Why do so few succeed?

[SOCRATES]

The best way to learn brain surgery is to get hold of an iceberg lettuce and to practise on it diligenttly, using a knife and fork.

 

[Chicken Curry]

There is a very simple answer to this question, who care's why so few succeed !

I care !!

It is important to know why so many people fail in order to try and avoid going down the same road as them.

I have my own views on this topic ( see a previous post # 57 of mine ) - in addition I might add that many people fail because they do not realise that in the early part of their learning process ( first 1, 2 ,3 years ) it is probably more important NOT TO LOSE than to actually win.

People should trade small size for a very long time while learning how to trade and how not to trade. If more people did this you would probably hear far fewer sob stories about about how Mr / Ms xxx blew their account etc. etc.

People fail because they often start big, make the inevitable mistakes and demolish their account.

Start small and use stops...then mistakes will not hurt you financially and you will still be around when you finally get to grips with this game.

 

[chump]

well i was making an early run for the funniest poster gong this year , but I see you mean to defend your crown Albert ..
"The best way to learn brain surgery is to get hold of an iceberg lettuce and to practise on it diligenttly, using a knife and fork."

My wife .. a operating theatre sister , has not stopped laughing at this one yet so I'm going to have my work cut out ...tries for a quick counter with ...play Monopoly and become a property tycoon ...yes it's a bit weak , but the day is yet young.

Just to stay on topic and deflect the mods from rightly bricking the above ..to succeed it helps if you don't believe in fairy tales as you'll be more inclined to stay with the facts and measure same against your plan.

 

[Bigbusiness]

well i was making an early run for the funniest poster gong this year , but I see you mean to defend your crown Albert ..
"The best way to learn brain surgery is to get hold of an iceberg lettuce and to practise on it diligenttly, using a knife and fork."

My wife .. a operating theatre sister , has not stopped laughing at this one yet so I'm going to have my work cut out ...tries for a quick counter with ...play Monopoly and become a property tycoon ...yes it's a bit weak , but the day is yet young.

Just to stay on topic and deflect the mods from rightly bricking the above ..to succeed it helps if you don't believe in fairy tales as you'll be more inclined to stay with the facts and measure same against your plan.

Made me laugh too. I have seen a few brain surgeons in action. They need something a bit bigger than a lettuce to practice on http://tinyurl.com/popth

 

[darktone]

Dark,
sorry , but I don't fit into that profile..no mountains climbed...sleepless nights ...just planning and more planning. Torture burnt..no I'll do my learning watching you do yours ...LOL more effective way of moving from A to B

hmmm. Still think that this a personal thing and imo it would only be more "effective" if the student was receptive to that approach..From what ive seen so far most are not. Planning is essential no doubt but you have to be equipped to make use of those plans. How often the stories of folks giving up there jobs to trade only to get turned over, most arnt prepared for the emotional side of trading.. Without that imo most plans will turn to cr@p. Few and far between are the noobs that realise this of the bat..too rapped up in how much dosh they goner make...at least i was LOL!

 

[Pat494]

There is a nice sounding fellow on a different thread who has made the 2 classic mistakes that sooner or later lead to total disaster; and is, even as I type, in the agonies of having made both ( publicly ).
1. Never bet against the trend
2. Don't use averaging

 

[Lightning McQueen]

Hi Pat can you post a link for the thread please

 

[chump]

Dark,
"Still think that this a personal thing "..if you look back at my posts you will see this is what I have said. I believe my words were something along the lines of "the process will be what you bring to it and therefore what you make it" ...can't really get more personal than that can you.

Planning as far as I can tell from what I see posted will be a major stumbling block. It takes a fair amount of hard work and self honesty to get right. However I 'd put money on it that if a person can get it 'right' they could also execute it. The problem with execution I suspect is based in not getting the planning 'right' in the first place...hence emotional unforeseens are much more likely to be in play. Diffficult topic to discuss in this medium without typing war & peace , but probably worthy of a thread in it's own right.

I agree some ,maybe most ,newbies would not be looking at trading in this way ,but as I said earlier that does not mean they cannot take this viewpoint if they are willing to learn from other peoples mistakes without having to rush into making theirown ..again it's down to temperament I suspect ....as to being "receptive" I think you are correct , but if a person is not receptive to learning in this way then it would be as well that they have masochistic tendencies because they are going to have to do it the hard way by reinventing the wheel at every obstacle they find in their path.
There's a lovely parallel in this...companies developing new technology/products are rarely the one's who derive the most benefit from them...no ,those that do that piggyback those companies ...people wishing to become successful traders can do the same if they choose to.

 

[Pat494]

Hi Pat can you post a link for the thread please

It's called Dow 2006

 

[dbphoenix]

Dark,
"Still think that this a personal thing "..if you look back at my posts you will see this is what I have said. I believe my words were something along the lines of "the process will be what you bring to it and therefore what you make it" ...can't really get more personal than that can you.

