Why do people lose money on the market?

[Olipro]

the biggest reason people lose money in the market is because they're wrong, and not just because they're wrong, but because it takes them a while to actually admit it.

time and again I've seen people trading who take loses that are going to take them 4+ of their mean trades to win back; it's simply not sustainable, and hence when the phrase "love taking a loss" is applied, very few people learn to truly love a loss because if they did, it would be as small as they possibly could make it (and this is of course directly related to how long it takes for you to finally admit things aren't going your way).

Personally, I day trade and thus I am extremely intolerant of a losing trade and will just close it out; sometimes I then find I was "right" but regardless, on other occasions I find that the flatness I was so intolerant of would then have proceeded to move against me; and as a general rule of thumb, I only take a profit as far as I can see the position running for me, and will exit when trouble rears its head. as a result, I find that my losses stay small and thus they become trivial to recover.

Of course, my strategy is probably not appropriate for everyone, and perhaps you might even find it wholly unsuitable to you, and whilst I still maintain a relatively high hit rate, although I often find I will adjust my requirements for a trade in relation to the price volatility.

Anyway, there's my 2c (per share ), Cheers!

 

[Legion]

"the biggest reason people lose money in the market is because they're wrong, and not just because they're wrong, but because it takes them a while to actually admit it."

hmm you can be wrong on the 2 above and still exit with a profit.....

as you can be right and exit with a loss so id say its not the biggest to say wrong even with admission of it.

the former id say helps if you perceive (knowing) which may enable one to exit with a profit when wrong.

the latter i'd say is not perceiving or not knowing which may result in someone being right but exiting with a loss.

2 camps of traders i always seem to come back to, those who must know and those who dont give a whatsit because? they say its not required to make money.. to know... now im not saying one is better than the other its maybe choice, hardwork, leading to perception to knowing (uncious continual perception allowed to follow through)

But the drive for some wanting ,having to know as to choose not knowing is an individual choice maybe.

humm... something like that..

 

[neil]

"the biggest reason people lose money in the market is because they're wrong, and not just because they're wrong, but because it takes them a while to actually admit it."

hmm you can be wrong on the 2 above and still exit with a profit.....

as you can be right and exit with a loss so id say its not the biggest to say wrong even with admission of it.

the former id say helps if you perceive (knowing) which may enable one to exit with a profit when wrong.

the latter i'd say is not perceiving or not knowing which may result in someone being right but exiting with a loss.

2 camps of traders i always seem to come back to, those who must know and those who dont give a whatsit because? they say its not required to make money.. to know... now im not saying one is better than the other its maybe choice, hardwork, leading to perception to knowing (uncious continual perception allowed to follow through)

But the drive for some wanting ,having to know as to choose not knowing is an individual choice maybe.

humm... something like that..

Do you write John Prescotts speeches :cheesy:

 

[Olipro]

yes, waiting for the market to come back of course can happen, but it's bad practice frankly and generally if you're using the words "come back" then you're already in trouble.

I use the words "right" and "wrong" but it's not really about being right or wrong, it's just a price difference you're looking for between your entry and exit, being right or wrong really only applies to what you're reading to predict that difference.

As John Maynard Keynes famously said; "Markets can stay irrational longer than you can stay solvent"!

So yes, whilst you're quite right that a position can easily go against you with a varying level of damage then come back to you, the issue is that you're simply running your chances on it, and the time when it doesn't come your way is when you've got to realise a loss that's probably going to take some work to recover.

Personally, I'd argue nipping a loss in the bud is safer than running on the odds you're right, since you can only ever know this after the fact.

 

[neil]

yes, waiting for the market to come back of course can happen, but it's bad practice frankly and generally if you're using the words "come back" then you're already in trouble.

I use the words "right" and "wrong" but it's not really about being right or wrong, it's just a price difference you're looking for between your entry and exit, being right or wrong really only applies to what you're reading to predict that difference.

As John Maynard Keynes famously said; "Markets can stay irrational longer than you can stay solvent"!

So yes, whilst you're quite right that a position can easily go against you with a varying level of damage then come back to you, the issue is that you're simply running your chances on it, and the time when it doesn't come your way is when you've got to realise a loss that's probably going to take some work to recover.

Personally, I'd argue nipping a loss in the bud is safer than running on the odds you're right, since you can only ever know this after the fact.

Spot on - manage your risk before the trade

 

[Olipro]

Spot on - manage your risk before the trade

thanks, I'm quite new to the boards so I'm just getting used to what's here, seems to be a pretty good forum though!

 

[SOCRATES]

I have just had a conversation with Skimbleshanks, in which we have heve been discussing the solution to a riddle.

The riddle involvst the 95% which is so much discussed on these boards...

We have arrived at the conclusion that the 95% view themseives as the five percent. Is this right or wrong?

