Why trading is so difficult?

[Joseff]

We know that more traders losing money and less traders trading in profit, but why? We have only two directions: [UP] and [Down] . If two traders will open trades in opposite directions one will make money an second one will lose.

During typing got the idea, if more traders losing money, so we have more traders that open trades in wrong direction and less traders in correct. Why?

Josef

 

[shadowninja]

Not just that, though - they might open in the right direction but while the profitable trader knows when to get out and take profit, the other watches profit turn to loss; similarly, when they're both wrong, the profitable trader knows when to get out and accept a small loss, the other prefers to hurt himself by seeing the MOAL (Mother Of All Losses).

 

[Joseff]

MOAL (Mother Of All Losses)

Thanks for explanation.

 

[0007]

Not just that, though - they might open in the right direction but while the profitable trader knows when to get out and take profit, the other watches profit turn to loss; similarly, when they're both wrong, the profitable trader knows when to get out and accept a small loss, the other prefers to hurt himself by seeing the MOAL (Mother Of All Losses).

Correct! This is the practicality of having so many variables leading to almost unlimited combinations of what the trader can do. Hence the need for some rules and a game plan to reduce the variables effect.

 

[Black Swan]

Not just that, though - they might open in the right direction but while the profitable trader knows when to get out and take profit, the other watches profit turn to loss; similarly, when they're both wrong, the profitable trader knows when to get out and accept a small loss, the other prefers to hurt himself by seeing the MOAL (Mother Of All Losses).

hmm...difficult one that, I've been 50 pips+ up twice in my current eur long taken yesterday, yet because my plan is to hunt for bigger pips, and according to my rules I've no reason to exit, I'm still in. Moved stop from 65 pips to 30 pip is the only management and adjusted take profit order to the 14400 line (approx 150 pip profit). If I start getting excited about 50 pips my plan falls apart, but I'm sure many on 'ere would have me sectioned for the times I let 50 pips slip through my fingers, but I have no alternative if sticking to my plan..which works ..for me.

 

[barjon]

We know that more traders losing money and less traders trading in profit, but why? We have only two directions: [UP] and [Down] . If two traders will open trades in opposite directions one will make money an second one will lose.

During typing got the idea, if more traders losing money, so we have more traders that open trades in wrong direction and less traders in correct. Why?

Josef

just goes to show that it's where you get out that makes or breaks, not where you get in.

 

[Black Swan]

just goes to show that it's where you get out that makes or breaks, not where you get in.

None of us will ever be 100% satisifed with our exits and as Chuck says;

"We can enter trades on our own terms, but we must exit based on terms set by the market.."

 

[Joseff]

None of us will ever be 100% satisifed with our exits and as Chuck says;

"We can enter trades on our own terms, but we must exit based on terms set by the market.."

Wise words!

 

[tommog]

We have only two directions: [UP] and [Down] . If two traders will open trades in opposite directions one will make money an second one will lose.

not true.

say you had a losing trader/ losing sytem and you did the opposite of his entries its still possible you would lose after you take into account costs.

Say you are a Forex trader (as many retail traders are) and you pay a 2 pip spread on cable. Thats costing you $2 everytime you trade assuming you are using standard $10,000 positions (again to keep this in the context of retail traders). Assume you do 7 trades a day, which again I think is in keeping with most retail traders you are spending $14 a day just to trade.
Say you do this for 50 weeks of the year you have to have made 3500 ticks over the course of the year to break even. Or 291 a month, take into account picking whether the market will go up or down is pretty hard most people cant even make 291 ticks a month assuming there was no spread or trading commissions.

Take it up a level, (as nobody is going to get rich trading $1 a pip) and we trade a standard lot on the in interbank market which is $100,000 positions, or $10 a point, that same equation means you have to make 35k a year to stand still!

This is why success rates are higher in the professional trading community. For a start, in 6 years of trading at various firms I have never seen anyone trade cash FX and make money unless they are on a market making desk that eliminates this spread. They all trade futures and traders are paying sometimes 0.80cents to put on a trade. Or 0.08 of a tick. You could have a trader at home that is a better trader than the professional but pay retail rates and could lose tens of thousands over the course of the year whilst an average (yet positive ticks) trader at a professional firm would earn a comfortable living.

making ticks is hard dont get me wrong, but the cost of doing business is what kills "most" traders

 

[new_trader]

just goes to show that it's where you get out that makes or breaks, not where you get in.

These platitudes...

 

[the hare]

These platitudes...

There is an element of truth to this. If you'd like to suggest a suitable trading site where we could dicuss this then I'd happily back it up with some hard data.

 

[Black Swan]

not true.

say you had a losing trader/ losing sytem and you did the opposite of his entries its still possible you would lose after you take into account costs.