Planning as far as I can tell from what I see posted will be a major stumbling block. It takes a fair amount of hard work and self honesty to get right. However I 'd put money on it that if a person can get it 'right' they could also execute it. The problem with execution I suspect is based in not getting the planning 'right' in the first place...hence emotional unforeseens are much more likely to be in play. Diffficult topic to discuss in this medium without typing war & peace , but probably worthy of a thread in it's own right.

I agree some ,maybe most ,newbies would not be looking at trading in this way ,but as I said earlier that does not mean they cannot take this viewpoint if they are willing to learn from other peoples mistakes without having to rush into making theirown ..again it's down to temperament I suspect ....as to being "receptive" I think you are correct , but if a person is not receptive to learning in this way then it would be as well that they have masochistic tendencies because they are going to have to do it the hard way by reinventing the wheel at every obstacle they find in their path.
There's a lovely parallel in this...companies developing new technology/products are rarely the one's who derive the most benefit from them...no ,those that do that piggyback those companies ...people wishing to become successful traders can do the same if they choose to.

A post worth reading several times. Then again.

 

[new_trader]

ZDO,

Can you give some guidance on how one goes about clearing the lists or introspection? My tangible problem in trading is that I pick a large majority of trades that quickly turn out to be losers - either that same day or the next. At this point, I have no trouble placing stop losses, and no trouble leaving them where they are placed. I also keep losses per trade small - such as 2-3 %. So, I cannot identify with the experts who talk about the traders blowing their accounts out on one or two bad trades. No, mine is more the death of a thousand cuts.

After having this happen enough, I finally decided that there must be something psychologically that is causing me to enter at the wrong times. Perhaps self sabotage. On the other hand, I still think that maybe there is something technical I can do to improve my timing. Maybe that's just an illusion I tell myself. You seem to indicate that once the psychological barriers are cleared, the tangible parts of trading will fall into place.

I've been at this a few years, and I have gone through the Mark Douglas exercise of religiously following a mechanical system over 30 trades. I was able to follow the system consistently with no real deviation. I gained psychologically from it, but the system ended up a loser.

So, any concrete guidance on how to deal with the lists, as you describe them? Does one sit and meditate? Does one have an in depth conversation with oneself about what's the problem? Self hypnosis? Writing a journal? How does this process work?

tunnel

tunnel1x1,

I am only a budding trader but I think abandoning a system after only around 30 trades is premature. Have you back-tested it to see how it should theoretically perform in the long run? I spent weeks back testing and refining a system using 8 years of historical data and there are a periods where it is negative after 30 trades but overall it is profitable. I plan to test it with real trades over at least 6 months which is a little over 100 trades. I have made around 27 real trades and down about $1500, but it is performing according to the back test.

 

[Pat494]

tunnel1x1,

I am only a budding trader but I think abandoning a system after only around 30 trades is premature. Have you back-tested it to see how it should theoretically perform in the long run? I spent weeks back testing and refining a system using 8 years of historical data and there are a periods where it is negative after 30 trades but overall it is profitable. I plan to test it with real trades over at least 6 months which is a little over 100 trades. I have made around 27 real trades and down about $1500, but it is performing according to the back test.

Sorry to be so negative but ever heard the one about a guy who throws himself off the top of a sky-scraper. He sees a buddy of his on the way down past the 15th floor " So far so good " he yells...................

 

[tunnel1x1]

tunnel1x1,

I am only a budding trader but I think abandoning a system after only around 30 trades is premature. Have you back-tested it to see how it should theoretically perform in the long run? I spent weeks back testing and refining a system using 8 years of historical data and there are a periods where it is negative after 30 trades but overall it is profitable. I plan to test it with real trades over at least 6 months which is a little over 100 trades. I have made around 27 real trades and down about $1500, but it is performing according to the back test.

New,

Sorry for the confusion by my post. The system I traded was done solely as as exercise in compliance with the suggestion in Douglas' book - Trading in the Zone. He recommends taking a simple system which is completely mechanical and following it for 25 trades. The point is not so much to make money with it but to develop discipline and to develop an awareness that trading is about probabilities; to demonstrate that any one trade is not important, etc. So, I developed a very simple moving average cross over system which could be traded without discretion as part of that exercise. No back testing involved, just mechanically trading the system. That's what I was trying to convey.

My style is not to trade mechanical systems but to trade a method which utilizes discretion. But, to develop awarenesses that Douglas speaks of, I traded that system for the exercise.

 

[tunnel1x1]

Then find another method for identifying setups. That's your problem.

That's SMALL???

Tunnel - if I had a system that 'kept my losses' to 2-3% I wouldn't be feeling too good. That isn't risk/money management.


No. Your system is crap. If you're not doing what your system tells you to do - that's psychological. If you're doing what your system tell you to do - and you keep losing - your system is crap.

Aaaarrghhh....Change. Find a new system. Any system. Doesn't matter which. Divorce your current system.

There are no lists. That was just ZDO's abstract. Choose a really simple system that has stood the test of time in making money. Channel break outs for instance.

Spend the next 5 days becoming an expert in channel breakouts.

Fix your rules for entry and exit.

Do not deviate.

Trade your system

Does this make a difference?

