The Real Reason Why Most Traders Fail:

The real reason that most traders fail is a very simple one.
Most traders, simply, do not have something that works CONSISTENTLY- week in week out, month in month out, year in year out.

It's really that simple.
Until you find someting that works CONSISTENTLY, year in year out, you are going to lose your money.

Forget about all those books on trading psychology.
While there is probably something that can be learned from these books to help you enhance your trading AFTER you have something that works, proper trading psychology- in and of itself- will make you NO money.

You could have the worst psychological make up that a trader can have but if you have something that works CONSISTENTLY, you will make money!

The ONLY thing that will make you money- year in year out- is having something that works CONSISTENTLY.

This is the real, and only, challenge for a trader- to find something that works consistently- year in year out.

Granted that this is MUCH easier said than done.

It is EXTREMELY difficult to find something that works CONSISTENTLY- year in year out, but this should be the trading goal.

Forget about trading rules, trading quotes, trading psychology books, trading journals.
While all of these can enhance your trading once you have something that works, none of these factors will make you ANY money in and of themselves.

One should not even bother trading until one has something that WORKS consistently.
This way you will know that you can make money in the long run.

You're much better off demo testing your trading strategies until your demo account shows good, consistent returns.

This way you won't lose any money in the process of finding something that works.

What are your thoughts?

-Take Whichever Way Works-
Bruce Lee
Jeet Kon Do

Nothing works consistently.

Markets aren't constants and if you don't adapt - you die.

Masquerade said:

Nothing works consistently.

Markets aren't constants and if you don't adapt - you die.

Click to expand...

When something stops working find something else that does.
You're right- you must adapt.

mrsoul said:

When something stops working find something else that does.
You're right- you must adapt.

Click to expand...

Then by that virtue you can't have something that works consistently "year in year out"

Masquerade said:

Then by that virtue you can't have something that works consistently "year in year out"

Click to expand...

Sure you can- and many people do.
You can have something that works for a couple of years and then stops working.
Then it's time to find something else.

given this approach you need to find something that works consistently in the future also. otherwise you will still lose money.

i'm not sure how you are going to do that.

Most people lose money because they sell at a lower price than they buy.

Forget "consistency" - a successful trader will adapt to changing conditions and not stick to any one method.

there is only one method that works in all conditions

Axiom - Wikipedia, the free encyclopedia


The Axiom of the Small Edge:

A trader's long run edge is smaller than he thinks; it is much more akin to a card-counting blackjack player's edge of 1% due to variance, ever-changing cycles, and fear-induced losses.

The Postulate of Trading the Small Edge:
Given The Axiom of the Small Edge, what really matters in money management is that a trader always be prepared, always be able to hold a position with a positive edge that goes against him, and always be able to take the next trade:


Imagine
The worst trading day you've ever had. The seconds ticking by, the disaster scenarios playing vividly out.
Imagine
The blackjack player. His edge is 1% or 2 hands/100.
Imagine
The pressure.
Imagine
The public speaker. Stammering, nervous, unpracticed and unprepared.
Imagine
The blackjack player, the public speaker and the trader as one.
Imagine
Once per month being unprepared: 12 hands Once per quarter succumbing to the pressure: 4 hands Once per quarter not taking the next trade, not betting the correct size: 4 hands
Imagine
The blackjack player giving up 20 hands to the house:

His edge is now -18%
Imagine
The blackjack player and the trader as one.

"His edge is now -18%."

The Axiom of the Small Edge and The Postulate of Trading the Small Edge say that what really matters in money management is that a trader always be prepared, always be able to hold a position with a positive edge that goes against him, and always be able to take the next trade.

mrsoul,

Can you say why you consistently capitalise the word CONSISTENTLY as I notice that you have been doing this consistently


Paul

In a nutshell, then:

mrsoul said:

The real reason that most traders fail is a very simple one.
Most traders, simply, do not have something that works CONSISTENTLY-

Click to expand...

Trader333 said:

mrsoul,

Can you say why you consistently capitalise the word CONSISTENTLY as I notice that you have been doing this consistently


Paul

Click to expand...

Paul,

I capitalized CONSISTENCY because without it you can't be consistent.
If your not consistent, it's a long, tough road.
A trader wants consistent money not home runs.
You score the runs by consistently hitting singles.

Some good points made.

My experience is:

The very first thing I need is a positive expectancy system/strategy to be successful long term, also know as an edge.
My edge is trading with the trend as I believe price has a better probability of following the trend at certain points.

Money management/bet size is important to avoid losing all your funds during a losing run. Even if I have an edge and I am correct 60% of the time and wrong 40% of the time I can still expect to see 4 consecutive losing trades 70% of the time, so if my bet size/% risk is too large I could run out of funds even thought I have a positive expectancy system.

Consistency, even with a positive edge a trader must understand that there will be periods of drawdown, periods of growth and flat periods.

Risk v Reward, having a positive risk versus reward ratio on its own is not an edge. Applying 1 risk v 3 reward or any other rvr ratio to a system/strategy that does not have an edge will not make it profitable long term.


