90% of traders fail... - page 5
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I recently came accross this post and found it very informative.
I figured that many people here can benefit from it.
I am NOT the original author.
**************************************************
LEARNING CYCLE FOR NEW TRADERS
Hi folks.
This cycle is as true for trading as it is for learning to drive a car and consists of five components.
I'm going to take you through each stage so you can recognise exactly where you are in your trading journey.
Step One: Unconscious Incompetence.
This is the first step you take when starting to look into trading. you know that its a good way of making money cos you've heard so many things about it and heard of so many millionaires.
Unfortunately, just like when you first desire to drive a car you think it will be easy - after all, how hard can it be?? - price either moves up or down - what's the big secret to that then - lets get cracking!
Unfortunately, just as when you first take your place in front of a steering wheel you find very quickly that you haven't got the first clue about what you're trying to do. you take lots of trades and lots of risks. when you enter a trade it turns against you so you reverse and it turns again .. and again, and again.
you try to turn around your losses by doubling up every time you trade - sometimes you'll get away with it but more often than not you will come away scathed and bruised
Well this is stage one - you are totally oblivious to your incompetence at trading. Stage one can last for a week or two of trading but the market is usually swift and you move onto stage two.
Stage Two - Conscious Incompetence
Stage two is where you realise that there is more work involved in this and that you might actually have to work a few things out.
you consciously realise that you are an incompetent trader - you don't have the skills or the insight to turn a regular profit.
During this phase you will buy systems and e-books galore, read websites based everywhere from Russia to the Ukraine. and begin your search for the holy grail.
During this time you will be a system whore - you will flick from method to method day by day and week by week never sticking with one long enough to actually see if it does work. every time you came upon a new indicator you'll be ecstatic that this is the one that will make all the difference.
you will test out automated systems on Meta-trader, you'll play with moving averages, Fibonacci lines, support & resistance, Pivots, Fractals, Divergence, DMI, ADX, and a hundred other things all in the vein hope that your 'magic system' starts today.
you'll be a top and bottom picker, trying to find the exact point of reversal with your indicators and you'll find yourself chasing losing trades and even adding to them cos you are so sure you are right.
You'll go into the live chat room and see other traders making pips and you want to know why it's not you - you'll ask a million questions, some of which are so dumb that looking back you feel a bit silly.
You'll then reach the point where you think all the ones who are calling pips after pips are liars - they cant be making that amount cos you've studied and you don't make that, you know as much as they do and they must be lying. but they're in there day after day and their account just grows whilst yours falls.
You will be like a teenager - the traders that make money will freely give you advice but you're stubborn and think that you know best - you take no notice and over leverage your account even though everyone says you are mad to - but you know better.
you'll consider following the calls that others make but even then it wont work so you try paying for signals from someone else - they don't work for you either.
This phase can last ages and ages - in fact in reality it can last well over a year - My own period lasted about 18 months.
Eventually you do begin to come out of this phase. You've probably committed more time and money than you ever thought you would, lost 2 or 3 loaded accounts and all but given up maybe 3 or 4 times.
Then comes stage 3
Stage 3 - The Eureka Moment
Towards the end of stage two you begin to realise that it's not the system that is making the difference.
you realise that its actually possible to make money with a simple moving average and nothing else IF you can get your head and money management right
You start to read books on the psychology of trading and identify with the characters portrayed in those books.
Finally comes the eureka moment.
The eureka moment causes a new connection to be made in your brain.
you suddenly realise that neither you, nor anyone else can accurately predict what the market will do in the next ten seconds, never mind the next 20 mins.
You start to work just one system that you mold to your own way of trading, you're starting to get happy and you define your risk threshold.
You start to take every trade that your 'edge' shows has a good probability of winning with.
when the trade turns bad you don't get angry or even because you know in your head that as you couldn't possibly predict it it isn't your fault - as soon as you realise that the trade is bad you close it . The next trade will have higher odds of success cos you know your simple system works.
You have realised in an instant that the trading game is about one thing - consistency of your 'edge' and your discipline to take all the trades no matter what.
You learn about proper money management and leverage - risk of account etc etc - and this time it actually soaks in and you think back to those who advised the same thing a year ago with a smile
you weren't ready then, but you are now.
The eureka moment came the moment that you truly accepted that you cannot predict the market.
Then comes stage four
Stage 4 - Conscious Competence
Ok, now you are making trades whenever your system tells you to.
you take losses just as easily as you take wins
you now let your winners run to their conclusion fully accepting the risk and knowing that your system makes more money than it loses and when you're on a loser you close it swiftly with little pain to your account
You are now at a point where you break even most of the time - day in day out, you will have weeks where you make 100 pips and weeks where you lose 100 pips - generally you are breaking even and not losing money.
you are now conscious of the fact that you are making calls that are generally good and you are getting respect from other traders as you chat the day away.