Bramble,

Thanks for the suggestions. I am looking for better triggers to entry. However, I don't think it's just a question of finally finding the right system or set up is it? If so, then that would encourage one to forever be looking for the correct system and never really sticking with one method long enough to learn it. I think my general method is sound: trade in the direction of the major trend, enter on a pull back (ie against the minor trend) when that pull back has completed.

Regarding stop loss, everything I have read indicates that for position traders, as opposed to day traders, a 2% stop loss is a reasonable stop loss. O'Neal recommends 8% which is too large IMO. However, I've not read anywhere that indicates 2% is too large. Perhaps with your type of system it is, but I'm not sure you can say it is for everyone. But, I'd be interested in hearing the reasons why you might disagree. Apparently, you are a full time, successful trader. I am not, so I would not begin to assert that I have the answers. Just opinions but without any emotions attached to them.

Again, I wouldn't go so far as to say that my "system" is crap. I trade a discretionary methodology, rather than a mechanical system. I think the basic method is sound, but I need to work on better triggers. I appreciate your help.

tunnel

 

[dbphoenix]

New,

Sorry for the confusion by my post. The system I traded was done solely as as exercise in compliance with the suggestion in Douglas' book - Trading in the Zone. He recommends taking a simple system which is completely mechanical and following it for 25 trades. The point is not so much to make money with it but to develop discipline and to develop an awareness that trading is about probabilities; to demonstrate that any one trade is not important, etc. So, I developed a very simple moving average cross over system which could be traded without discretion as part of that exercise. No back testing involved, just mechanically trading the system. That's what I was trying to convey.

My style is not to trade mechanical systems but to trade a method which utilizes discretion. But, to develop awarenesses that Douglas speaks of, I traded that system for the exercise.

Tunnel, I'm afraid you missed the point entirely. Or almost entirely. Yes, the "exercise" is partly to develop an understanding of the nature of probability in trading, of loss, of being sensitive to what the market is telling you.

However, there's a "Part A" that you missed, which is the development of the system in the first place. Taking 20 or 25 or 30 trades that are not prompted by a consistently profitable trading system/strategy is useless. You have to initiate the development of the system, THEN test it by implementing these trades, then re-working it, then trading it again in a closed loop until you have something that is consistently profitable.

So, as suggested earlier, the problem is not you but your system, or rather lack of a system. Contemplating your navel isn't going to be of much benefit. Of greater benefit will be to buy a package of lined paper and a box of pencils, a cheap/free software program (preferably with replay), a cheap/free data feed, and several pounds of coffee.

 

[new_trader]

Sorry to be so negative but ever heard the one about a guy who throws himself off the top of a sky-scraper. He sees a buddy of his on the way down past the 15th floor " So far so good " he yells...................

No, how does it end?

 

[dbphoenix]

Isn't it interesting how the more experience one has, the better able he is to tell the future?

 

[Pat494]

No, how does it end?

As a sticky mess on the pavement ( sidewalk )

{a helpful analogy hopefully]

 

[SOCRATES]

No, how does it end?

It depends, for all we know he might have a parachute concealed and as yet unopened that only he knows about. I will never forget a stunt that someone played in a busy shopping area bursting with people on a busy weekend.

This joker attached a handful of gas filled balloons to a dolly in a pram, that was planted among the crowd and appeared to be unattended. The whole thing was set up so that a few minutes later whatever anchored the dolly and the balloons disengaged.

The crowd went beserk when they saw what they believed to be a baby lifted many feet into the air and drifting away......

Not everything that is seen is necessarily what it is.

......................And.....................not necessarily everything that is ........... can be readily seen.

 

[tunnel1x1]

Tunnel, I'm afraid you missed the point entirely. Or almost entirely. Yes, the "exercise" is partly to develop an understanding of the nature of probability in trading, of loss, of being sensitive to what the market is telling you.

However, there's a "Part A" that you missed, which is the development of the system in the first place. Taking 20 or 25 or 30 trades that are not prompted by a consistently profitable trading system/strategy is useless. You have to initiate the development of the system, THEN test it by implementing these trades, then re-working it, then trading it again in a closed loop until you have something that is consistently profitable.

So, as suggested earlier, the problem is not you but your system, or rather lack of a system. Contemplating your navel isn't going to be of much benefit. Of greater benefit will be to buy a package of lined paper and a box of pencils, a cheap/free software program (preferably with replay), a cheap/free data feed, and several pounds of coffee.

DB,

Respectfully, I do not think the process you outlined is what Douglas talks about at all when he talks about going through the exercise. He states that the reader should consider the exercise to be "tuition". Get a simple mechanical system and trade it. If I remember right, he says that it's not important if the system is profitable. If it turns out not to be profitable, that is tuition for the education you will receive by the exercise. I don't believe the point of the exercise is to develop a winning system, but to develop the right mental framework. However, it's been almost a year since I finished reading it, so I will go back and review those chapters discussing the exercise to see if I missed the point, as you suggest. Thanks.

By the way, are you a completely mechanical systems trader or do you exercise discretion in the setups you trade?