Hello Jon...we can see you peeping.:cheesy:

 

[laptop1]

I have just had a conversation with Skimbleshanks, in which we have heve been discussing the solution to a riddle.

The riddle involvst the 95% which is so much discussed on these boards...

We have arrived at the conclusion that the 95% view themseives as the five percent. Is this right or wrong?

[:[/color]

How many post one does, gives a clue if you are the real deal...Most pros dont post on threads and if they do, they only post occasionally. So to answer you question, yes you are correct and you must be one of the 95% looking at the amount of posts you do.

 

[Dackster]

I agree, SOCRATES. From what i have read so far, there seems to be plenty of pretenders on this site. Read between the lines though, and thier guise is no more than delusions of grandeur. Good trading, sir.

 

[SOCRATES]

How many post one does, gives a clue if you are the real deal...Most pros dont post on threads and if they do, they only post occasionally. So to answer you question, yes you are correct and you must be one of the 95% looking at the amount of posts you do.

Skim is laughing..

 

[dc2000]

I have just had a conversation with Skimbleshanks, in which we have heve been discussing the solution to a riddle.

The riddle involvst the 95% which is so much discussed on these boards...

We have arrived at the conclusion that the 95% view themseives as the five percent. Is this right or wrong?

Hello Jon...we can see you peeping

nice to see you keep in touch with skim nudge nudge

as for the 95% its good to see that you take note of headline grabbing statements,
on T2W there are those that talk the talk and there are those that can walk the walk the difference is plain to see

there are also those that type toooo fast

 

[SOCRATES]

nice to see you keep in touch with skim nudge nudge

as for the 95% its good to see that you take note of headline grabbing statements,
on T2W there are those that talk the talk and there are those that can walk the walk the difference is plain to see

there are also those that type toooo fast

Yes exactly......

I have just been asked to tell you.....

That is why you are not in the 20% of the 5% that remains, otherwise you would be able to pin all of this immediately ...

 

[dc2000]

That is why you are not in the 20% of the 5% that remains, otherwise you would be able to pin all of this immediately

not something I will lose any sleep over

 

[SOCRATES]

not something I will lose any sleep over

Good, I agree with you, because we need cannon fodder, lots of cannon fodder, as much as possible to provide liquidity. The more cannon fodder we get the better our fills. Thank you...:cheesy: ....in between snoring you are doing a great job. Please keep it up.

 

[dc2000]

take your best shot Soc

Oh yes, Your the great pretender (oooh-ooh-oooh-ooh)
Pretending your doing well (oooh-ooh-oooh-ooh)
Your need is such
You pretend too much
Your lonely but no-one can tell

 

[peto]

I have just had a conversation with Skimbleshanks, in which we have heve been discussing the solution to a riddle.

The riddle involvst the 95% which is so much discussed on these boards...

We have arrived at the conclusion that the 95% view themseives as the five percent. Is this right or wrong?

:

What a shame Dackster got banned before he had a chance to expand on the sins of cannonballing

The riddle has me beat, for sure. I previously thought that I was one of the 95%, but presumably that means I am actualy one of the 5%. wow. Maybe it is only 95% of the 95% that consider they are in the 5%, leaving me in the exclusive club of 4.75% remaining?

 

[jimbo57]

you have to remember is that the great socrates engaages in what he likes to call "visual mathematics".

What you also need to realise is that he has never demonstrated in over 3000 posts any mathematical skill whatsover - he likely thinks a fractal is a medical condition as indeed is a hyperbolic (and he does have experience of those!) ,and only ever sees what he wants to see through his pre-conceived and likely somewhat warped ('bolical) view of the world.

So his 'visual mathematics' need to be taken with a pinch of salt and a sedative of choice on a Sunday evening.

 

[SOCRATES]

you have to remember is that the great socrates engaages in what he likes to call "visual mathematics".

What you also need to realise is that he has never demonstrated in over 3000 posts any mathematical skill whatsover - he likely thinks a fractal is a medical condition as indeed is a hyperbolic (and he does have experience of those!) ,and only ever sees what he wants to see through his pre-conceived and likely somewhat warped ('bolical) view of the world.

So his 'visual mathematics' need to be taken with a pinch of salt and a sedative of choice on a Sunday evening.

Precisely, very well put. But no one needs to be a visual mathematician to know in which percentage you are.........the fat side, not the thin side.

 

[jimbo57]

Precisely, very well put. But no one needs to be a visual mathematician to know in which percentage you are.........the fat side, not the thin side.

Is that really the best you can do old man?

 

[in2uxs]

It would seem Brother Socrates that some in here are showing a damn right lack of respect. It is obvious that they simply resent such greatness in a single person. You must therefore rejoice, brother, in their envy towards you.