# 97% Of Traders Are Failures?



## brerwallabi (21 November 2005)

The comment in the Adaptive Analysis thread that 97% of traders failed really astounded me. Is this comment fact, can anyone show statistical evidence from a reliable source that this the case. Or is the comment used similar to the comments used by real estate agents, used car salesmen and other snake oilers.   Am I one of the 97% or one of the 3%? I wonder how I determine success or failure. Is there cut off point in return from trading capital that determines success or failure. Is a 10% return failure or is 15%? Certainly losing your capital is failure. I would always like to improve my trading but how do I determine if I am successful? I have my trading plan and over the last three years have achieved my goals and have improved my performance (return) each year. So is someone failing if they do not achieve someone elses standard or use their method.


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## It's Snake Pliskin (22 November 2005)

Good thread!

I have been thinking the same. Why not 96% or 98%? Maybe 97% sounds more credible - not too close, nor too far from 100%. Personally I think it is the industry saying that most peole are unable to trade on their own and need their so called services - that aren't free by the way. 

You've raised a good point. What is the benchmark of success or level of failure that determines this?

Is it sales pitching? We'll find out if there are some people who may have the answer.


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## It's Snake Pliskin (22 November 2005)

....and I've just got some info from Wayne. In another thread CFDs:


			
				wayneL said:
			
		

> The "spread betting" houses and the UK government know most traders come to the market with casino mentality.
> 
> It's why 95% of traders lose.




95%! hmm interesting. 

Maybe it is perception, or is it just guessing?


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## wayneL (22 November 2005)

Yer...it's really easy to fall for the propaganda.

I have no idea whether it's true or not.

But considering that most conventional businesses eventually fail, something like that figure, it's not hard to believe. But with trading you can do it a helluva lot faster.

Would be nice if someone actually came up with some fair dinkum statistics.


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## tarnor (22 November 2005)

I don't think you can really ever quantify that statement..  how many traders just fade away quietly after losing thier cash? could be like saying 97 percent of statistics are made up on the spot ...  

maybe if they have access to the tax record of alll those who claim to be a trader for tax purposes?? but i'm sure this wouldn't be allowed

I don't mind someone out thier trying to help people save thier money.. but if its working towards some othermy way is the only way  agenda i always switch off pretty quick


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## money tree (22 November 2005)

I have posted this many times.

In 1999 (during the tech boom no less) Etrade did a survey on client accounts. They found that 97% of these accounts had a zero balance after 12 months. This is either because they lost all the money, or pulled the money out (and you wouldnt do that if you were making money).

here is one supporting article:

http://www.timesonline.co.uk/article/0,,2097-1028048,00.html

another google:

"For example, Massachusetts regulators seized the records of one day-trading firm in the late '90s. They found that the firm had 68 traders, and 67 of them were losing money. This works out to be close to the typical failure rate of 97% for individuals who attempt to trade for a living."


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## Knobby22 (22 November 2005)

Of course most short term traders lose money.
They are effectively making bets against the professional traders who are experts and they also have to cover commissions, ect. The cost of doing business.

Even successful short term traders have usually had a period when they were losing and still learning.

If you read the secrets of Buffett and Soros, (one a trader, one an investor), they take great pains to limit the costs of trading shares (using completely different techniques).

I personally go for the long term outlook where I trade as rarely as possible and always consider tax implications. Many people new to the stockmarket are too impatient.

I've said it before, if you are not doing well in this boom market, in good conditions - watch out!

Consider investing or at least long time frame trading, it requires less time and is a simpler path to wealth.


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## rozella (22 November 2005)

It is hard to believe that only 3% are successful, maybe we could have a poll, with a few options, keeping in mind there are full timers & part timers ???


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## son of baglimit (22 November 2005)

i read the 97% figure as '97% fat free', as its the fat that the successful ones are feeding off. if 97% are fat free, they aint got not fat to live on.
thats all.


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## Smurf1976 (22 November 2005)

Most businesses cease to exist at some point so the 97% failure rate for traders sounds reasonable to me. The nature of trading being such that losses can accumulate rapidly when compared to most other businesses. 

With enough leverage you can blow your account in an afternoon in a worst case scenario. Bit hard to do that running a shop.

Even the high flyers tend to come down in due course. A few examples...