You still have to work at it and think about your trades but as this continues you begin to make more money than you lose consistently.
you'll start the day on a 20 pip win, take a 35 pip loss and have no feelings that you've given those pips back because you know that it will come back again.
you will now begin to make consistent pips week in and week out 25 pips one week, 50 the next and so on.
this lasts about 6 months
then comes Stage Five
Stage Five - Unconscious Competence
Now were cooking - just like driving a car, every day you get in your seat and trade - you do everything now on an unconscious level.
you are running on autopilot. You start to pick the really big trades and getting 100 pips in a day is becoming quite normal to you.
This is trading utopia - you have mastered your emotions and you are now a trader with a rapidly growing account.
you're a star in the trading chat room and people listen to what you say. you recognise yourself in their questions from about two years ago.
you pass on your advice but you know most of it is futile cos they're teenagers - some of them will get to where you are - some will do it fast and others will be slower - literally dozens and dozens will never get past stage two but a few will.
Trading is no longer exciting - in fact it's probably boring you to bits - like everything in life when you get good at it or do it for your job - it gets boring - you're doing your job and that's that.
You can now say with your head held high "I'm a currency trader"
I hope you've enjoyed this text and can recognise yourself in some stage or another - personally I'm at stage four now and am constantly making good amounts of pips - I've been trading in total for about 3 years and the first two were hell on earth.
for those of you reading this who stick with it, ill look forward to the banter we have together in the future when we are both bored to death during the trading day
Soultrader.
I believe most traders fail because they really don't understand how to take advantage of divergence. RSI, Stoch, and macd ... all important, all different. that and buying into the 200 ema on the 1 hour without divergence.
talk about the death cross.
Good article on why 90% of traders fail...
http://www.esignallearning.com/education/marketmaster/default.asp
sorry if its' been posted before...
-CS...............................
I like the delusional pit of confidence and pip dreams that i am seeing. The real reason why people fail is because of brokers. Now, before you misjudge me, first ask me why and how it is that i know, what it is that i know and i'll tell you. Secondly,
it's totally obvious.
When you lose your account, %20 of that goes to the broker, 80% of that goes to their firm, when you "keep on and keep on" putting back in. It's just that, Forex is so huge that there's too many non US treasures out there to catch for fraud, or to be regulated, hence it's "foreign", so.
Why trade in a non regulated market if the lose ratio is 95%, doesn't that tell you something?! If even the smartest and most genious lose out when going live over 75% of the time, even with the most potfound edges, just what makes you think that "hopes and dream" can boost any of us at all?
95% loss rate WORLDWIDE should send you a radar of common sense, it's mostly fraudulant and like a casino, with hopes and dreams. For some reason, people just keep coming back. "Hope truely is the reason why" as to why most people lose. Because the game was made for you to lose for a reason, but. Only 5% of those who win consistantly, in my view are big time investors, the retail traders keep the money flowing, heck.
I hear that most of the money being traded, in liquid is mostly "demo traded paper". LOL, see. The more deception, the more it's so obvious, small things like this matter. It's the name "For" "Ex". Well, it's not "For", us, it's "For" them.
Now, i didn't say that there wasn't a way around this.
Check futures stats, i hear the win rate has changed, serverely. 85% losers, compared to Forex. Why???!?!?!?
Because, it's regulated, much, much harder to cheat clients when your firm is constantly being watched, isn't it. Also, most brokers watch trading forums, like this one. Stealing your strategys, using them against you, but. No, they don't mention small things like this over internet boards.
Call me paranoid, but. 95% losers WORLDWIDE vs. PIPEDREAMS and hardwork
Which one makes more money off of which as a strategy that never changes?
An ape can answer this one.
I recently came accross this post and found it very informative.
I figured that many people here can benefit from it.
I am NOT the original author.
**************************************************
LEARNING CYCLE FOR NEW TRADERS
Hi folks.
This cycle is as true for trading as it is for learning to drive a car and consists of five components.
I'm going to take you through each stage so you can recognise exactly where you are in your trading journey.
Step One: Unconscious Incompetence.
This is the first step you take when starting to look into trading. you know that its a good way of making money cos you've heard so many things about it and heard of so many millionaires.
Unfortunately, just like when you first desire to drive a car you think it will be easy - after all, how hard can it be?? - price either moves up or down - what's the big secret to that then - lets get cracking!
Unfortunately, just as when you first take your place in front of a steering wheel you find very quickly that you haven't got the first clue about what you're trying to do. you take lots of trades and lots of risks. when you enter a trade it turns against you so you reverse and it turns again .. and again, and again.
you try to turn around your losses by doubling up every time you trade - sometimes you'll get away with it but more often than not you will come away scathed and bruised
Well this is stage one - you are totally oblivious to your incompetence at trading. Stage one can last for a week or two of trading but the market is usually swift and you move onto stage two.
