B
That's not the real reason that most traders fail. That's one of the things most of them have in common. The real reason that most fail, is simply that most people attracted to trading are unsuitable for it, either mentally or financially. It attracts a lot of gamblers and greedy types!
One of the best posts I have ever read on T2W....taken me years to get to this point.
Excellent advice in a nutshell.
Best,
Swiss
cuotes
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Let's talk about INCONSISTENCY.
If you have read to Steenbarger (it is a MUST) you should know that being inconsistent with your trading is a SIGNAL.
Probably you've made rules. Probably you have planned in advance when to enter, where to exit... probably you got a plan in advance.
For example: I'm going to trade XYZ, enter when A happens and exit when B occurs.
And later... you break all the rules and made something different. You were INCONSISTENT. And not once or twice, but... everytime.
Probably you got angry because you read in books that you should follow a plan. You felt bad. Do you know that feeling? I bet you do!!!!
So, tomorrow you'll try again, and this time you'll follow the plan. You swear!!!
GREAT MISTAKE MY FRIEND!!!
If you're being consistently inconsistent, you just have a signal. A powerful signal that is telling you that you are trading in a fashion that doesn't suits your personality. You must change.
Your losses of discipline are intuitive gravitations to your natural trading style. The answer to your problems is not to bindly adhere to your methods an work on discipline, but rather to determine wether those methods are truly the onesto follow.
What we do when we're inconsistent may just reveal what comes naturally to us.
Our goal is:
1. Know what comes naturally to us.
2. Figure out how to apply that to trading.
If you have read to Steenbarger (it is a MUST) you should know that being inconsistent with your trading is a SIGNAL.
Probably you've made rules. Probably you have planned in advance when to enter, where to exit... probably you got a plan in advance.
For example: I'm going to trade XYZ, enter when A happens and exit when B occurs.
And later... you break all the rules and made something different. You were INCONSISTENT. And not once or twice, but... everytime.
Probably you got angry because you read in books that you should follow a plan. You felt bad. Do you know that feeling? I bet you do!!!!
So, tomorrow you'll try again, and this time you'll follow the plan. You swear!!!
GREAT MISTAKE MY FRIEND!!!
If you're being consistently inconsistent, you just have a signal. A powerful signal that is telling you that you are trading in a fashion that doesn't suits your personality. You must change.
Your losses of discipline are intuitive gravitations to your natural trading style. The answer to your problems is not to bindly adhere to your methods an work on discipline, but rather to determine wether those methods are truly the onesto follow.
What we do when we're inconsistent may just reveal what comes naturally to us.
Our goal is:
1. Know what comes naturally to us.
2. Figure out how to apply that to trading.
I am finding the simpler I keep systems the better I am becoming at trading. This is I believe because I can see things more clearly when things are kept simple, so I am less panicked and this means I can spend more thought on the more important issues of R/R ratio combined with money management. When this is right, the subjective consistency is less important. Btw Dinos's post was superb.
morgan_edge
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Is that how it works?
I've been demo trading for about 8 months and have found something that has been giving me very good results. It took me alot of research etc to find this method, but are you saying it will just stop working in a year or so?
What about someone like Mr.Charts who appears to have been successfully using the same methodology for a long time now?
I just dont get how, if this is the case, what the point is in even trying to learn to trade?
As a trader it sounds like you have to spend months and months developing/back testing/forward testing a system, and then expect it to stop working a year or so long down the line. Are you then supposed to not earn any money for the next year or so whilst you develop/backtest/forward test a new system?
cheers
cuotes
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Markets evolve.
Even the famous Toby Crabel's Open Break Range Patterns evolve.
Market is an ever-changing entity.
You don't evolve with it, you die
Claudia123
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Only way to learn is get off demo and use real money - is a different game believe me. Be prepared to lose. Forget back testing - the markets change by the second and you you have to adapt your system as such. Concentrate on one index/currency whatever and get to know how it behaves. I trade GBP/USD daily and know it inside out - know the highs lows etc etc etc. Good luck.
B
Black Swan
No it's bollox, (it always spooks me when I hear/read this too), your edge will work for years, but as it does you'll eventually evolve to descretionary anyhow; when you can look at a chart and in a heartbeat make a decision to go in/stay out...
GCC
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Let's look at this from another way. Your claim is that most people fail because they don't have something that works consistently, so the implication is that most losers out there do not have a consistently winning method or system or otherwise they will win in trading.
Well, my question is, is it really that HARD to find something that works consistently?
From my knowledge, many losers in trading actually have vast knowledge about trading, especially about systems and other technical stuff. Many long-time losers I know actually pay huge money to trading gurus, visit seminars around the globe to learn about different systems and indicators. I suppose amount those things they have learnt, there must be at least one method that can work consistently, right?
Moreover, as Dino pointed out in his post, even the simplest trend-following method can be a consistent winning approach. And I think most people have already heard about this not long they entered the world of trading. So, except for true novices, I don't think it is really that hard to find a consistent winning system or approach.
It is apparent that most of veteran-losers should have already known some winning methodology, therefore the lack of a consistent winning system cannot be a reason of why most of the losers fail.
To summarise, most of the losers out there know a lot of consistent winning methods, but they still lose money. While the lack of a winning method can be a losing reason for SOME people, I believe this is not so for MOST of them. This is why I argue that it is the inability to execute those methods, not the methods themselves, prevent them from winning. And this inability has a lot to do with psychology.
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cuotes
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That's exactly what I mean when I say that we must find a style that suits our personality traits.
As I pointed out before, what we do when we're inconsistent may just reveal what comes naturally to us.