1. General Motors is linked absolutely with 20th century US manufacturing and economic strength. As most people have heard at some point "General Motors is too big to fail".

If recent reports are any indication it's well on the way to failing. At best it will survive as a mere shadow of what it once was in terms of its US physical production.

2. Anyone under a certain age who has spent virtually any time in Adelaide will know where Heaven nightclub is. Adelaide's only "super club" as many termed it.

Then it started to go wrong. Patronage fell and it came to the point of a management change and relaunch as Heaven II nightclub. Well, guess what? It's shut again.

Whilst this latest shutdown has plenty to do with being on the wrong side of the law, the point is that it is shut. Why is less relevant although them not paying copyright fees on the music they were playing (amongst various other more serious problems) does suggest that business wasn't exactly booming from a financial perspective despite the image they tried to create.

3. For half a century the Tasmanian town of Burnie and the APPM (Associated Pulp and Paper Mills) company were effectively the same thing. 4500 workers, both male and female, drawn mostly from a town of under 20,000 people with most of the rest working at the nearby Tioxide or North-West Acid plants, the port or supporting service industries. What could possibly go wrong?

Well, the former N.W. Acid plant site is now a collection of sheds used as, amongst other things, a trucking depot. 

The Tioxide plant is completly gone with vegetation returning to the site. 

The APPM board mills and Eastern paper mill are empty buildings whilst the pulp mill is gone altogether. Only part of the Western paper mill is still in operation but even that produces only a low grade product using imported pulp. And the workforce is down fully 95% from the peak.

4. Those who were around in the 1980's will remember that at one point Alan Bond was very well respected. How times change...

5. Go to any shopping centre that you recall visiting as a child. You will find that most of the businesses that were there 20, 30 or however many years ago are long gone. Most likely whoever took over that shop after them is gone too. Individual shops have probably changed occupancy half a dozen times since you first went there. And most of them will change again in the coming years. Sure, some operators simply move but many cease to exist.

6. Drive around the industrial zone of any city and you will find numerous once well known factory sites which now sit empty or are used as warehouses, discount furniture retailers etc. The story is the same whether it's automotive component manufacturers in Melbourne, the wool mills in Launceston or electronics factories in Adelaide. Once they were massive, now they are gone.

The moral of the story here is quite simply that most businesses will at some point cease to operate and in most cases that will be because they cease to be profitable. It stands to reason that trading would have an even higher failure rate due to the low barriers to entry which encourages substantial (in $ terms) operations to be established by those with no real plan. It's not surprising that most of them fail.


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## kaveman (22 November 2005)

I have always heard the figure was 98%, so maybe first time traders are improving. One thing I have noticed in books is that the gurus of trading often themselves went bust in their first attempts at trading. Just a matter of learning from your mistakes.
So does that 3%/97% include the ones who are second or 3rd time rounders?


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## Dan_ (22 November 2005)

Smurf,

Great post, hit it on the head :hammer:


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## RichKid (22 November 2005)

Great post Smurf, nothing lasts forever.

I agree with Money Tree about the source of stats, I've seen some comments about brokerages compiling stats on their clients (was it TechA who mentioned something like that?) and the anecdotale figure is around 90% either lose money or don't make money. 

So if any of you folks know brokers (especially large ones like ComSec) or people who've worked for them ask if they can tell you the figures for the number of traders that lose money or close accounts due to not winning more than they spend. I bet they have very specific data on it as they need to know their market and customers to construct their profit/financial models. So, those who have connections, let's see if you can find some figures from within the industry. Maybe Nick Radge himself knows since he was an insider for awhile.


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## tech/a (22 November 2005)

Anyone in my view can trade a winner---but,
2-5% will consistantly profit from trading--consistantly being over a period of 12 mths or more and over Breakeven including brokerage.

Tree has quoted statistical evidence.

My view.


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## wayneL (22 November 2005)

Knobby22 said:
			
		

> Consider investing or at least long time frame trading, it requires less time and is a simpler path to wealth.




I agree in part, because short term trading and inesting for wealth are *two different things *

For those folk who have no intention of trading as an exclusive living (have job or other business), I agree one hundred percent.

