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

dbphoenix

Legendary member
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
 

forker

Senior member
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.
 

dbphoenix

Legendary member
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.”

Db
 

forker

Senior member
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!
 

ffsear

Senior member
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.
 

dbphoenix

Legendary member
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 don’t 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.​
 

Fugazsy

Veteren member
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.
 
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Pferd

Active member
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.
 

dbphoenix

Legendary member
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.

I don't know about Germany, but it's dissimilar in the US. If you're interested, the Small Business Administration maintains figures on this sort of thing.

Db
 

timsk

Legendary member
. . . 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 . . .

. . . Finding a method that works has absolutely zero relevance with dealing with fear for many people out there . . .
I think you both have valid points; one doesn't necessarily negate the other in my book. Having a well defined and tested trading plan will probably help to reduce fear and, in some cases, might even eradicate it completely. But not with everyone. I don't much care for flying and people telling me that the aircraft is built and serviced by experts and is statistically the safest form of transport etc., etc. has zero impact on my fear. I think the same can apply to some traders. For them, trading is akin to flying: no amount of preparation, study, logic or anything else will remove the fear that today's the day when they're going to lose their shirt and possibly a lot more besides. As we all know, it can and does happen - that's the risk we all take. The most recent example being the traders caught out in January 2015 when the Swiss National Bank removed the peg that held the Swiss franc at a fixed exchange rate with the Euro. Difficult to build an eventuality like that into a trading plan which may otherwise rock solid.
Tim.
 

dbphoenix

Legendary member
If "no amount of preparation, study, logic or anything else will remove the fear that today's the day when they're going to lose their shirt and possibly a lot more besides", then they need either to find something else to do or seek out a therapist. Some people hold this same fear with regard to putting their money in banks. Some people hold this same fear with regard to their jobs and pensions and retirement. Some people hold this same fear with regard to letting their children out of the house.

Their issue has much less to do with the object of their fear than it does with their attitudes and beliefs towards life.

As I pointed out in my article on fear. the basis of most of it is fear of the unknown (there are psychotic bases for fear which we needn't include here). The more one explores the unknown, rationally and objectively, the less basis there is for fear. A large part of this involves selecting the right market and the right instrument. The Swiss Bank January '15 situation may have been tense for some, but for those who trade US index futures it was hardly a blip.

The vast majority of fearful traders have never bothered to characterize their markets (largely because they don't know what that means) and therefore have never bothered to put together a trading plan. And most of those who have bothered to put together a trading plan have never taken the next steps to determine the probabilities that whatever actions their plans call for have a greater chance of success than failure (this is particularly true with regard to indicators and patterns).

Those who fail at trading "are looking for an easy, drop-a-penny-in- the-slot way of making money" (Wyckoff). That they soon become intimately familiar with fear should come as no surprise.

Db
 

TexasRangersFan

Active member
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.

I don't know about Germany, but it's dissimilar in the US. If you're interested, the Small Business Administration maintains figures on this sort of thing.

Db



Restaurants have a 75 percent failure rate in the first year. I think those have the highest rate of failure of businesses. Laundry mats, liquor stores and jewelry stores have the highest rates of success if they can make it the first year.

That is based on what I remember from college.

But that is a good question, a good one if you consider that it could be a full time business.

I wonder what the Small Business Administration would think if I told them I wanted 1M bucks to start a trading fund........:D
 

foroom lluzers

Veteren member
What separates winners from losers is a robust trading plan and the discipline to follow it. The road to somewhere or other is paved with good intentions.

Insanity is repeating the same thing over and over again , this has been said repeatedly for over 50 years.

Who are the 5%?Why are they succesful?

Maybe they taught the wrong methods , systems and techniques or is this all due to trading psychology?

http://www.trade2win.com/boards/edu...0-succesful-trading-physical-gold-trader.html

How do the 5% trade?
 
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