Finding a good match between us and "our style" is important. Try different markets, with different products and different timeframes.
How many traders keep losing money just because they're using a style that doesn't suit them?
If you're a methodical, rational, think-twice investor, not even the best scalping strategy over the world will give you any money.
I already said this in other thread, but it is applicable here as well.
(EDIT: Actually just realised this has already been said earlier by cuotes, etc. so it's just another way saying same thing?)
I am starting to learn that the consistency has to be YOU, the trader. The markets aren't consistent and so it's probably impossible to find something that works consistently. But you can be consistent in your trading plan, money management and discipline.
Obviously, if your method is not profitable then it is not a good method and there's no point in consistently trading an unprofitable system. On the other hand, a potentially profitable system is simply one that you can trade confidently and with consistency.
Another way to think while working on a system or set of rules (that I've learned about recently) is instead of thinking about all the reasons why the trade should work, think about all the reasons why it shouldn't. That should save you money (or demo points) and help you build a more reliable/robust set of rules.
Of course you can't win them all - but if you're inconsistent as a trader, then you may find it hard to be consistently profitable (or unprofitable) at all. It's then just a case of 'luck'.
But trading is a tough game - it's like intense sports training in a way. You have to persevere even when it hurts and your body/mind is screaming that it's had enough. (After all, muscles are built by tearing and rebuilding of tissue). But you have to be careful and wise and learn to PACE YOURSELF - because there's sometimes a fine line between building yourself up and breaking yourself down.
I am starting to learn that the consistency has to be YOU, the trader. The markets aren't consistent and so it's probably impossible to find something that works consistently. But you can be consistent in your trading plan, money management and discipline.
Obviously, if your method is not profitable then it is not a good method and there's no point in consistently trading an unprofitable system. On the other hand, a potentially profitable system is simply one that you can trade confidently and with consistency.
Another way to think while working on a system or set of rules (that I've learned about recently) is instead of thinking about all the reasons why the trade should work, think about all the reasons why it shouldn't. That should save you money (or demo points) and help you build a more reliable/robust set of rules.
Of course you can't win them all - but if you're inconsistent as a trader, then you may find it hard to be consistently profitable (or unprofitable) at all. It's then just a case of 'luck'.
But trading is a tough game - it's like intense sports training in a way. You have to persevere even when it hurts and your body/mind is screaming that it's had enough. (After all, muscles are built by tearing and rebuilding of tissue). But you have to be careful and wise and learn to PACE YOURSELF - because there's sometimes a fine line between building yourself up and breaking yourself down.
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GCC
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But I believe that many losers out there have already tried all sort of systems under the sun. Is it possible that even then they can't find a "style" that suits them? If their style is really so unique to find a match, then I can only think of one style that they can take advantage: investing. Just buy bonds or stocks and collect dividends.
While style is definitely important, I just can't believe it is the only reason.
That's exactly what I mean when I say that we must find a style that suits our personality traits.
As I pointed out before, what we do when we're inconsistent may just reveal what comes naturally to us.
Finding a good match between us and "our style" is important. Try different markets, with different products and different timeframes.
How many traders keep losing money just because they're using a style that doesn't suit them?
If you're a methodical, rational, think-twice investor, not even the best scalping strategy over the world will give you any money.
I already said this in other thread, but it is applicable here as well.
It seems like the simplest way to make money is to find a set-up that works and play it EVERY time it sets up- rain or shine.
Don't worry about drawdowns just play it every time.
The hardest part of trading is finding a set-up that works consistently.
Don't worry about personality or any other psychological factors- just find something that works!
-Take Whichever Way Works-
Bruce Lee
Jeet Kon Do
cuotes
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Still I'm absolutely convinced that if a magical formula doesn't suits you, you'll be unable to apply it sucessfully on the long haul.
Of course, psychological factor it is NOT the only factor as GCC says. A winner system is necessary.
Btw, "accommodating and imposing your own weakness on the market" (tenbobtrader)
and "the consistency has to be YOU" (neoripley) are a couple of good ideas.
A system that WORKS will suit ANYONE"S psychological make-up.
Psychology has NOTHING to do with winning.
It's all about having something that WORKS!
Ah! But if YOU don't have the discipline and confidence to apply the system consistently and are unable to handle the downside (with poor money management) you will probably not find it profitable and will be back to square one saying "it doesn't work". You, the trader, are a vital part of any system that "works".
A car might be mechanically sound but if YOU can't drive it, it's not the car's fault - it simply can't drive itself (it can't crash itself either, unless there's something wrong with it). In fact, I think a car is a very good analogy i.e. you (the driver), your car, the roads and conditions can be compared in many ways to you (the trader), your system (or set of rules), the markets and conditions. Just think about it.
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If you have something that works you would have to be a psychological basket-case to screw up trading it.
Only a very small percentage of traders are psychological basket-cases.
A trader becomes a psychological basket-case when he trades a methodology that doesn't work.
Provided you have a system that works perfectly and consistently ALL THE TIME. But most agree there is no such thing. There are too many variables. Again, take the car example. Why don't we have auto-pilot cars? Do you drive the same way down the same road on a nice summer day, during a foul thunder storm and in icy, snowy conditions late at night? Is there an auto-pilot vehicle that could? What/who is responsibe for the safe conclusion of the journey each time? You, the driver (provided you approach each condition with the same discipline and consistency - i.e. not being overtired, drunk, blindfolded, watching a dvd, etc). That said, again, who is responsible for any mistakes? The car? Some people can drive the same car for 25+ years, others can write a car off in six months.
But that's just my opinion. You started the thread. What is your answer?
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