Trading psychology, it does not matter how mentally strong or prepared you are, without a trading edge you cant be profitable long term.

Spending 10 hours a day trading, watching Bloomberg, buying 4 screens, etc etc without a trading edge you cant be profitable long term.


So why do so many traders lose? Because they have not got an edge - a system with a positive expectancy. When any of us click the buy/sell button on our trading platform and pay our 2 pip spread we are already behind, so we need an edge just to breakeven in this game and an ever bigger edge to make money.


Whats your edge?


Andy

good post CC - Andy

think that probably covers a large enough % of the 90 % for most




A very good post by tomorton on the other fail thread might account for many others regardless of an edge being present

http://www.trade2win.com/boards/psy...sychology-why-90-traders-fail.html#post837962

"The unconscious blocks can be the worst and most difficult to identify and confront. Many of us are brought up with attitudes to hard work, honest effort, gainful employment, money, job success, earned / unearned income and all that baggage which are incompatible with successful trading. So traders sometimes sabotage their own efforts due to some kind of guilt / mental mismatch between what they want and how they are getting it. These inner conflicts can be deep and hard to spotlight."

accumulated damage along the way caused perhaps by wrong beliefs at the start account for another % of fails etc etc


Andy

Im only interested in why and how traders succeed ù

I've being around trading full time for over a decade now, over the years, I have seen marvellous visual charts posted, albiet, imho far over elaborate and in truth, extremely difficult to interpret, there is no 100% accurate trading system, however, trading is v simple, its the trader and contributions from BB like these which make trading difficult as one questions their system after berating from another trader who suggests their system is non workable etc. I know traders who swear by stochastics, or S&R, fibs or any variation you want to contribute for discussion etc etc etc. if it works for them, is no guarantee it will work for you. What has worked for me for years is KISS, follow the trend, follow the money, follow the profit and wave bye bye to losses. Why on earth try (as many do) try and call tops and bottoms of moves, rather than let the market makers do as they want, drive the market, and when a trend is established, you can safely get on board before its to late and get off asap (profitably) before it reaches its destination, as nobody has the forsight to know where it will end, however, with hindsight and and the ability to build a database of statistical data you can get a fairly accurate idea how the product you are trading behaves, you will never know how far a move is going to go, but, do you home work, you can get off (profitably) well before it reaches its destination, banked your profits and be re-armed ready to trade the next move.

Do your home workhome, study intimately how the product you trade behaves/acts/moves, and trades only established trend, no second "guessing", I learnt very early in my trading life, after losing my first 2 trading pots, thinking/taking other advice only contributes to your demise, make your own decisions, trade only with the macro trend (larger t/f) and lower t/f to catch the pips, listen to nobody elses opinions and stay off BB's whilst your trading, focus 100% on the job in hand, your responsibility is to you, and not anybody else who may question what and why you do what you do, you don't have to explain to anybody (except the missus, hehe),
on any BB.

Sorry for going on, but just my 2 penneth fwiw,

Happy trading all

superfly said:

Im only interested in why and how traders succeed ù

Click to expand...

arrrrrr fresh air

"he who loses the least, wins"

Dinos said:

I've being around trading full time for over a decade now, over the years, I have seen marvellous visual charts posted, albiet, imho far over elaborate and in truth, extremely difficult to interpret, there is no 100% accurate trading system, however, trading is v simple, its the trader and contributions from BB like these which make trading difficult as one questions their system after berating from another trader who suggests their system is non workable etc. I know traders who swear by stochastics, or S&R, fibs or any variation you want to contribute for discussion etc etc etc. if it works for them, is no guarantee it will work for you. What has worked for me for years is KISS, follow the trend, follow the money, follow the profit and wave bye bye to losses. Why on earth try (as many do) try and call tops and bottoms of moves, rather than let the market makers do as they want, drive the market, and when a trend is established, you can safely get on board before its to late and get off asap (profitably) before it reaches its destination, as nobody has the forsight to know where it will end, however, with hindsight and and the ability to build a database of statistical data you can get a fairly accurate idea how the product you are trading behaves, you will never know how far a move is going to go, but, do you home work, you can get off (profitably) well before it reaches its destination, banked your profits and be re-armed ready to trade the next move.

Do your home workhome, study intimately how the product you trade behaves/acts/moves, and trades only established trend, no second "guessing", I learnt very early in my trading life, after losing my first 2 trading pots, thinking/taking other advice only contributes to your demise, make your own decisions, trade only with the macro trend (larger t/f) and lower t/f to catch the pips, listen to nobody elses opinions and stay off BB's whilst your trading, focus 100% on the job in hand, your responsibility is to you, and not anybody else who may question what and why you do what you do, you don't have to explain to anybody (except the missus, hehe),
on any BB.

Sorry for going on, but just my 2 penneth fwiw,

Happy trading all

Click to expand...

Excellent post Dino, totally agree !

Thread change of trend


The reason why 10 % WIN

That question is far too easy to answer, go back to the origional question and we can get miles more out of this thread .........



Andy