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Why 90% of retail traders fail...

AlekseyKGD
Apr 18 2014 at 12:47
11 ieraksti
I would join to previous opinions that emotions make our trades vulnerable. Here is an digits only and accurate calculation only should be included in our trading strategy.
TheFX4You
Apr 21 2014 at 19:21
92 ieraksti
Definitely, it's because of emotions.
That's why need to find or develop EA that works fine for you...
Stable 20% per month without manual intervention...
Bob LLewellyn (ForexAssistant)
Apr 21 2014 at 22:21
465 ieraksti
Emotions are the result, the cause is poorly trained investors/traders. If you knew what to do you would just do it and not get emotional about anything. It is only because you don't know how to handle some situation that you have emotions. Therefore people link the emotion to what has happened with their account but one didn't cause the other, they both had the same cause. Therefore, they can't fix anything because they are looking in the wrong place for the cause.

So why can an EA take out the emotion from trading? You shift your trust to the robot instead of where it belongs, in you. If you know how the system works, by all means use a robot. I do, in fact if you check back a couple of pages you will see that I develop them. However, I will be the first to say, if you don't understand the system, don't use it. That goes for a robot, an account manager or even doing it yourself. Learn first, then do.

The latest estimates are that 85% fail. In a market where a robot can get it right 99.9% of the time. What's the problem here? Not emotions. Traders just do not have a grasp of this new market yet. And at 14 years old the forex market is still in its infancy. But it has some really interesting properties that actually can make it safer than any other market.

Let's look at some of the fundamentals. There are no bubbles in the forex, the value of the currency is set by its usability. There are no bear markets because the forex is the worlds only pure market. Every other market, commodities, stocks, futures, whatever, you always buy them with cash, (currency), that's not pure as a change in one can effect a change in the other. Currencies are for the most part unaffected by some other market.

However, the currencies themselves are very much interrelated because the economies of their countries are interrelated. The economies are not just interrelated, they are entangled, (a physics concept where one energy state effects the other). This makes for an incredibly stable market. There are limits to how far out of normal the banks will let their currencies migrate. That means there are limits to how far a price can change.

There is no such thing as insider trading or cooking the books. This makes the forex market the most transparent market in the world. Transparency is a measure of safety. The forex market is not effected by a local economy because it is world wide. Because of its size no one can corner the market or manipulate the market for their own profits, the banks won't let them.
How could you corner a market when the banks can make more any time they want.

With all of this going for the forex market, at least 85% of traders fail. It's not from emotions but its not intelligent or rational. Why do so many chose to try to trade before they know how? Now that maybe emotional. I read well over 35 books on the forex market before I took my first trade. You know what I discovered from those 35 books? The market was too new and no one knew what the hell they were talking about.

That was 8 years ago, times have changed and slowly new traders are looking at that 85% failure rate and having a second thought before they jump in. Plus they have us 8 year olds helping them to walk. You don't need to worry about emotions, read and learn, that will take care of the emotions.

Bob
where research touches lives.
Bob LLewellyn (ForexAssistant)
Apr 25 2014 at 00:16
465 ieraksti
Everyone, I have had some good ideas in my life and have shared some of my success with everyone here, but I just had the biggest and most wonderful idea of my life. Please stop in to our new thread at
 
https://www.myfxbook.com/community/new-traders/traders-give-birth-new-idea/755228,1

I'm a little nervous.

Bob

PS, I am going to copy this invitation all over the other threads. If you happen to see a duplicate of this message, ignore it, you only have to go there once.

Bob
where research touches lives.
Femi Shitu (diamondfx)
May 07 2014 at 06:50
47 ieraksti
Hello friends , I used to think like that also before until i tried a few expensive software then my eyes became open to the reality about forex trading and how its should be traded.

COMMON MISTAKES MOST TRADERS MAKE IS , 3: 1 RISK TO REWARD RATIO , IT SHOULD BE 1: 3 RISK TO REWARD RATIO

RISK MANAGEMENT IS PHYSIOLOGICAL, BUT YOU ARE SCARED OF TAKING LOSSES AND CUTTING YOUR PROFITS EARLY.

