Winners and Losers
An Inconvenient TruthTrading is a Business
Steve Burns
Sept 29 on Twitter
@SJosephBurns
“Too many new traders think the secrets to trading are in predictions, 100% win rates, & Holy Grail systems. Also taking huge position sizes on trades that can’t lose. This is why 90% fail. That has been my experience in the trading education field over the past decade.”
A great post, as are many of his. Let’s explore this a bit more.
Possible Reasons
I agree with Stephen’s thesis in general.
The ideas he proposes are valid to me.
Most traders fail, and not just new traders.
Here are a few of my ideas:
Unrealistic Expectations.
Not enough Capital.
Revenge Trading
Lack of Knowledge
Undisciplined Reactions to Market Actions
Exposure during News Events
Spreading Focus out into too many areas
Lack of a system that provides an edge.
Confidence. No inner belief that we can become successful.
Lack of Emotional Control.
Lack of respect for the Market.
Thinking this is a video game
Wanting action, being in the market all the time.
Lack of experience.
Failure to adapt to changing conditions.
Not understanding the glass is always going to be half full and half empty.
Personal problems and health issues
An unclear mind; going in too many directions (unrelated to markets).
Time Zones
As a daytrader, I think there are about Three good trade times a day.
If we get a piece of one of them, become more conservative and protect profits.
The Primary Trade during the first two hours of the day is one time zone.
The second normally is a contra to the primary trade somwhere between 12 and 2.
The afternoon trade where we get continuation, regression, or reversal is the other important time.
There are others, including pre market, EOD, overnight, but for practical purposes these three are the predominant ones.
Failure Rate
I noticed a post by Stephen Burns that caught my eye again.
This one was referring to the failure rate of traders.
I gave this some thought, as it is a sensitive area for me right now.
I am going to add some of my thoughts to his, and encourage others to do the same.
It’s an attempt to help thiose who want to be helped.
Not a marketing scheme, not a bash everyone else and pssst come use my methofology.
Honest help.
For those who refuse to take responsibility for your own actions, none of these ideas will help you.
Trend Trading
While all of those ideas are important, The Major idea is probably more simple
Fighting a well established trend.
For almost the past decade, much has changed. Bots are now commonplace and unemotional traders.
We compete with them.
We have suggested “In a strong uptrend, Buy Support until it stops working.”
Many traders have continued to try and call a top.
We are bombarded with emails asking us to buy into the crash scenario.
Obviously one day the doom and gloomers will get it right.
Playing for a crash everyday is a one way ticket to the poorhouse.
This is not meant to say we can’t have ideas on the short side; many times we can find half gap and gap type trades that give us an edge.
Overr time however, the upward bias after a reset goes much longer than most expect, including professionals.
More Ideas
Crypotocurrency? What’s that?
Not understanding the power of a regression trade. Especially after a news event.
Not enough experience to understand multiple levels of support or resistance. (Loading Zones)
Not seeing the bigger picture.
LACK OF COMMON SENSE
Predictive Model
Monday we thought Longs should be paid for sure by 2942. I suggested the most difficult zone to break would be 2942 to 2947.
Friday’s leftover support at 2916 we thought was important until broken.
Experience Matters
Tuesday’s overnight low stalled at 17.5, and I suggested 16 was still intact and support. 23.5 was proposed as the squeeze pivot. Zeek and I both felt that 32 to 34 would get tested, and 2936 was suggested as Important resistance.
Charts
