No trading skill.....
Don't know when the right situation to enter and exit market.
Simple. Because many of them start trading before they know how to trade.
In my opinion, they can't know how to trade without trading.
You cant do experiments with money. You have to first learn the theory, trade in demo then go live. I partly agree with you in that after losing a good amount of money is when someone develops the discipline that leads to being a good trader. Im not saying people shouldn't trade im just answering the question "why do many traders lose?" And its simple; majority of them rush to live trading once they learn a tiny bit of it. I was once there so I know and it took me about 3 years to recover what I had lost within a few weeks rushing to trade. But all in all traders should never lose hope and research wide.
![](https://c.mql5.com/3/55/hand-yes__1.gif)
rush to live trading once they learn a tiny bit of it. I was once there so I know and it took me about 3 years to recover what I had lost within a few weeks rushing to trade. But all in all traders should never lose hope and research wide.
It is a pity if there is no english translation of this text - https://www.mql5.com/ru/forum/119374
Google translation :
Stage One: Unconscious incompetence
In the first step you start to look closely to trading. You know, it's a good way to make money because you've heard about this and many millionaires. Unfortunately, and as is also the first desire to drive a car you think it will be easy - indeed, so that in this complicated? !! Price moves up and down - what's the secret - start!
Unfortunately, just as the sowing for the first time behind the wheel - you will very quickly realize that it is not that going to do. You take a lot of lots and risks. Once you open a position immediately the price goes against you, you turn, and it goes against you again, and again, and again.
You are trying to compensate your losses by doubling each time your trades - sometimes it works, but most do not, and you go out in cuts and bruises.
Well, this is the first step - it is absolutely clear that you know nothing about trading. This stage lasts a week or two, but the market is fast and you move on to the second.
Stage Two: Conscious incompetence.
Stage two - it you will realize that there is much work to be performed.
You become aware of their incompetence - you do not have the skills or insights to receive regular income.
At this stage, you are buying a lot of systems and books, read sites from Russia to Ukraine and start looking for the Grail.
At this stage you will be "system whore" - will jump from method to method day after day, week after week, never stopping to notice so whether the system works. Every time a new indicator will appear you will be delighted because "it will change it all!"
You will test the automatic systems in Meta-Trader, will play with MA, Fib, soprosivleniem and support pivot, fractals, divergence, DMI, ADX, and a hundred other things, hoping in my heart that your "magic system" will work today!
You'll catch ups and downs of the price with their indicators, trying to find the exact point of the coup. You'll hold on to losing positions open, and even topped up on them because you believe that right.
You will be to chat with and see what other traders are doing pips and you will not know why it's not you. You ask a million questions, some of them are stupid, looking back, you'll feel a little silly. You will reach a point when you think that those who constantly collect pips - liars. They can not earn! Because you learn, but can not do so. You know as much as they, then they're lying! But their accounts grow with each passing day, and your falls.
You will be like a teenager - traders who make money will give advice, but you will be hard-nosed and will think that you know better. You do not listen to advice and take a huge shoulder to your account, everyone will say that you are crazy, but you know better!
You will try to use signs which are used by others, it will not work. You will try to buy signals - they also do not work.
This stage can last a very long time. More than a year. For me it was 18 months.
Gradually, you will begin to come out of this stage. You begin to invest more time and money (more than you expected). You have already merged 2 or 3 accounts, and may already be throwing this thing 3 or 4 times.
And now comes the third stage
Stage Three: Eureka!
As we approach the end of the second stage, you begin to realize that the main thing is not a system.
You realize that, generally speaking, it is possible to make money using simple MA but only if you keep yourself in the hands and you have the correct money management.
You start reading books about trading psychology and find themselves in the described characters.
And finally comes the enlightenment!
At this point in the brain there is a new link.
You suddenly realize that you do not, no one else can accurately predict what the market will do in the next 10 seconds, let alone 20 minutes. [Then I probably incorrectly translated about 20 minutes. Alexnn]
You begin to work on the same system, you adaptable for yourself, you become happier and know your "risk threshold".
You start to trade if your system shows a good probability of winning.
If your position is losing money, you do not get angry, because you know that you can not predict whether it was your fault, once you understand that the position is not in your favor - you close it. Next position will have a greater probability of winning, because your simple system works.
You immediately realize that the trading game the most important thing - to follow a disciplined system and make transactions.
You learn the proper money management and plechu- and only now you realize the truth of those who give you advice in the past.
You were not ready, but now it is not.
Eureka comes that moment when you honestly say that you can not predict the market.
Then comes the fourth stage.
Stage four: Perceived competence.
Ok, Sach you make trades when your system tells you to do so.
You take losses as easily as winnings.
You let your "winners" to run to the end (assuming risk) and you know that your system is making more money than it loses. And if you have a losing position you close it quickly with little damage to the account.
Now you are at the stage when your account is at a constant level varies from day to day. There are weeks when you win 100 pips and weeks when lost 100. In short you balance and not lose money.