PROPER RISK MANAGEMENT HELP YOU TO EARN MORE IN THE LONG RUN,BECAUSE IF YOU RISK LESS ,YOU WILL EARN MORE IN THE LONG RUN.

FOLLOW THIS SIMPLE RULE

DIAMOND FX STRATEGY

EQUITY : 1,000 USD
RISK: 1% OF EQUITY (1,000) = 0.01 LOT
RISK MANAGEMENT: TP / SL
STRATEGY: LONG TERM
STICK TO THIS CURRENCY PAIR: EUR/USD , GBP/USD , EUR/JPY , GBP/JPY , GBP/CHF , AUD/USD

Price consist of at least 80% Technical and 20% of Fundamental . So analysis on Technical will be right only if you are able to analyse properly.

Determine the long term trend then trade in the direction of the trend, stay on it till you get maximum pips. (e.g We make as much as 300 pips because we hold on to trend but that might take 1 month in some cases. )

Look at 4hrs, Daily , Weekly price chart for analysis then enter on the Small time frame 15mins, 30mins ,1 hr.

The most common mistake of all is our Emotion and inability to follow rules.

I hope my contribution will help some of you who think Forex trading is not profitable.

Feel free to write me here or talk on skype and check out our account for the year, Its traded on a Multi terminal so you can plug your account to ours for a fee .

Regards,

Femi Shitu.
Diamond FX Group.


Building a profitable portfolio for our clients worldwide.
psaTrading
May 15 2014 at 16:08
891 ieraksti
'I personally don't!
I Was just waiting for this moment, to go short on Dax ... 😄





Pielikumi

ivan (ivaneis)
May 16 2014 at 14:03
9 ieraksti
ahuruglica posted:
@FxMasterGuru

I would like to see a real account that proves your claim that you belong to the 5%.

I belong to the crowd (95%) 😲
psaTrading
May 16 2014 at 16:42
891 ieraksti
It was pure lucK! 😄

And today we had a very narrow day!

Which you all a nice weekend.
.............................................
https://silvatradingen.wordpress.com/
'It is not enough to have a good mind. The main thing is to use it well.' (Rene Descartes)
Adam Black (ablack)
May 19 2014 at 06:41
7 ieraksti
My small opinion on this is the main reason traders fail is their lack of understanding of their own Trading PSYCHOLOGY.

With Psychology being mentioned you have to break down the different parts that we all know are a few small but very important parts of the word.

1. Greed:

We won't all look at greed as a part of trading but if you look at your DD or any part of your trades that take you on the bus rides you know you shouldn't be on. Where you’re searching every line, indicator, average, price anything you can to convince yourself that the trade will come back. All of that emotional roll coaster comes from our need to not want to be wrong or take a loss we know we should have taken 30 pips ago. So if you don't want to say it's greed call it ego or whatever you want but that one part of the psychology of trading is a hurdle we all have trouble with.

2. Patients or as I call it, 'The need to be in a trade.'

 This is another huge part of trading psychology that has to be controlled in order to find success. All of us as traders are always looking and searching for that moment to hit the button, and let it begin. How many times have you seen the same set up on your screens approaching and because you feel that you have to be in that trade and you don't wait you lose out on half of what you could have gotten or even worse the trade falls apart before it reaches your actual entry you should have waited on?

3. I can't lose:

This part of trading psychology is as deadly to your trading success as greed. What i am refereeing to is when you have been in the market for your time that you trade, depending on your style and it handed you your wallet after it took your money then drove you to the ATM, took it from you again and repeated the process. At this point in any other situation a normal person would call it a day, study up relax and get ready for the next day. We as traders do the opposite and continue to refuse to let the market beat up for the day and we end up losing what is the most important thing to a trader other than our equity, our confidence.

There are many more parts to the psychology of a trader, so many more I could write a post long enough where I'm sure no one would read it. With that being said in my time as a trader the personality trait i have seen that sets successful traders apart from any other traders is the ability to control not only the above mentioned trading psychology but to also have the ability to look at their trading logs and break down their own list of trading psychological traits that they can find in themselves and learn to control them.
Work Hard or Die Useless
psaTrading
May 19 2014 at 22:07
891 ieraksti
Some due to the addiction that can be created:

Signs of Trading Addiction

Fortunately, some tell-tale symptoms should alert you or your family or friends to a very real problem and danger. If you spend far too much of your free time trading - thus neglecting family, friends and a full time job - you need to worry. Similarly, if not only your life seems to revolve around trading, but you are putting more and more money into the process, disaster may be around the corner.

