WARNING: 90% Of Retail Traders Lose, What Are You Made Of? Are You A Shark?

This is a discussion on WARNING: 90% Of Retail Traders Lose, What Are You Made Of? Are You A Shark? within the Psychology, Risk & Money Management forums, part of the Methods category; my contribution to this thread: I have to say i like the term chancers but i prefer the term plagiarist ...

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Old Feb 24, 2016, 2:22pm   #16
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my contribution to this thread:

I have to say i like the term chancers but i prefer the term plagiarist washouts [people carbon copying someones work and expect to succeed]

I think if people can overcome this inherent property we were programmed with from birth [grow\win\succeed]; we would have a very different ratio of success -I think it would even change market dynamics. You cannot succeed in trading until you deprogram yourself because your intentions will always align yourself to failure. it might be fear of being wrong or not focusing on important bits because of tunnel vision biased towards our programmed properties.


The best way to deprogram this is to throw a few hundred into an account and trade it to lose. Don't cheat by throwing the maximum position size. The goal here is to bleed yourself of everything you believe to be right. When you feel that you want to go long then open a short trade and set your target and stop like you normally would. There are 2 valuable lessons in this exercise that will change your belief system that you have been programmed for your entire life.

1) Anything can happen. Don't bias yourself in any way because you will end up with tunnel vision
2) Decouple yourself emotionally from losing. This will take the fear away and you can tune your intuition to get you out of a loser before your stop is hit which can improve your results.
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Old Feb 24, 2016, 2:31pm   #17
 
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The best way to deprogram this is to throw a few hundred into an account and trade it to lose. Don't cheat by throwing the maximum position size. The goal here is to bleed yourself of everything you believe to be right. When you feel that you want to go long then open a short trade and set your target and stop like you normally would. There are 2 valuable lessons in this exercise that will change your belief system that you have been programmed for your entire life.
I agree with most of your points but disagree on the best route to get there. One needn't be a flagellant in order to reprogram himself. It starts with study and observation, then practice and testing. Trading without any sort of plan is more likely to reinforce everything that's wrong with one's approach.

For details, see the article I wrote on fear.

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Old Feb 24, 2016, 2:47pm   #18
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Originally Posted by dbphoenix View Post
I agree with most of your points but disagree on the best route to get there. One needn't be a flagellant in order to reprogram himself. It starts with study and observation, then practice and testing. Trading without any sort of plan is more likely to reinforce everything that's wrong with one's approach.

For details, see the article I wrote on fear.

Db

you can only deal with fear by taking it by the horns. You don't facilitate deprogramming through observing and practice. I think of myself as an average guy and as such i found no success in deprogramming myself through observation and practice. I only gained strategies through that approach and strategy is only half of what it takes to succeed in the long run. Everyone observes and practices but why does so many fail following this path?

being an average Joe, turning things on its head and interacting with the market in a way that goes against all my beliefs; opened new doors. I am sure many people trying to make it in this business will agree that observation and practice has not yielded consistent results. In my opinion, this is directly related to their programmed thought process.
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Old Feb 24, 2016, 2:53pm   #19
 
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you can only deal with fear by taking it by the horns. You don't facilitate deprogramming through observing and practice. I think of myself as an average guy and as such i found no success in deprogramming myself through observation and practice. I only gained strategies through that approach and strategy is only half of what it takes to succeed in the long run. Everyone observes and practices but why does so many fail following this path?

being an average Joe, turning things on its head and interacting with the market in a way that goes against all my beliefs; opened new doors. I am sure many people trying to make it in this business will agree that observation and practice has not yielded consistent results. In my opinion, this is directly related to their programmed thought process.
They fail because they don't observe correctly and therefore practice the wrong things. Practice doesn't make perfect unless one is practicing the correct things, whether trading or a forehand. If one keeps practicing the wrong things, he is reinforcing the wrong behaviors. And thus continues to fail.

I've been working with beginners for quite some time now and they rarely are able to observe without obsessing over where to enter. If they do enter, they then obsess over their entry rather than focus on what traders are doing and how and where and when they're doing it. This invariably leads to exiting at the wrong time.

All of which is why this is so easy for children.

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Old Feb 24, 2016, 3:54pm   #20
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They fail because they don't observe correctly and therefore practice the wrong things. Practice doesn't make perfect unless one is practicing the correct things, whether trading or a forehand. If one keeps practicing the wrong things, he is reinforcing the wrong behaviors. And thus continues to fail.

I've been working with beginners for quite some time now and they rarely are able to observe without obsessing over where to enter. If they do enter, they then obsess over their entry rather than focus on what traders are doing and how and where and when they're doing it. This invariably leads to exiting at the wrong time.

All of which is why this is so easy for children.

Db
Any person of reasonable intelligence would know through practice and observation that they did something wrong and they should do it differently the following time. You put your hand in the fire once and you know next time to rather put it to the side. So to say that people don't observe correctly is appropriate on the first instance and insulting thereafter.

I spent years trying to tune my observations and in the end i realised my problem was not my observations but rather my attempts to rectify them on future trades. This logic only results in an overly complex rule system that makes trading even more difficult. This is why, as you say, children find it easy. They cannot follow a complex rule system and trade it as they observe it.