But for those who it is their only living, like myself, a different mindset is necessary. Short term trading is the bread and butter, it replaces the income that would be from a business or job otherwise. It is not "investing". It is no different than buying or selling any commodity in business. To stay in business, your income must be higher than cost of goods + expenses.

*N.B. Yes many fail! But so do many people who start a normal business fail and lose their capital as already stated.*

It is just a different psychology and rule base, and thats what most people don't understand. Just like people(ex employees) start a business and bring their employee attitude to the business, and fail to adjust...and wonder why customers never return.

I have a completely different mindset towards my trading "business" and my "investments".

Those of us who trade for a living watch forums and see comments like;

"all daytraders lose"

"trading forex is the best way to lose your shirt"

"short term trading/daytrading is gambling"

etc etc etc

We can only shake our heads because it is not the reality of the professional trader.



			
				Knobby22 said:
			
		

> They are effectively making bets against the professional traders




This is exactly why they lose....gambling mentality

I would bet my bottom dollar that professional/successful traders would have a win/loss ratio no better than an amateur. The pros just use different rules that the amatuers never bother to learn...like risk and money management for example. They wouldn't knoe an expectancy calculation if it fell out of a packet of cornflakes.

That really the only difference between a winner and a loser in this game.


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## Knobby22 (22 November 2005)

wayneL

I would bet my bottom dollar that professional/successful traders would have a win/loss ratio no better than an amateur. The pros just use different rules that the amatuers never bother to learn...like risk and money management for example. They wouldn't knoe an expectancy calculation if it fell out of a packet of cornflakes.

QUOTE said:
			
		

> There is a lot of truth in that. It's a well known fact that bad golfers will buy new clubs rather than take lessons, however a lot of people have not got the psychological makeup or the analytical skills to be a trader easily.
> 
> 
> 
> ...


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## wayneL (22 November 2005)

Knobby22 said:
			
		

> I know of others like you that split their activities between investing and short term trading. How do you stop day trading with investments i.e. how do you keep your hands off them as you would have the temptation to play with them all day or do you write what you plan to do with these stocks and set aims for them?




With my brokers software, I can create different pages, so short term instruments on on page and longer tem on another.

I resolved not to look at the longer term page during trading hours. But I do have alarms/stops set, so I know if action is needed.




			
				Knobby22 said:
			
		

> ....and why didn't the quotes work?




Here's the format, except I'll use different parentheses so you can see:

{QUOTE=Knobby22}....and why didn't the quotes work?{/QUOTE}

So you enclose both the beginning and ending code with parentheses [ and ]. You'll also notice the ending code also has a / incuded.

Cheers


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## mit (22 November 2005)

rozella said:
			
		

> It is hard to believe that only 3% are successful, maybe we could have a poll, with a few options, keeping in mind there are full timers & part timers ???




I think a poll (even if everybody is honest) would show a much smaller failure rate as everybody here is at least trying to educate themselves. I know a lot of people who buy shares and never read a book, know nothing about position sizing and buy on rumours and NEVER sell. I tell to get some education and treat it like a business but I tend to think they don't believe it.

MIT


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## Julia (22 November 2005)

If it's any comfort to the 97%, I recently "audited" my portfolio to see whether the stocks I chose myself without any advice from broker were doing as well as or better than those recommended by full service broker (with their astonishingly high brokerage attached). The results were interesting:
There are 28 companies in the portfolio;
20 of these were my own choice :  two out of the 20 are currently 10% approx below the cost price.  Remainder are well ahead of cost price.
8 were recommendations by full service broker and were stocks I would never have chosen myself:  3 have shown growth of at least 10% but the remaining five are more than 10% below cost price.  
Time frame on the above is about 18 months.

So the full service broker has been given the flick.  So much for depending on opinions of experts.  If I'm paying about $250 in brokerage on a trade of only about $10,000 I expect some positive results.  Although my own choices had done reasonably well in previous years, I thought things could only get better if I used the services of "experts".  Well, now I know how expert they are.

