Best Thread Why You Are Failing - and What You Need to Do

[Vorbis]

Why must the answer because when one knows why, the how and the when become easily recognized.


-------------------
A Truly,
Stupid Cow

The Why? can't help you because the Why? is subjective.

 

[Vorbis]

The Why? can't help you because the Why? is subjective.

Just to clarify this statement.

Of course, if manage to ascertain the real motives behind the order-flow that causes a particular move in the market, this can be a tremendous advantage. Especially if you spot it in advance and act upon the information or correctly calculate the likely result of the activity.

But, in most cases, if you ask ten traders after the fact "what caused that move in the market?", you are likely to get ten different responses.

 

[Kewin]

1st - don't be greedy
2nd - be patient
3rd - analyise and believe in yourself

absolutely agree!

 

[steven46]

Most Professionals know how to proceed when their systems go south
AND because they trade "other people's" money, they generally do not have
issues relating to emotional control, so they fix the technical issues and
they move forward, executing the "revised" or new system mechanically.

Amateurs on the other hand, trade their own money, and often do not
know (in detail) whether their systems have an edge. They are mostly
speculators in the truest sense of the word. I just call it ignorance and
in this business it is fatal. That (in a nutshell) is why they mostly fail.

In my thread (Beyond Price Action) I outline a simple system that has
an edge. To trade it successfully, you would need to add a few tools
such as 1) understanding of context, 2) a basic understanding of statistics,
and the 3) emotional control necessary to execute with discipline. So
what I am saying (really) is that to make any reasonably good system
work, the trader has to be willing to extend themselves past their
usual comfort zone.

It has been a long while (years in fact) since I posted on a public site
What I discovered (recently) is that most retail traders are unwilling to go
that extra mile.

 

[steven46]

Most Professionals know how to proceed when their systems go south
AND because they trade "other people's" money, they generally do not have
issues relating to emotional control, so they fix the technical issues and
they move forward, executing the "revised" or new system mechanically.

Amateurs on the other hand, trade their own money, and often do not
know (in detail) whether their systems have an edge. They are mostly
speculators in the truest sense of the word. I just call it ignorance and
in this business it is fatal. That (in a nutshell) is why they mostly fail.

In my thread (Beyond Price Action) I outline a simple system that has
an edge. To trade it successfully, you would need to add a few tools
such as 1) understanding of context, 2) a basic understanding of statistics,
and the 3) emotional control necessary to execute with discipline. So
what I am saying (really) is that to make any reasonably good system
work, the trader has to be willing to extend themselves past their
usual comfort zone.

It has been a long while (years in fact) since I posted on a public site
What I discovered (recently) is that most retail traders are unwilling to go
that extra mile.

 

[steven46]

I will be posting less often now, because I have an obligation
to a client

Interestingly, my commercial clients do not object to public posts
outlining my approach. In meetings they suggest that there is no
concern as to whether I am giving up my edge, because in their view
retail traders (generally) cannot mobilize sufficient capital to impact
their automated (and uncorrelated) systems approach. I have been
talking to several traders whose approach is similar and they seem
to agree. This, in my opinion, suggests that retail traders who wish to
learn this profession do have viable options, if they are willing to
commit time and reasonable resources to the project.

 

[FX4Newbies]

The winning system you take from demo to live, is unlikely to be the system you end up trading successfully – if you end up trading successfully at all.

While there is a great deal of difference between trading demo funds and real funds and while there are ways to mitigate the problems you will encounter en route, you will likely find after your first set of failed trades that you’ll lose faith with your ‘winning system’ and try all number of on-the-fly fixes, new systems, signals and indicators to make up for and take your mind off your failures and prove, if only to yourself, you’re a ‘good trader’.

The thing is, the probabilities are that you’re not a good trader and that you’re far more likely to join the large percentage that fail, one or more times, before giving up for good.

