[MoonRocket]

^^^ Totally agree. That's why it's a good idea IMO to open a CFD account as this allows a new commer to put a few dollars on a trade and get the real feel of it.
Also the above scenario is why many get the feeling the market is after them and become fearful or aggressive about it.
Took me a couple of years to overcome that feeling.

[Dick Lexic]

stop running = the market "is" after you and it happens every day.

surely it's not a feeling it's a reality? we need to deal with it on that basis?

[tim3]

Originally Posted by bbmac

Whether the failure rate statistic above is as high as the oft quoted 95% for retail traders - there is no way of knowing. What is clear though is that the failure rate is very high. Below I list some of the reasons for this.

a. The sub culture that surrounds trading as I intimated above suggests that you can ' get rick quick ' and work ' just five minutes day ' etc. This is plainly false and very misleading. It causes many to follow these apparent shortcuts letting their hope / greed cloud their common sense. If it looks too good to true - it usually is !

b. When they commence live trading - they simply don't know what it is they need to know and are distracted by false noises such as detailed in point a. above. They have no idea that actually trading isn't about getting involved in as many opportunities as possible - but about disregarding as many risks as possible to leave only the highest probability trading opportunities. This requires patience and discipline. It was Aristotle that said ' Patience is bitter - but it's fruit is sweet. '

The 1st goal of a trader should always be capital preservation, (Ie you have to be able to 'stay in the game ' through sensible and proven risk management techniques.) Only then can you achieve the 2nd goal which is to grow that capital. The 3rd task is to learn from every trade you place.

c. They are generally under funded and as a result of this (and greed) are over leveraged. Whilst the leveraging of margin can magnify gains it can magnify losses also. All too often they take advantage of the ridiculous levels of leverage willingly offered by the brokers and the result in more cases than not is that sooner or later they blow out their accounts and lose their trading margin.

d. They have no idea what a Trading Edge is, how to acquire one or what they then need to know about it in order to ensure that it throws up no surprises that can lead to problems, and a loss of trading margin.

e. They don't understand the psychological barriers that can prevent them from achieving their trading aims even with a proven Trading Edge. In his book Reminiscences Of A Stock Operator about the legendary Wall Street Trader Jesse Livermore, Edwin Lefevre suggests that one of the prime reasons most never make it is because;

i. When the natural human instinct is to hope - in trading you have to fear

ii. When the natural human instinct is to fear - in trading you have to hope

I.e: Most times the necessary cognitive responses required in trading run counter to the instinctive human ones. Furthermore when entering a market you have to be right at the right time, not right at the wrong time - because this is the same as being wrong. For example in a bullish market you have to know what the highest probability set-ups are to buy to profit from the rising price. If you buy in the wrong place and price corrects to the downside, even though it may resume it's rise you have been stopped out for a loss. You were right - the market was bullish - but you were right at the wrong time !

My experience is that developing the necessary 'trading psychology' can prove harder than mastering the technical stuff. Getting a proven consistently profitable way to trade (ie a Trading Edge) that can be relied upon to produce a regular income is one thing, but as the excellent Mark Douglas (Trading in the Zone, The Disciplined Trader etc) points out - it is the destructive effects of the human emotions connected with any discretionary trading that can lead to the ' Profit Gap, ' ie the difference between having a proven trading edge and actually being able to make a reliable and consistent income from it yourself. Of course the first step is to actually acquire a proven consistently profitable trading edge, but even given this - some never close this 'profit gap.'

G/L

Great post and mentions the 2 books every trader should read Reminicences and the Disciplined Trader.

[MoonRocket]

Originally Posted by Dick Lexic

stop running = the market "is" after you and it happens every day.

surely it's not a feeling it's a reality? we need to deal with it on that basis?

I'm a bit uncertain what you mean.
However the market cannot possibly be after you or me...it doesn't know we exist.
Now maybe the market does chase the big boys or more accurately the big boys chase each other but we hardly enter those ranks.
Sure, I can get caught in the crossfire but they're not the slightest bit interested in getting me.

[wallstreetwarrior87]

Concerning the idea of stop hunting:

There are many types of participants, so you need to be clear which type of trader will want/need to stop hunt, and ultimately why would they do this.

If you can create and then prove a theory you will be able to know (from a high probability POV) where stop hunts will occur and where they wont.

When people make comments like "they are after your stop" what they really mean is; very few traders think outside the box, so as a result this means the majority think along the same lines, thus do the same things (like place stop losses is conventional places). Why does this happen? This is because most traders learn from the same hymn sheet, and never develop from this point. Conventional wisdom advocates using a certain percentage of your account on each trade. So for one example, it should not be too hard to work out account sizes of retail traders, and then make a calculated assessment of where stops will be placed because of this.

A few of the "famous" big traders have stated that there are places they do not play their games as they can not manipulate the market in the fashion they are accustomed to, there for they do not trade in these places as they can not control the situation.

These guys know their gameplan, so you should know yours!

[Dick Lexic]

It is my opinion that stop running, manipulation does happen in the markets. If the market is running the stops they do know we exist because our stops are visible and in the right conditions or if the stop is within easy reach for them they will hit it. I also think there are some very powerful people who can move the markets in their favor and can even engineer a move days/weeks in advance. I’m talking major markets and it’s just my opinion of course, I’m sure some of you will think I’m completely bonkers.

[Hoggums]

Most people put stops at S/R levels which are completely predictable. Anyone viewing the order book will be able to see these orders sitting en masse at these levels and predictably they start opening positions that they can close at a profit when the S/R is hit. They can feel confident that they'll be able to close at that level because of the number of orders sitting there.

So you may call it stop hunting - but actually it's two herds of people, one out to make a quick buck - the other to protect their positions or take profits with longer term positions.

So you may feel like the Sb firm is deliberately trying to fleece you out of money - but the actual reason is you are are part of a herd of sheep trading predictably at predictable levels.

[wallstreetwarrior87]

Originally Posted by Dick Lexic

It is my opinion that stop running, manipulation does happen in the markets. If the market is running the stops they do know we exist because our stops are visible and in the right conditions or if the stop is within easy reach for them they will hit it. I also think there are some very powerful people who can move the markets in their favor and can even engineer a move days/weeks in advance. I’m talking major markets and it’s just my opinion of course, I’m sure some of you will think I’m completely bonkers.

Not bonkers at all. Its all about the food chain, and where we sit in it. But as long as we understand this, we can participate with a favourable outcome.