Say you are a Forex trader (as many retail traders are) and you pay a 2 pip spread on cable. Thats costing you $2 everytime you trade assuming you are using standard $10,000 positions (again to keep this in the context of retail traders). Assume you do 7 trades a day, which again I think is in keeping with most retail traders you are spending $14 a day just to trade.

Say you do this for 50 weeks of the year you have to have made 3500 ticks over the course of the year to break even. Or 291 a month, take into account picking whether the market will go up or down is pretty hard most people cant even make 291 ticks a month assuming there was no spread or trading commissions.

Take it up a level, (as nobody is going to get rich trading $1 a pip) and we trade a standard lot on the in interbank market which is $100,000 positions, or $10 a point, that same equation means you have to make 35k a year to stand still!

This is why success rates are higher in the professional trading community. For a start, in 6 years of trading at various firms I have never seen anyone trade cash FX and make money unless they are on a market making desk that eliminates this spread. They all trade futures and traders are paying sometimes 0.80cents to put on a trade. Or 0.08 of a tick. You could have a trader at home that is a better trader than the professional but pay retail rates and could lose tens of thousands over the course of the year whilst an average (yet positive ticks) trader at a professional firm would earn a comfortable living.

making ticks is hard dont get me wrong, but the cost of doing business is what kills "most" traders

Good post, I took 3 trades on the Euro last week, 2 winners, one loser. One of the biggest mistakes us retail chumps make is over trading, and not understanding what the concept of over trading actually is..IMHO retail trading folk need to take as few trades as possible with their edge to come out net winners and therefore (as you put it) virtually eliminate the cost of the spread/the cost of doing the business, and if it's not low frequency trading they don't have an edge..

 

[new_trader]

There is an element of truth to this. If you'd like to suggest a suitable trading site where we could dicuss this then I'd happily back it up with some hard data.

I'm not sure what you need back up. I trade, I have my own data. My experience is that when you get the entry right your trade is in profit almost from the beginning and this gives you the courage and conviction to hold the trade all the way through to the end. If the market stalls and hesitates and gyrates then chances are you got it wrong and you will begin to doubt yourself. In my book, nothing but nothing beats getting the entry right. Like Jesse Livermore says, it pays to be right at the right time.

 

[the hare]

My experience is that when you get the entry right your trade is in profit almost from the beginning and this gives you the courage and conviction to hold the trade all the way through to the end.

I trade a system based on completely random entries, but I'm 100% in agreement, this even applies to the methods that I use. Having aid that, I really do believe that there's an over emphasis on entry.

 

[0007]

........... In my book, nothing but nothing beats getting the entry right. Like Jesse Livermore says, it pays to be right at the right time.

I've long thought that. Sure, exits are very important but if you are expert [lucky?] at getting out it's so much more satisfying when you were also expert [lucky?]at getting in.

 

[advfntrader]

its so difficult because its not just UP or DOWN. its up, down, up, up, up, down, up, down...etc. the possibilities are endless and our minds can't cope with it all. cuts your losses, run your profits, 1:1, 1:2, trailing stop etc. etc. etc

 

[Mr. Charts]

I'm not sure what you need back up. I trade, I have my own data. My experience is that when you get the entry right your trade is in profit almost from the beginning and this gives you the courage and conviction to hold the trade all the way through to the end. If the market stalls and hesitates and gyrates then chances are you got it wrong and you will begin to doubt yourself. In my book, nothing but nothing beats getting the entry right. Like Jesse Livermore says, it pays to be right at the right time.

Well said.

 

[Joseff]

its so difficult because its not just UP or DOWN. its up, down, up, up, up, down, up, down...etc. the possibilities are endless and our minds can't cope with it all. cuts your losses, run your profits, 1:1, 1:2, trailing stop etc. etc. etc

Sounds as easy as buy low and sell high.

 

[theroguetrader]

4 main reasons why people loose money & think therefore trading is " overly " difficult -

1) overtrading
2) late entries
3) no discipline (overtrading)
4) no patience (not waiting for correct set ups & randomly ("guessing ")

Theres a whole industry worth billions, that survives on giving the " illusion " that trading is harder than it actually is - FACT !!
it is difficult - but its not orbital mechanics !!


when your born and start to learn to walk - you dont just " suddenly " stand up straight - !!
practice makes -

 

[Mr. Charts]

4 main reasons why people loose money & think therefore trading is " overly " difficult -

1) overtrading
2) late entries
3) no discipline (overtrading)
4) no patience (not waiting for correct set ups & randomly ("guessing ")

Theres a whole industry worth billions, that survives on giving the " illusion " that trading is harder than it actually is - FACT !!
it is difficult - but its not orbital mechanics !!


when your born and start to learn to walk - you dont just " suddenly " stand up straight - !!
practice makes -

Also well said !