Why trading is so difficult?

[timsk]

One has way better chances to become a successful trader than a famous writer, rock star or champion athlete.

An interesting thought and one I think I agree with for two reasons:
1. Trading is a large - and ever expanding arena - compared to say, the sports arena. If you're good at football, there is a finite number of premiership sides to play for.
2. Trading isn't quite so fickle as the the arts. Generally, good traders will do well and bad ones won't. Occasionally, poor traders can get lucky (by being long in a bull market for example) and vice-versa I suppose. However, there are lots of great writers that don't get published (or don't do that well even when they are published) and musicians who barely know one end of their instrument from the other, and yet make millions.
Tim.

 

[Cornix]

An interesting thought and one I think I agree with for two reasons:
1. Trading is a large - and ever expanding arena - compared to say, the sports arena. If you're good at football, there is a finite number of premiership sides to play for.
2. Trading isn't quite so fickle as the the arts. Generally, good traders will do well and bad ones won't. Occasionally, poor traders can get lucky (by being long in a bull market for example) and vice-versa I suppose. However, there are lots of great writers that don't get published (or don't do that well even when they are published) and musicians who barely know one end of their instrument from the other, and yet make millions.
Tim.

Yes, I think that factor of luck is smaller in trading than in arts. It is more similar to sports.

But unlike sports, it does not allow one to play with opponents of different level.

Being in the market is like playing the top league right from the start. How many newbies would handle it successfully in sports?

 

[rog1111]

Most likely you'll both get stopped out, and lose. The unfortunate reality for small retail traders with tight stops!
rog1111

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

 

[market_bull]

I somewhat assume that successful trading always requires a measure of patience, articulate thoughts and just plain old-fashioned luck! How many times do we read in the papers that some lucky fellow has just won millions in a casino or some type of lottery? Although, maybe trading is harder because, aside from a little "luck", you need to have a grasp on what you're doing.

Which is why I'm at this forum and reading and learning what I can. I'm a total greenhorn. So, my opinion should be taken with a grain of salt. (Unless there is some truth to it, at which point I knew exactly what I was talking about. )

 

[timsk]

I somewhat assume that successful trading always requires a measure of patience, articulate thoughts and just plain old-fashioned luck! How many times do we read in the papers that some lucky fellow has just won millions in a casino or some type of lottery? Although, maybe trading is harder because, aside from a little "luck", you need to have a grasp on what you're doing.

Which is why I'm at this forum and reading and learning what I can. I'm a total greenhorn. So, my opinion should be taken with a grain of salt. (Unless there is some truth to it, at which point I knew exactly what I was talking about. )

Hi market_bull,
Good luck and bad luck play a part in equal measure over the medium to long term. On a per trade basis, one can experience one or the other and win / lose accordingly. Generally, consistently profitable traders who enjoy gains on a week by week, month by month and year by year basis do not do so out of luck. The one caveat here is a trader who only goes long in a bull market. There were many such traders who thought they were trading gods in the bull market leading up to the dot com bubble popping in spring 2000. Most of 'em just got lucky, before losing all that they had gained when the market crashed. The ones that knew what they were doing got out around the highs and hung on to their profits. Think of trading like a competitive sport such as tennis. Roger Federer can win a tie-break to take a set by hitting the net cord and throwing his opponent off balance. Does he rely on things like that happening on a regular basis to win all his trophies? No way Jose - and so it is with trading. For sure, luck is a factor, but very rarely is it a deciding factor in determining who wins and who loses in the medium to long term.
Tim.

 

[market_bull]

Hi market_bull,
Good luck and bad luck play a part in equal measure over the medium to long term. On a per trade basis, one can experience one or the other and win / lose accordingly. Generally, consistently profitable traders who enjoy gains on a week by week, month by month and year by year basis do not do so out of luck. The one caveat here is a trader who only goes long in a bull market. There were many such traders who thought they were trading gods in the bull market leading up to the dot com bubble popping in spring 2000. Most of 'em just got lucky, before losing all that they had gained when the market crashed. The ones that knew what they were doing got out around the highs and hung on to their profits. Think of trading like a competitive sport such as tennis. Roger Federer can win a tie-break to take a set by hitting the net cord and throwing his opponent off balance. Does he rely on things like that happening on a regular basis to win all his trophies? No way Jose - and so it is with trading. For sure, luck is a factor, but very rarely is it a deciding factor in determining who wins and who loses in the medium to long term.
Tim.