Now you realize that in general, give good advice (prediction) and accumulate respect from other traders with whom to chat.
You still need to work and think about the trade, but over time you begin to earn more than lose.
You start the day with a 20 pips wins, then 35 pips loss and you do not have a feeling about this. You gave these pips, but you know that they come back.
You begin to consistently do more and more pips per week. 25, then 50, and more
It lasts 6 months.
Then comes the 5th stage.
Stage 5: Unconscious Competence
Right now, just like driving a car, you are trading a day doing everything on a subconscious level.
You are running on autopilot. You start working on large transactions and make 100 pips a day. And it is normal for you.
This business is a utopia. You control the emotions and you are a trader with a soaring score.
You - the star traders in chat. People listen to you. You recognize yourself in their questions 2 years ago.
You advise, but you know that it takes more wasted because they behave like teenagers. Some of them I will go down to your level. Someone will someone slower. Most never overcome the second level. But someone comes.
Trading is no longer exciting. She became terribly boring, like everything in this life that you have mastered. It's just a job.
Now, with her head held high, you can say, "I - trader"
I hope all of us will sooner or later reach the coveted fifth stage :)
Google translation :
Thanks! Seems like I've found the original eng source:
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 because 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 may have initial success, and thats even worse - cos it tells your brain that this really is simple and you start to risk more money.
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 You are totally oblivious to your incompetence at trading.
This step can last for a week or two of trading but the market is usually swift and you move onth the next stage.
Step Two - Conscious Incompetence
Step two is where you realise that there is more work involved in trading 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.
You now set about buying systems and e-books galore, read websites based everywhere from USA to the Ukraine. and begin your search for the holy grail. During this time you will be a system nomad - 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 come 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 Metatrader, 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 because 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 because 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 overtrade 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.
You might even approach a 'guru' like Rob Booker or someone on a chat board who promises to make you into a trader(usually for a fee of course). Whether the guru is good or not you wont win because there is no replacement for screen time and you still think you know best.
This step can last ages and ages - in fact in reality talking with other traders as well as personal experience confirms that it can easily last well over a year and more nearer 3 years. This is also the step when you are most likely to give up through sheer frustration.
Around 60% of new traders die out in the first 3 months - they give up and this is good - think about it - if trading was easy we would all be millionaires. another 20% keep going for a year and then in desperation take risks guaranteed to blow their account which of course it does.
What may suprise you is that of the remaining 20% all of them will last around 3 years - and they will think they are safe in the water - but even at 3 years only a further 5-10% will continue and go on to actually make money consistently.
By the way - they are real figures, not just some ive picked out of my head - so when you get to 3 years in the game dont think its plain sailing from there.
Iv had many people argue with me about these timescales - funny enough none of them have been trading for more that 3 years - if you think you know better then ask on a board for someone who's been trading 5 years and ask them how long it takes to become fully 100% proficient. Sure i guess there will be exceptions to the rle - but i havent met any yet.
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 but now its in your blood
One day - im a split second moment you will enter stage 3.
Step 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 and 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.
Because of this revelation you stop taking any notice of what anyone thinks - what this news item will do, and what that event will do to the markets. You become an individual with your own method of trading
You start to work just one system that you mould 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 or the one after it or the one after that will have higher odds of success because you know your system works.
You stop looking at trading results from a trade-to-trade perspective and start to look at weekly figures knowing that one bad trade does not a poor system make.
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 as you know the probabilities stack in your favour.
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.
Step 4 - Conscious Competence
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 looses 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
Step Five - Unconscious Competence
Now we’re 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 200 pips in a day doesnt make you any more excited that getting 1 pips.
You see the newbies in the forum shouting 'go dollar go' as if they are urging on a horse to win in the grand national and you see yourself - but many years ago now.
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 because 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.
Finally you grow out of the chat rooms and find a few choice people who you converse with about the markets without being influenced at all.
All the time you are honing your methods to extract the maximum profit from the market without increasing risk. Your method of trading doesnt change - it just gets better - you now have what women call 'intuition'
You can now say with your head held high "I'm a currency trader" but to be honest you dont even bother telling anyone - it's a job like any other.
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I hope youve enjoyed reading this journey into a traders mind and that hopefully youve identified with some points in here.
Remember that only 5% will actually make it - but the reason for that isnt ability, its staying power and the ability to change your perceptions and paradigms as new information comes available.
The losers are those who wanted to 'get rich quick' but approached the market and within 6 months put on a pair of blinkers so they couldnt see the obvious - a kind of "this is the way i see it and thats that" scenario - refusing to assimilate new information that changes that perception.
Im happy to tell you that the reason i started trading was because of the 'get rich quick' mindset. Just that now i see it as 'get rich slow'
If youre thinking about giving up i have one piece of advice for you ....
Ask yourself the question "how many years would you go to college if you knew for a fact that there was a million dollars a year job at the end of it?
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Why do many traders lose?
In my opinion, reasons are:
- Not manage risk
- Not pay attention to important news
- Not follow the market