trying to find your edge in one component only, it would seem obvious you need to try something different via first finding patterns and market context considering they do occur prior to the timing signal...after...you can then develop your trade management as you noted.

 

Tendency does not equal edge. Therefore, you can have a tendency but not an edge if you don't have a trading plan to exploit that tendency...reality.

 

By patterns I meant Inside Bar, Outside Bar, Pinnochio Bar, shooting star etc. The way I am approaching system development is to first identify a market behavior where I can say that the if certain conditions happen in the market, then it is more likely to do x rather then y. Once I am able to find such a tendency, then I can move to the next stage of proper entry, exit, trade management to refine the system further.

 

I think the very first step in system development is what is a tradeable market tendency. I should be able to say that given a particular market context that can be defined by a computer, if event A happens, then the market is atleast 55-60 percent likely to do X rather then a Y. This should be observable across markets and over multiple years to be of any value for further system development.

 

I am having difficulty finding that. I think, without this one would be dabbling in randomness trying to find an profitable trading system.