Succinctly said. In my very brief time of reading and diving into the text, the discipline and knowledge needed is already quite painfully obvious.

 

[tim3]

Hi market_bull,
Good luck and bad luck play a part in equal measure over the medium to long term. On a per trade basis, one can experience one or the other and win / lose accordingly. Generally, consistently profitable traders who enjoy gains on a week by week, month by month and year by year basis do not do so out of luck. The one caveat here is a trader who only goes long in a bull market. There were many such traders who thought they were trading gods in the bull market leading up to the dot com bubble popping in spring 2000. Most of 'em just got lucky, before losing all that they had gained when the market crashed. The ones that knew what they were doing got out around the highs and hung on to their profits. Think of trading like a competitive sport such as tennis. Roger Federer can win a tie-break to take a set by hitting the net cord and throwing his opponent off balance. Does he rely on things like that happening on a regular basis to win all his trophies? No way Jose - and so it is with trading. For sure, luck is a factor, but very rarely is it a deciding factor in determining who wins and who loses in the medium to long term.
Tim.

Great points agree 100%

I would also add in reply to the original question Why is trading so difficult? because human nature sets you up to lose ie take small gains and let losing trades run thats why I always enter a stop when I enter a trade you have to think at what point do I accept I got the trade wrong.

 

[market_bull]

Great points agree 100%

I would also add in reply to the original question Why is trading so difficult? because human nature sets you up to lose ie take small gains and let losing trades run thats why I always enter a stop when I enter a trade you have to think at what point do I accept I got the trade wrong.

Along with the, "if I just hold out a little longer, I won't have to take a loss" type of thing. I saw the abbreviation already on the forum, but don't remember who said it. But that's where we get the MOAL, lol.

 

[the hare]

For sure, luck is a factor, but very rarely is it a deciding factor in determining who wins and who loses in the medium to long term.

Unless of course the underlying strategy is based on exploiting good luck when it occurs. Most of the decent discretionary traders of my aquaintence where smart enough to have worked that one out

The key point however is that at some stage in people's development they have to make a leap of faith and believe that markets are either random, or that markets are predictble. If you belive the former than luck becomes a far more important concept, if you believe the latter, then learning to capitalise on luck (or just being lucky) is probably far more important than most traders would probably care to admit.

Either way, the role of luck should not be underestimated. I'd probably go as far as to say that its impossible to experience long term gains without developing the ability to differentiate between a genuine edge, and dumb luck.

That will upset the all is known in advance crowd

 

[barjon]

Unless of course the underlying strategy is based on exploiting good luck when it occurs. Most of the decent discretionary traders of my aquaintence where smart enough to have worked that one out

The key point however is that at some stage in people's development they have to make a leap of faith and believe that markets are either random, or that markets are predictble. If you belive the former than luck becomes a far more important concept, if you believe the latter, then learning to capitalise on luck (or just being lucky) is probably far more important than most traders would probably care to admit.

Either way, the role of luck should not be underestimated. I'd probably go as far as to say that its impossible to experience long term gains without developing the ability to differentiate between a genuine edge, and dumb luck.

That will upset the all is known in advance crowd

Hare

Aye, there's a lot of truth in that but, to some extent, you make your own luck or maybe better put as prospect of being lucky.

Darvas of "How I made $2m..." fame is a case in point. He was "lucky" enough to light on Charles Kent (inventors of filter tip ciggies) and Polaroid (inventors of instant photos) as they took off and they were responsible for most of his $2m. BUT, his initial filtering did throw them up in the first place (amongst other lesser lights) and, as you say, he did have the balls to ride that "luck" to the end.

I suppose if you know the road is quiet between 4 and 5 in the morning you could walk blindly out with a much better chance of being lucky enough not to be hit by a car than if you tried it in the rush hour.

jon