I have to say that i disagree with you on your point where its a case of observing incorrectly and requiring practice. Every instant in a market is unique and thus practicing in reality is trying to apply logic based on infinite instances of an observation. We don't know what is going to happen next so how is practicing going to change that? (it isn't)

Going back to children, which is a very good example of someone that hasn't been programmed; they trade it as they see it without fear or tunnel vision from a bias. They don't need to practice because they observed once and apply the same logic to every instance that fits the profile of that observation. An adult of reasonable intelligence should be able to replicate; so why can't they?

how can practicing infinite variations of an observation, when each instance is unique and the outcome unknown going to help? you can't! practice is not going to change your belief and in my opinion it will only make it worse because each instance is different and you end up questioning every move you make and end up giving up. The only way you are going to equip yourself like a child is to deal with what really matters. There are probably many ways to do it but for me, and i am sure it could be the same for others as i am not unique, is to put your hand in the fire every time.
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Old Feb 24, 2016, 4:08pm   #21
 
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Observing correctly means more than just looking at it. The purpose of observing is to formulate hypotheses for testing. The testing determines the probabilities of success of any given tactic. Though the outcome of any given trade is random and unknowable, the outcome of a series of trades is easily determined, though it takes time and effort. This is what Douglas is all about. And if one can't formulate a tactic that has a high enough probability of success over a series of trades, then he keeps at it until he does. At that point, fear is superfluous.

Deciding that one "should do it differently next time" is only a start. He must then determine through testing just what it is that he ought to be doing. Then he must do it. If he knows what he ought to do but doesn't do it, that's another matter to be addressed.

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Old Feb 24, 2016, 4:32pm   #22
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Observing correctly means more than just looking at it. The purpose of observing is to formulate hypotheses for testing. The testing determines the probabilities of success of any given tactic. Though the outcome of any given trade is random and unknowable, the outcome of a series of trades is easily determined, though it takes time and effort. This is what Douglas is all about. And if one can't formulate a tactic that has a high enough probability of success over a series of trades, then he keeps at it until he does. At that point, fear is superfluous.

Deciding that one "should do it differently next time" is only a start. He must then determine through testing just what it is that he ought to be doing. Then he must do it. If he knows what he ought to do but doesn't do it, that's another matter to be addressed.

Db
Finding a method that works has absolutely zero relevance with dealing with fear for many people out there. if it were the case then why are the stats around success so heavily weighted on the loser side. We see it every day where people have tested a method or traded it on demo and have success but fail on a live account. Practicing a method isn't practicing fear in a general sense. It might work for some but it clearly doesn't work for the majority. I was part of that majority and practicing methods i had proven to work didn't change the fact that i failed.

I did overturn my failure but i did it by creating an environment where fear had no relevance at all. So i shall stop here and state that perhaps you are right, but you need to realise that the path you followed seems to be one where fewer walk successfully. I for sure was never able to achieve what i have through practice alone.
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Old Feb 24, 2016, 4:42pm   #23
 
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The stats around success are heavily weighted on the loser side because the losers do not have thoroughly-tested and consistently-profitable trading plans, or, if they have them, they don't follow them. If they do have them and they follow them, there's no thing to be afraid of.

In twenty years I have yet to encounter someone who is failing at trading who has a thoroughly-tested trading plan. Not one. Few even know how to go about it. Therefore, that is where I look first. And those who have taken that route have been successful. Are there very many? No. Few are willing to go through the process. But, as Ed Seykota pointed out, “A losing trader can do little to transform himself into a winning trader. A losing trader is not going to want to transform himself. That’s the kind of thing winning traders do.”

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Old Feb 24, 2016, 4:53pm   #24
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And how do you know that every person that contributed towards stats you have seen didn't apply a trading plan? You can only assume but you aren't assuming you are stating it as being the truth!
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Old Feb 24, 2016, 4:55pm   #25
 
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And how do you know that every person that contributed towards stats you have seen didn't apply a trading plan? You can only assume but you aren't assuming you are stating it as being the truth!
I asked.

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Old Feb 24, 2016, 5:03pm   #26
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I figured that much
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Old Feb 24, 2016, 6:09pm   #27
 
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the losers do not have thoroughly-tested and consistently-profitable trading plans,
There is no such thing as a consistently-profitable trading plan. Market conditions change every single day (just looks at the Dax today compared with yesterday). Some days your plan will work, others it will fall down

The successful trader will be quick to realise when his strategy is not working and will stop trading. The losing trader fails to realise this and keeps trading and gets more emotional.
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Old Feb 24, 2016, 6:18pm   #28
 
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There is no such thing as a consistently-profitable trading plan. Market conditions change every single day (just looks at the Dax today compared with yesterday). Some days your plan will work, others it will fall down

The successful trader will be quick to realise when his strategy is not working and will stop trading. The losing trader fails to realise this and keeps trading and gets more emotional.
Consistently profitable means profitable over a series of trades, not that every single trade is profitable. Or, as Douglas put it,
1. Anything can happen.
2. You donít need to know what is going to happen next in order to make money.
3. There is a random distribution between wins and losses for any given set of variables that define an edge.
4. An edge is nothing more than an indication of a higher probability of one thing happening over another.
5. Every moment in the market is unique.
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Old Feb 24, 2016, 7:31pm   #29
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A plan will help, is my island in a sea of uncertainty, maybe not useful for everyone, but for myself helps me to trade in a less reactive way.

I want the market to come to me and not chase it, my plan also tell me when I am not reading correctly and it is time to go fishing instead, I have losing days but because of my plan I keep them small.

My plan also helps me to grow through my emotions: fear, greed and so on will always arise in myself but I have learned to live with them by acceptance and they turned to be quite helpful. Emotions are energy and if used in alliances they can inject creativity in refining the plan.

A plan is not rigid list of do and don'ts, it constantly evolves based on further understanding of ourselves in relation to the market to create that fluidity necessary to trade in a professional manner.

Last edited by Fugazsy; Feb 25, 2016 at 7:45am.
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Old Feb 27, 2016, 11:18am   #30
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What I would like to know is how this 90% (or whatever the right figure is) compares with other business starts such restaurants or shops. I bet is pretty similar.
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