If you’re lucky, you’ll find your level, hit your stride, find your metre – whatever metaphor you want to use – and it’ll click into place. You’ll no longer dread the start of a new trading day – you’ll look forward to it. You’ll no longer feel relaxed and calm only when NOT in a trade and stressed and anxious when you are. You’ll find you’re no longer looking for excuses NOT to place that trade (make a cup of tea, make a phone call, walk the dog, go for a run) – you’ll know exactly when and if to place it. You’ll no longer start to tense when your position moves against you – you’ll smile and feel good that that means you’ve just established a lower risk level, or if you’re already in profit, a higher profit level that you’ll come out at if it gets hit again. Far more of your trades will go into positive territory right off the bat and those that don’t will move against you far more quickly and let you know you were wrong without you having to hang on every up tick and down tick for – cheering one and despairing at the other – for an eternity. You’ll no longer stick to your target (an ethereal thing at best) and give back all your profits as it retreats, having reached within a few ticks of the completely arbitrary goal, you’ll let the price action let you know when it’s time to take your profits (or your losses). Each trade setup, entry, management and exit will be in perfect harmony with your system and your own personal psychological needs in relation to trading a system. You’ll be trading the perfect timeframe and the perfect system for your personality and your needs. Until you find a methodology that suits you perfectly you’re just spinning your wheels and likely bleeding capital. If you don’t feel good trading – stop. Right now. ‘Cos it ain’t going to work otherwise.

How do you find this perfectly suited system? There are as many ways as there are bods trying to find a way. Pretty unhelpful.

What’s the point of this post? I’ve just waded through an entire weekends’ worth of the normal “I want a system”, “I’ve got a system and it’ll work for you” and “How do I make Money” posts. All chasing and offering the wrong things. And they’re the wrong things because none of them know YOU or address YOUR needs.

There are an infinite number of combinations of usage of price and volume and time. Such a large set of instruments and markets they may as well be infinite. And the range between the most well informed, highly teched and savvy institutional investor and the most clueless, under-funded, inexperienced and ill-equipped mug punter is so large as to beggar belief. Where do you think you are you on the spectrum? Where do think you REALLY are on that spectrum?

A very small percentage of people make money in trading. The odds of you doing so are miniscule.

Those that are making money are using techniques of such simplicity it would amaze you. In fact, it probably wouldn’t, as you’ve already covered that in your first few months interest and education in trading – and then put it behind you as being too simple to be worth further consideration.

You’ve gone off to pursue the newest and latest fads and techniques and systems and indicators, without realising you already have all you need to make the bare bones of a system that will suit you perfectly. You’re entranced with the prospect of being a Darksider. It’s a fabrication. An attempt to create a sense of asceticism or elitism which does you no favours at all and offers you no advantage, but gives a good laugh to those that think you’re stupid enough to believe that that’s the only way to go. You’re convinced a splay of indicators, or Gann fans, or Elliott waves or Di Jango’s reversal trines will be the ‘solution’. They my or they may not be. You’re convinced that trading a pure VWAP engine with no charts or indicators at all is going to be the only way for you. You feel the raw random noise of the 1 minute chart is the only place to be or the Daily gives you the freedom to be largely relaxed in stops and targets. It makes no difference. There’s no difference in the way you make your money be it with bar charts devoid of any further information or if charts covered to the exclusion of all white space with indicators of all manner, hue and type, or a bare excel style numbers grid. Your profits are made whatever way you make them and no one way is better than any other.

But unless you’re totally in tune with the way you’re trading, you’ll feel uneasy when you’re in a trade and you’ll fear the trade moving against you and you’ll feel varying degrees of pain when it does. Your profits will be fewer and smaller than your losses and you wont have any confidence in what you’re doing and you’ll feel insecure, lacking, a loser and a failure. What to do? Stop. Simply stop. You’re not going to be consistently profitable trading if this is where you’re at.

Go back to basics. Look at the charts, with whatever indicators you want to be using and just LOOK. Simple stuff like lower lows, lower highs or higher lows, higher highs. If you can’t see them – they’re not there. If you can see them –what is that telling you? They’re giving you direction, entry, S&R and exit points. How much more could you ask for?

Hi TheBramble,

I really like the main points you raised in your initial post. Very important that traders have a method that works for them: one that they understand and can actually use consistently. Of course, they need to be focused on their development: their trading psychology and their trading plan...the step-by-step details of how they are going to actually prepare to trade and how they are going to go through the actual trade.

Once all of that is in place, the trader needs to remember to think in terms of probabilities (not focus on each trade winning or losing), which I hope most traders know. Nothing is guaranteed at any time. This I think would also help: Treat your Demo Account like it is real money. Take it seriously as you practice. When trading with your Live Account, think of it like it's play money... from an emotional standpoint. Don't become all worried and tense because NOW it's real! When you go live, you've got to be able to let that money go to work for you. Be sure your trading method is the best it can be for your chosen style of trading.

