Why most newbie traders fail?

[Trader333]

no indicators , they are rubbish

How do you know ?


Paul

 

[tropical_goblin]

How do you know ?


Paul

years of testing but then also since i no longer use them i can see how so many traders find it difficult to succeed with them because they rely on them so much.

when i made the move to just price action i started reading the charts very differently. at first i was like a fish out of water but after a while things fell together. i believe this is where so many traders can turn the corner of success. There is a tremendous amount of information in reading the charts though price action that traders just dont learn when trying to figure out signals based on indicators. if i throw on an indicator and compare what price and the indicator are telling me i can see so many areas where traders can go wrong.
these days when i speak with other traders especially new traders with a year or 2 under their belt, i notice they rely more on what the indicator(s) telling them and in an almost biased sense totally ignore what price is telling them.

i dont disagree that some traders use them successfully but i think it would be interesting to take a closer look at those traders and i am willing to bet price action analysis is a major component in their analysis. i am also willing to bet that those traders would also be able to completely remove those indicators and although there will be a teething period they will grasp it quickly and continue their success. lets face it indicators mathmatical obscure information. how does one know how obscure is the best configuration. one can configure an indicator with countless configurations each obscuring price like a spectroscope obscures light and colours. i would like to see an experiment with a handful of newby traders with a year to 2 years under their belt and train them in price action without indicators along with some basic priciples like channels and supp/resistance.

 

[Splitlink]

How do you know ?


Paul

Paul,

I don't know whether you use them and I respect whatever you do, as a poster who has been here longer than me.

However, anything dealing with the use of averages is a waste of time, IMO, and that means all of them, if they are based on price action.

The RSI, based on the price's relationship to the index, helps but, no, price bar patterns are what works for me.

Split

 

[Trader333]

i dont disagree that some traders use them successfully but i think it would be interesting to take a closer look at those traders and i am willing to bet price action analysis is a major component in their analysis.

I don't doubt your comments about price action but there are those who use a combination of indicators with phenomenal success. This is not your usual indicators but more to do with complex mathmatic cycles involving Inverse Fisher and Fourier Transform models. One benefit of this is that it is possible to monitor multiple instruments in multiple time frames all at once and set up alerts to automatically know when an opportunity is available. This is not something that is easily achieved by observing price action alone.


Paul

 

[MrGecko]

I don't doubt your comments about price action but there are those who use a combination of indicators with phenomenal success. This is not your usual indicators but more to do with complex mathmatic cycles involving Inverse Fisher and Fourier Transform models. One benefit of this is that it is possible to monitor multiple instruments in multiple time frames all at once and set up alerts to automatically know when an opportunity is available. This is not something that is easily achieved by observing price action alone.


Paul

Paul,

I am interested to hear how you use fourier transformations for trading - I admit I have looked at this in the past (quite a while ago tbh), but couldn't get anything tangible from it.

Care to elaborate?

 

[tropical_goblin]

Paul,

I am interested to hear how you use fourier transformations for trading - I admit I have looked at this in the past (quite a while ago tbh), but couldn't get anything tangible from it.

Care to elaborate?

i too looked at these unique indicators and found the same results.

 

[ofurbaldur]

Maybe the profitability of a trader is not how or when he enters but when he exits.

Failure is high when people do not have enough capital to put to work.

Baldur

 

[tropical_goblin]

Maybe the profitability of a trader is not how or when he enters but when he exits.

Failure is high when people do not have enough capital to put to work.

Baldur

i would say when he\she enters and exits is vital to success but also money management. lets take an example.

trader A:
enters trades on very high probability setups but only after confirmation which means price gets a change to move far away from a low risk stops and on successful trades he\she exits too early. this trader like many maintains an average 50% win ratio but takes on too much risk and over the long run makes little or no money at all.

trader B:

enters trades on very high probability setups with great entries but poor exits and also maintains a 50% win ratio. this trader will last longer than trader A but will also struggle to push ahead.

trader C:

enters trades on very high probability with great entries and great exits and also maintains a 50% win ratio. i dont think i need to say this but it is obvious trader C tops the other traders and is very successful.

now what makes trader C so special.. its not the size of his account. its the fact that his setups provide low risk high reward outcomes and even though the market isnt perfect losing is all calculated into his money management.

 

[temptrader]

i would say when he\she enters and exits is vital to success but also money management. lets take an example.

trader A:
enters trades on very high probability setups but only after confirmation which means price gets a change to move far away from a low risk stops and on successful trades he\she exits too early. this trader like many maintains an average 50% win ratio but takes on too much risk and over the long run makes little or no money at all.

trader B:

enters trades on very high probability setups with great entries but poor exits and also maintains a 50% win ratio. this trader will last longer than trader A but will also struggle to push ahead.

trader C:

enters trades on very high probability with great entries and great exits and also maintains a 50% win ratio. i dont think i need to say this but it is obvious trader C tops the other traders and is very successful.

now what makes trader C so special.. its not the size of his account. its the fact that his setups provide low risk high reward outcomes and even though the market isnt perfect losing is all calculated into his money management.