Stage Two - Conscious Incompetence
Stage two is where you realise that there is more work involved in this and that you might actually have to work a few things out.
you consciously realise that you are an incompetent trader - you don't have the skills or the insight to turn a regular profit.
During this phase you will buy systems and e-books galore, read websites based everywhere from Russia to the Ukraine. and begin your search for the holy grail.
During this time you will be a system whore - you will flick from method to method day by day and week by week never sticking with one long enough to actually see if it does work. every time you came upon a new indicator you'll be ecstatic that this is the one that will make all the difference.
you will test out automated systems on Meta-trader, you'll play with moving averages, Fibonacci lines, support & resistance, Pivots, Fractals, Divergence, DMI, ADX, and a hundred other things all in the vein hope that your 'magic system' starts today.
you'll be a top and bottom picker, trying to find the exact point of reversal with your indicators and you'll find yourself chasing losing trades and even adding to them cos you are so sure you are right.
You'll go into the live chat room and see other traders making pips and you want to know why it's not you - you'll ask a million questions, some of which are so dumb that looking back you feel a bit silly.
You'll then reach the point where you think all the ones who are calling pips after pips are liars - they cant be making that amount cos you've studied and you don't make that, you know as much as they do and they must be lying. but they're in there day after day and their account just grows whilst yours falls.
You will be like a teenager - the traders that make money will freely give you advice but you're stubborn and think that you know best - you take no notice and over leverage your account even though everyone says you are mad to - but you know better.
you'll consider following the calls that others make but even then it wont work so you try paying for signals from someone else - they don't work for you either.
This phase can last ages and ages - in fact in reality it can last well over a year - My own period lasted about 18 months.
Eventually you do begin to come out of this phase. You've probably committed more time and money than you ever thought you would, lost 2 or 3 loaded accounts and all but given up maybe 3 or 4 times.
Then comes stage 3
Stage 3 - The Eureka Moment
Towards the end of stage two you begin to realise that it's not the system that is making the difference.
you realise that its actually possible to make money with a simple moving average and nothing else IF you can get your head and money management right
You start to read books on the psychology of trading and identify with the characters portrayed in those books.
Finally comes the eureka moment.
The eureka moment causes a new connection to be made in your brain.
you suddenly realise that neither you, nor anyone else can accurately predict what the market will do in the next ten seconds, never mind the next 20 mins.
You start to work just one system that you mold to your own way of trading, you're starting to get happy and you define your risk threshold.
You start to take every trade that your 'edge' shows has a good probability of winning with.
when the trade turns bad you don't get angry or even because you know in your head that as you couldn't possibly predict it it isn't your fault - as soon as you realise that the trade is bad you close it . The next trade will have higher odds of success cos you know your simple system works.
You have realised in an instant that the trading game is about one thing - consistency of your 'edge' and your discipline to take all the trades no matter what.
You learn about proper money management and leverage - risk of account etc etc - and this time it actually soaks in and you think back to those who advised the same thing a year ago with a smile
you weren't ready then, but you are now.
The eureka moment came the moment that you truly accepted that you cannot predict the market.
Then comes stage four
Stage 4 - Conscious Competence
Ok, now you are making trades whenever your system tells you to.
you take losses just as easily as you take wins
you now let your winners run to their conclusion fully accepting the risk and knowing that your system makes more money than it loses and when you're on a loser you close it swiftly with little pain to your account
You are now at a point where you break even most of the time - day in day out, you will have weeks where you make 100 pips and weeks where you lose 100 pips - generally you are breaking even and not losing money.
you are now conscious of the fact that you are making calls that are generally good and you are getting respect from other traders as you chat the day away.
You still have to work at it and think about your trades but as this continues you begin to make more money than you lose consistently.
you'll start the day on a 20 pip win, take a 35 pip loss and have no feelings that you've given those pips back because you know that it will come back again.
you will now begin to make consistent pips week in and week out 25 pips one week, 50 the next and so on.
this lasts about 6 months
then comes Stage Five
Stage Five - Unconscious Competence
Now were cooking - just like driving a car, every day you get in your seat and trade - you do everything now on an unconscious level.
you are running on autopilot. You start to pick the really big trades and getting 100 pips in a day is becoming quite normal to you.
This is trading utopia - you have mastered your emotions and you are now a trader with a rapidly growing account.
you're a star in the trading chat room and people listen to what you say. you recognise yourself in their questions from about two years ago.
you pass on your advice but you know most of it is futile cos they're teenagers - some of them will get to where you are - some will do it fast and others will be slower - literally dozens and dozens will never get past stage two but a few will.
Trading is no longer exciting - in fact it's probably boring you to bits - like everything in life when you get good at it or do it for your job - it gets boring - you're doing your job and that's that.