Also important to analyze your trading results monthly at least, unless you just have a few trades (less than10). Crunch the numbers, look at your trading stats and improve as needed. The numbers tell it all...very much like taking a blood test.

Good trading requires work...consistent work, but the rewards are well worth it!

Trade well ALL!

 

[steven46]

I have a simple comment

Periodically I work for commercial firms
training new hires. These new people are
hired because they share common traits

1) University Degree in Math or Science
2) Ability to think critically
3) Ability to manage emotional response to stress

These firms hire psychologists to screen applicants
and they tell me that once they find the right person,
everything else can be taught.

This is why, when I teach a class on my own, I start with
a simple questionnaire. Its pass/fail. I don't expect students
to qualify as above, but I do need then to approach the
subject in an adult way. It is surprisingly difficult to find
persons who have the right combination of traits.

 

[FX4Newbies]

I have a simple comment

Periodically I work for commercial firms
training new hires. These new people are
hired because they share common traits

1) University Degree in Math or Science
2) Ability to think critically
3) Ability to manage emotional response to stress

These firms hire psychologists to screen applicants
and they tell me that once they find the right person,
everything else can be taught.

This is why, when I teach a class on my own, I start with
a simple questionnaire. Its pass/fail. I don't expect students
to qualify as above, but I do need then to approach the
subject in an adult way. It is surprisingly difficult to find
persons who have the right combination of traits.

Yes...critical thinking is a plus and being able to manage the emotional response to stress is another plus, but, if people have the right tools, understanding and MOTIVATION/DRIVE/DETERMINATION/DISCIPLINE it can be done. A trader's profile assessment to start is certainly an excellent idea. Here is a great one to start with:

Tharp Trader Test

tharptradertest.com

P.S. Not necessarily recommending any trading methods with this link.

 

[Simon54]

I have a simple comment

Periodically I work for commercial firms
training new hires. These new people are
hired because they share common traits

1) University Degree in Math or Science
2) Ability to think critically
3) Ability to manage emotional response to stress

These firms hire psychologists to screen applicants
and they tell me that once they find the right person,
everything else can be taught.

This is why, when I teach a class on my own, I start with
a simple questionnaire. Its pass/fail. I don't expect students
to qualify as above, but I do need then to approach the
subject in an adult way. It is surprisingly difficult to find
persons who have the right combination of traits.

Umm Makes sense! Do you find it hard to teach those who don't have those traits naturally or is it just a longer process?

 

[steven46]

I try to evaluate each person in terms of how closely they fit the model that
I was taught. I also employ intuition which, after many years of experience,
seems to be effective. My classes last 4-5 months, then I suggest students
stop and try to trade on their own, evaluating their performance and "bottom
line" results . Most of the time it is the student's inability to control emotions
that causes insurmountable problems. Typically once they are filled, fearful
thoughts distract them so much so that they are unable to hold a position
long enough to realize a reasonable result. They are also unable to make
clear eyed adjustments to their trading plan when they are wrong. I am not
capable of helping this kind of person overcome their innate tendency to
be risk averse.

 

[FX4Newbies]

If a trader cannot bring the required level of courage to their trading, then it becomes difficult for them to go forward, even with a good method. They have to meet their fear, whatever it is, head-on. Only courage can do that.

That is one of the main reasons I hate to see people take the long way around trying to learn, as they can install mindsets and emotional pathways that could hinder their success down the road. When a trader is starting out, they don't see these pitfalls unfortunately. To them they are just trying to learn. Trading is a very unique endeavor; very easy to overlook the underlying dynamics that are required to succeed.

If a trader is not beginning to see some kind of consistency within the first year of trading a particular method, that is a sign to me that something is definitely wrong. Chatted with someone recently...after two years of using a "touted" method, they were still going through ups and downs.

 

[FX4Newbies]

I try to evaluate each person in terms of how closely they fit the model that
I was taught. I also employ intuition which, after many years of experience,
seems to be effective. My classes last 4-5 months, then I suggest students
stop and try to trade on their own, evaluating their performance and "bottom
line" results . Most of the time it is the student's inability to control emotions
that causes insurmountable problems. Typically once they are filled, fearful
thoughts distract them so much so that they are unable to hold a position
long enough to realize a reasonable result. They are also unable to make
clear eyed adjustments to their trading plan when they are wrong. I am not
capable of helping this kind of person overcome their innate tendency to
be risk averse.