I don't mean to be annoying or trying to cause trouble, but what you post is rather elementary and can be read from a lot of source on the internet. Also I'm sure van Tharp goes into this as well.

It's all obvious, elementary and repeated spouting that has already gotten utterly tedious hearing it over and over again. The point I'm trying to make is that most of the losers are probably following this as well, and they know this as well, and the crucial central point I'm trying to make is that the really, really successful traders don't have something as "money management", and they don't talk about the 3 out of 10 trades in their favour - it's more like 9 out of 10!!

I personally believe that people talk about money management, high probability trades, risk reward, martingales etc. . . is to make up for their own inabilities to predict the market . . . . or that they are seeing the game in the wrong way . .

 

[Paul71]

Understanding, or lack of it, is why most fail. But, they are newbies, so why should they understand?

You can't transfer 'trading understanding', not in text form, it has to be learned, first hand. Some pick it up some don't.

Good luck.



PS. For the people who bang on about not being able to explain how they trade in the simpleist terms, here's my explanation.

I buy or sell a price.

So now you know how to trade, go for it.

 

[doberman]

look at the 2 attached charts, one shows a successful trade and the other a stopped out trade. the lines from the andrews pitchfork define price range and direction and when drawn right contain price magically. if price breaks these setups and my stop is hit which is up to 20 ticks outside these support and resistance lines then the setup is invalid and i take my money and run. i do not want to be hanging about because i know from consistent success that these lines should contain the price and when they dont the trade is wrong. all my orders are setup on entry (stop,target). i trail my stop once the trade is on its way. i suggest as a new trader you dont trade oil which tends to have violent moves which can break an account without a stop. ALWAYS use a stop, if you not going to use a stop then you never going to succeed as a trader[/GOTO

Thanks for you help in your reply I will be following your advice this week will let you know how i work out,
having trouble drawing the pitchfork your upper / lower lines do not connect to anything .

 

[ceydababy]

Great thread ! However anyone browsing T2W would believe that 90% of people make money. The obsession to appear as a winning trader appears to know no bounds on here, even as far as people lying on FW's Live Trading Forum.

 

[ceydababy]

3) no indicators , they are rubbish and cannot compare to price action. indicator traders rely on them too much.

HA ! Obviously personal opinion. Head and clouds....

 

[Paul71]

3) no indicators , they are rubbish and cannot compare to price action. indicator traders rely on them too much.

HA ! Obviously personal opinion. Head and clouds....

It's all in the %s. Size up to 3%/trade using indicators and you will lose, 1.5% using PA and you have a chance. But, try indicators at 2.5% with a 3:1 w:l on a 15min chart and the market maker will ban you for a week.

So, go for a 200 pip range on fx with a 100 pip stop, this will put the odds in your favour on a 30 min chart and you can risk 7% (so the text book say)

I've not tried it, but my mech sys says its going to be overcast with dry spells on the EUR/GBP, so my chances of getting it right are about the same as an SPX trade in a cocktail glass with an umbrella and glacier cherry on fire.

Now, do you understand risk?

 

[barjon]

I've deleted the last few posts because they were more about insulting each other than about the topic in hand. Cool it guys

good trading

jon

 

[doberman]

look at the 2 attached charts, one shows a successful trade and the other a stopped out trade. the lines from the andrews pitchfork define price range and direction and when drawn right contain price magically. if price breaks these setups and my stop is hit which is up to 20 ticks outside these support and risistance lines then the setup is invalid and i take my money and run. i do not want to be hanging about because i know from consistent success that these lines should contain the price and when they dont the trade is wrong. all my orders are setup on entry (stop,target). i trail my stop once the trade is on its way. i suggest as a new trader you dont trade oil which tends to have violent moves which can break an account without a stop. ALWAYS use a stop, if you not going to use a stop then you never going to succeed as a trader

I think i will have to go back to no stop loss to fiance this stop loss business i have never loss so much money in one day but will stick with it it fells good just as your failed chart shows you keep coming back to where you started but in the case of the stop loss you never return with money as you have put your money in the bin.
If you look at oil today i have loss 160 pips on the up,
80 on the down and another 60 in the last hour.
if i had played the on stop only netting half the pips 1000+ = round 500 pips

 

[doberman]

on my 2th day of using stop losses am down about 140 pips,had to run the last 2.3 hours with out to get some money in (up and down the oil for 66 pips) .
Can not afford to play stop loss wed thu as It looks like there will be a lot of movement and hope money to be made to play s/l fri.
I know in the long term s/l is the way but you loss so much knowing that with in minutes or hours you will be back and above or below which ever you need to be it seams such a waste of money.

 

[Vaco]

then your entries are wrong or your stops are too tight, running without a stoploss whilst waiting for the market to turn in your favour is very dangerous and a road to disaster

 

[Hilarymannah]

Here's my two cents worth,....
90% of traders don't fail, everyone does,...it's just the 10% that have the tenacity to persevere through failure, and the others don't.
Everything and anything is possible, given enough time and learning! : )

 

[meanreversion]

There are now two threads along the lines of "why is everyone a failure", both in the same section. Getting a strong sense of deja vu