Read more at:
https://www.investopedia.com/articles/investing/071713/downward-spiral-trading-addiction.asp
GremlinCCS
May 21 2014 at 15:06
4 ieraksti
I Need to agree with Bob and Adam here.

I'm new to the trades, I've been interested and wanting to trade for years now. As a man with little to no extra spare cash to use to trade I were stuck in the same loop. I bought expensive software and it took me 4 years to pay it down each month just to never using it and I probability never will. After spending some money on binary and lost a few bucks there I stumbled across MT4 and opened my eyes to the Forex market and I must say I'm so glad I did.

Finally I have my foot in and thus far I can't Complain and I really Really hope that I can stay that way.

Number 1 will be Greed. The want for more, faster and faster.... With all my previous fails I have adapted to play safe and grow slow but still with a steady and good growth, a growth with what I'm happy with. I know others that are also new traders that have the greed problem, Playing more than they should for the size of the account for a faster growth, but with that comes more losses and bigger losses.

Emotions, I'll still call this a problem although Bob disagree. The emotions for me are more that I can't really afford to lose the trades as the account are still small and I don't have more money to put into it. Thus losses are very emotional for me, If you can afford the size loss that's it would be fine and much less emotional, I feel in the end of the day the emotion are worse to those that can't really afford playing with the money that they are playing with.


I'm using EA's, I use them as I don't have time to keep an eye on the market the whole day around. The EA's give me the freedom to go about the day and knowing something is happening and I'm making some money today. They are not bullet proof and they do get losses. But that's part of the trading game as long as your profits are more than your losses all are good.

EA's does not take the emotion away as you will still log in to see whats happening and things does not always go as planned or hopped and that's where it all goes down the drain again. I do not believe to set up an EA and forget about it. I monitor mine at least twice a day but it's only 5 mins and I'm done. There's many days I want to intervene but I have got myself to leave it alone.


The most important part for me are to choice your game and stick with it.

Choice your percentage to play with - keep it as low as possible, I'm playing with 2% per currency pair on my one account and I feel safe thus far with it and I'm happy with the growth I have thus far - 44% are more than an acceptable for me. Account were started the beginning of the month.

Set your TP and SL and stick to it. I set my Take profit to 25% as that's more than enough for me. Stop Loss I have a bit high at this stage and I'm sure its gona bite me in the ass one day but I can't really seem to get to a point to choice the correct size for me. Currently running on 360pips and I know that's a lot but I haven't had any losses thus far that ever reached its stop loss.

Also Important for me are a trailing stop loss. It works like a charm and I'm in love with it. Yes some times it can cut your profits but it has saved me more than cut my profits.

Live life as its meant to be lived.Free....
Bob LLewellyn (ForexAssistant)
May 22 2014 at 15:54
465 ieraksti
Gremlin; 'I'm in love with it.'

Yes, that was the term that I was going to use when I read your last post.

Love is an emotion that doesn't play well with trading. There were some trader rules going around at one time, I think 'never fall in love with your trades' was number 3. The market changes from time to time. Watch your system but don't put all of your faith in it. All that you said makes perfect sense, just remember the other rules. 'Diversify often'.

As soon as it's financially feasible, find a second, third and fourth robot that you feel comfortable with. Four different types of EA will give an added safety margin that can not be quantified. Also use more than one broker with accounts in more than one currency. I realize that funds are limited but playing it safe will mean that someday the ability will be there when the funds are available.

Now if your trying to sell that program that you write so affectionately about, fine, talk it up, but if not, watch how much affection you give to it. Trading systems will leave you busted faster than an unfaithful wife. It's just a tool. Nothing more.