Totally understand steven46. Some professions also make it difficult for people to have a trader's mindset, simply because the mindset they need to succeed at their profession is opposite to the one they need for trading. Accountants are an example. Farmers and pilots usually have a good pre-disposition to the concept of trading. Farmers know they have to accept the risk, as a crop can be wiped out. Pilots fly by rules and instruments. The average person is raised to avoid risk instead of managing it to increase/profit.

 

[ChelseaR]

I have a simple comment

Periodically I work for commercial firms
training new hires. These new people are
hired because they share common traits

1) University Degree in Math or Science
2) Ability to think critically
3) Ability to manage emotional response to stress

These firms hire psychologists to screen applicants
and they tell me that once they find the right person,
everything else can be taught.

This is why, when I teach a class on my own, I start with
a simple questionnaire. Its pass/fail. I don't expect students
to qualify as above, but I do need then to approach the
subject in an adult way. It is surprisingly difficult to find
persons who have the right combination of traits.

Do you think these traits can be developed overtime?

 

[steven46]

Do you think these traits can be developed overtime?

Hello Chelsea

Thanks for your important question

In my opinion, what matters most is the desire to achieve a goal.
If you want something bad enough, you will do whatever it takes. I am
a living example that this is possible and that is why I always speak to candidates
in person, so that I can get some idea whether they know what is at stake, and how
their lives could change once they learn how to do this.

How much time will it take? I don't know. Typically my classes last 4-5 months and
Before the class begins, I ask each student to provide a list of their most important
objectives (the reasons why they want to learn this profession). After the class ends
they can stay on if they wish, however I encourage them to try to trade on their own
and to keep in touch with me, to let me know how they are doing. If they need additional
help, I do what I can to help them figure it out. What I have learned is that seemingly
small changes can make big differences. In this uncertain world, I think a person presenting
themselves as able to train others, should do all that they can to help students achieve
their goals.

I hope this helps you to find that "right person" for you.

Good luck

 

[Simon54]

If a trader cannot bring the required level of courage to their trading, then it becomes difficult for them to go forward, even with a good method. They have to meet their fear, whatever it is, head-on. Only courage can do that.

That is one of the main reasons I hate to see people take the long way around trying to learn, as they can install mindsets and emotional pathways that could hinder their success down the road. When a trader is starting out, they don't see these pitfalls unfortunately. To them they are just trying to learn. Trading is a very unique endeavor; very easy to overlook the underlying dynamics that are required to succeed.

If a trader is not beginning to see some kind of consistency within the first year of trading a particular method, that is a sign to me that something is definitely wrong. Chatted with someone recently...after two years of using a "touted" method, they were still going through ups and downs.

Absolutely - trading do need courage and awareness. Also, if there is no consistency post one year. What your take on how to spot the right approach?

 

[FX4Newbies]

Absolutely - trading do need courage and awareness. Also, if there is no consistency post one year. What your take on how to spot the right approach?

In a nutshell, the chart is a TIME vs PRICE chart, so your trading approach should clue you in to high probability times and prices when price could turn. Also compare what is happening on a longer-term chart relative to the timeframe you are trading. Most traders are concerned about the price to enter only. That is not healthy as the price could continue lower or higher as the case might be, then return to their entry price at a later time. Of course, they would very likely have been stopped out by then. Don't discount time. This is all from a technical perspective only, not fundamental.

 

[Simon54]

In a nutshell, the chart is a TIME vs PRICE chart, so your trading approach should clue you in to high probability times and prices when price could turn. Also compare what is happening on a longer-term chart relative to the timeframe you are trading. Most traders are concerned about the price to enter only. That is not healthy as the price could continue lower or higher as the case might be, then return to their entry price at a later time. Of course, they would very likely have been stopped out by then. Don't discount time. This is all from a technical perspective only, not fundamental.

I agree to you. Timings are as important as price. Any specific tools which you used to spot high probability of turning points?

 

[FX4Newbies]

When I look for turning points, it is the combo of price and time...together. I don't just use one tool to spot a turning point. If you don't use Fibonacci Tools, I would strongly suggest you research them carefully. Btw, not every video on the internet about Fibs is correct in how they show you to use those tools.

 

[Simon54]

When I look for turning points, it is the combo of price and time...together. I don't just use one tool to spot a turning point. If you don't use Fibonacci Tools, I would strongly suggest you research them carefully. Btw, not every video on the internet about Fibs is correct in how they show you to use those tools.

Got it. I check out the right one then. Also, any ratio which works best for you?