You can now say with your head held high "I'm a currency trader"
I hope you've enjoyed this text and can recognise yourself in some stage or another - personally I'm at stage four now and am constantly making good amounts of pips - I've been trading in total for about 3 years and the first two were hell on earth.
for those of you reading this who stick with it, ill look forward to the banter we have together in the future when we are both bored to death during the trading day
Soultrader.The "Eureka Moment" is when people staring thinking outside of the box and say to themselves, how can i force the competition to destroy themselves before me, THEN. You can cut threw all the BS so called "forum mentoring".
All warfare is based on deception, Sun Tzu wasn't the best fedual warlord for nothing and nobody wants to be poor, so. What does that tell you about morality when it relates to trading?
The reason i am even mentioing a small 00.1% of this is because, hopefully.
A broker, or two will see this and say "hmm, let's reevaluate", this one guy knows something obvious, but what if others know the eaxct samething and aren't saying, WAIT.
Our clients are cheating us!!!!!
Then all hell breaks loose!
I believe its the reliance on technical indicators that brings everyone undone.The brokers and so call educators all MARKET these products extremely heavily and are all making lots of cash from us eager naive beavers. You need to look at the market as constant feeding frenzy that gets interrupted when the big news comes out. There two ways to play the game, one would be to scalp on the news release the other to wait and position after the news if it moves to an extreme.
buy on top price.. sell on bottom price...
I believe its the reliance on technical indicators that brings everyone undone.The brokers and so call educators all MARKET these products extremely heavily and are all making lots of cash from us eager naive beavers. You need to look at the market as constant feeding frenzy that gets interrupted when the big news comes out. There two ways to play the game, one would be to scalp on the news release the other to wait and position after the news if it moves to an extreme.
I'd have to disagree.. I have been doing fine, along with a few traders out there who rely soley on technical indicators and money managment who DO NOT TRADE THE NEWS. I have been trading in the worst, flattest market hours and seem to be doing fine.. I completely believe that it's becuase of my money managment and technical skill that has kept me in the game.
Yes, but why risk serious drawdowns, daily drawdowns on intuition, which is what technical analysis is all about? Nomatter how good an analyst is, nomatter how good your interpitation is on divergence, resistence, whatever the case.
There will always be fakes and intrical reversals.
Like the bpc1000 said, the technical analizing for this market, for Forex is a marketing myth to attract newbies. I've seen genious systems and intuitional traders last a couple of months, then. Once their systems hit mainstream, just like that. They get hit hard. The main reason it's nearly impossible to trade consistent and profitable is for two reasons, not counting the broker.
The market is flat, meaning.
It's far, far too liquid to trade technicals, the patterns are mostly false.
Secondly, there is no central price, you're getting your technical graphs from a bank, or broker. Well, whatever you think you're getting from the Chicago Exchange, you aren't. It's changed feeds, NOT exact market feeds from Chicago.
Technical Analysis is good for predicatable markets and also. Only some cases, if you have good expectations over a news report. An indicator can assist in that extra buy and sell decison when all your numbers are correct, the little bit from the indicator helps.
Let's see.
I amnot a news traders, by far.
However, i've been trading news for about 6 months, not the month before, because of the painful FED Hikes and unusual spiks over the dollar.
I've had 90% winners.
Now, i've been doing technicals for about a year or so.
I've relied mostly on breakouts, bull rumors and so on.
Even with the best Analysis, i've only won, with 12 pip per scalps at about 45% of the time. You tell me, which side of trading is more logical and makes more sense to use, or to use both technical and fundamental in?
It's obvious, Fundamentals and technicals are supposed to be used "TOGETHER". Brokers know and real traders know with common sense that fundamental are the ONLY real way to trade. Technicals are just aids to your fundamental judgement when there is uncertainty on some levels.
Brokers know this, so.
They spike the feeds to make you fail, in regulated, or unregulated.
The best way to trade forex for retail traders, in my opinion is to simply scalp leverages.
A perfect example of technicals and fundamentals used together, effectively even to this day is "Straddling". The logic to it is to time how close you are to the spike's consolidation, but arenot to be too close so that you can get in a guaranteed fills on either side, however.
Even with all of the mindgames most brokers play during news times, straddling still pays off, unless they cut the feeds and shutdown the platform, straddling still works, in all forms. The E Mini is a wonderful market for technicals there is so much hidden divergence in daily ranges that it will make your head pop off with how much profit potential it has over all.
The market has to "rush" faster, so trends will become alot more predictable, because everybody is constantly reverse buying and selling all day at the next best price, wrestling negoitations until the market closes. These are what i call the greenlight hours on the E Mini and NSYD.
Buy, hey.
Don't take my word for it. Another trader's failure is my gain in that giant snakepit!