Trader rule #1 'Never trade with the bread money'. If you got little to work with, start a home business and let that fund your retirement account. You have something that someone else needs, maybe information, maybe time? Use what you have and leverage it to make more. Then don't let anyone else know what you are doing until it's done or someone will try to screw it up for you. Remember, the higher the profit, the greater the risk, not 100% true. But set a target, not for profit, but for safety. That's the difference between investing and gambling.

Good Luck.

Bob

 
where research touches lives.
Disgruntled
Jun 10 2014 at 07:01
1 ieraksti
Just makw sure that no-one uses Light Peak Capital for pension transfers. I was approached by a firm who could transfer pensions into a FX fund and I would get 2% per month return, so I let them transfer my pension. Now it appears that without good reason Light Peak Capital have refused to take the business from a company called PMC ( premier market consultants Ltd). So, I now believe millions of peoples pension pots are tied up with no-where to go. Anyone know this PMC company or Light Peak Capital? Seems to be one big scam. It seems LPA are an appointed rep of a bigger company Kession. Can the FCA do anything about this?
Bob LLewellyn (ForexAssistant)
Jun 10 2014 at 17:43
465 ieraksti
Ah, disgruntled, if only you could have joined us before you took that trade. By the way, thank you for the heads up on that company but we are traders here and our whole premise is to by pass the middlemen. However, if we did like the profits over risk and we wanted to get in on whatever they were doing, we would probably not have gone over 5% of the pension fund. This is what we call money management or risk management if you prefer but it is just part of what we do.

You can't change what was, just pick up the pieces and don't invest in anything until you have had a chance to learn about that market and then direct your own investments, you just learned that the one person that you can trust is you. Don't make the same mistake again and you're well on you way to a successful retirement program.

And by-the-way welcome to the forum.

Bob

where research touches lives.
johannfly
Jun 12 2014 at 13:39
6 ieraksti
je pense il y a trop de blabla
Rentre dans la pratique, toi immense soutien à la lueur de je sais pas qui
Brian Oliver (hungryhound)
Jun 14 2014 at 13:47
4 ieraksti
I can find no statistics that support the statement that 90% or more people loose their money trading Forex.
The numbers reported by the brokers on a monthly basis tell a different story.
Depending on the broker the stats show that only 60 to 75% of customers accounts loose money on a monthly basis.

Check out these links:
https://trading-gurus.com/fxcm-release-extra-forex-trader-profitability-statistics/
https://www.cftc.gov/MarketReports/FinancialDataforFCMs/index.htm

There are a number of other links that show the information in a clearer format but I cannot find them at the moment.

IB has the lowest rate and it would suggest that this is because of their client base. While FXCM has among the highest.

Is the myth promoted because those that are trading successfully like to think that they belong to a exclusive club, are better than the other 90% ?

It is clear however that education, money management and overcoming greed is the major problem to be overcome if one wants to become profitable.
Bob LLewellyn (ForexAssistant)
Jun 15 2014 at 18:53
465 ieraksti
Maybe I can help out here Brian, first the failure rate is down to about 80% now, the 90% was true a few years back. However, the data about how many trades were lost compared to the total trades doesn't tell you about how many traders quit trading because of their losses. If someone is profitable for 6 months then gets wiped out in one and he quits, this person goes into the failure folder though he was profitable 85% of the time.

Maybe it would help if we said that we have a high attrition rate, somewhere around 80% although failure is the correct analytical term.

Bob
where research touches lives.
Gabriel Urse
Pureprofitfx
Jun 16 2014 at 06:50
38 ieraksti
The beginners are too naive and they do not have self control and money management. They think they can make millions of USD overnight with thousands USD. They belive so because they make demo money first.
It took me 3 years to understand twoi important things, money management and emotional management. I am doing well, I have the neccesary patience and most important I think on long term, at least a year.
I trade daily and make aprox. 20% monthly profit with 20% risk.
Brian Oliver (hungryhound)
Jun 16 2014 at 06:58
4 ieraksti
I suspect that you are right Bob because the big retail Forex companies, have gone to some lengths to ensure that their customers are able to trade. It is not in their interest to see their customers wiped out as their major income comes from commissions from trading.
jotekfinance
Jun 17 2014 at 06:51
138 ieraksti
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