Julia


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## brerwallabi (23 November 2005)

Julia said:
			
		

> So the full service broker has been given the flick.  So much for depending on opinions of experts.  If I'm paying about $250 in brokerage on a trade of only about $10,000 I expect some positive results.  Although my own choices had done reasonably well in previous years, I thought things could only get better if I used the services of "experts".  Well, now I know how expert they are.
> 
> Julia




Well I am really out of touch with reality I hope people are not trading or trying to trade short term and paying $250.00 brokerage because thats what I will I will make sometimes on a $10,000 trade. Julia you did say you had a portfolio so I know you are not trading short term but when I was trading full time to pick up  $250 in a couple of hours was a fair gain, no wonder people lose money, buying 10000 shares at $1.00 every 1 cent gain gives you a $100.00 profit so you need a 2.5 cent rise to cover your brokerage so in many eyes the share would have to be maybe a $1.10 to give a reasonable gain. I might have traded it many times in a timeframe that may have been a period of days (usually stocks I now really well) and it never went for example over a $1.05. Note I always got out very quick if the direction was not going as anticipated. 
I really don't know how people lose money but when brokerage is costing 2.5% a la as above maybe people panic when a share falls and sell. I have my set rules for 97% of the time what a coincidence and only occassionally forget my own rules of buying and selling.
Leaving money in the bank costs basically nothing and gives you possibly 5.5% or roundabouts so a share that cost a $1.00 that falls to 95 cents on 2.5% brokerage becomes a real issue I think for some - yes a loss , in they come out they go all 97 of them ha.
All this aside I still can't determine if I am a sucess or a failure where is the benchmark and who are 97%, it must be a big market to exploit, hmmm sounds like a good business venture if you can convince people they are underperforming, no intention to discredit the genuine in that comment.


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## It's Snake Pliskin (23 November 2005)

> Spread-betting companies deny losses on such a huge scale, but are loath to reveal actual figures. However, industry sources estimate the number of people who lose money when they bet is closer to 40% or 50%. And most betters take action to limit any losses.




With comments like this I'm not convinced 97% of traders, investors, spread betters lose. One British article - that's inconclusive - is hardly representative of the world trading community. 

Did 97% of traders lose in the tech boom? Maybe so.


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## brerwallabi (23 November 2005)

Snake Pliskin said:
			
		

> Did 97% of traders lose in the tech boom? Maybe so.




But hey wasn't it good for a while, glad I didn't have all my eggs all in the one basket.


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## It's Snake Pliskin (23 November 2005)

brerwallabi said:
			
		

> But hey wasn't it good for a while, glad I didn't have all my eggs all in the one basket.




I had all my eggs in the bank. So, paradoxically, I won.


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## tech/a (23 November 2005)

*brerwallabi*

This question of what represents a successful trader isnt being addressed.
Everyone is arguing the 97% failure rate.

Thats like arguing how many smokers die a year and not discussing the definition of death!!!! or more to the point the DEGREE of death!

Personally I think anyone who can turn a profit consistantly over a period of years can call themselves a profitable trader.

Anyone who can return a wage consistantly (whether they trade fulltime or not) I think could call themselves an experienced profitable trader.

Anyone who returns excess money to their needs consistantly I would classify as successful!

However in the purists definition as in the Statistics presented from Tree I think the classification is net profitable after brokerage.

*Julia.*

http://www.infochoice.com.au/investment/onlinebroking/compare/tables/default.asp

I'm currently looking at Morrisons but considering CFD's for the short term trades I'm playing with.


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## Kauri (23 November 2005)

The 97% figure is for mine an Urban Myth...  I wonder if anyone can post factual as opposed to anecdotal evidence to back up the 97% figure.......

  From the Reality Times...an American Real Estate news and advice offering..

*Are Homebuyers, Sellers Really Better Off With "Discount" Brokers?
*_by Blanche Evans_


Discount brokerage may not be the answer to investment returns, according to recent study of a large discount stock brokerage firm's clients. The fault lies not in the brokerage services themselves, but in the personalities of the investors, according to the results. And the lessons for homebuyers and sellers couldn't be more apparent -- buy and hold still works in stock market investment and as a homebuying strategy. 

Why is this pertinent? Many people, who would like to see real estate commissions come down further, point to the stock brokerage industry as a great example of why lower commissions will benefit consumers because they save money making the trades. But guess what? They don't make more money on the returns. 

According to a recent study of discount brokerage customers, do-it-yourself stock and bond investors who take advantage of online low trading commissions didn't do as well as the investors who bought and held. 

Behavioral finance professors Brad Barber and Terry Odean produced a startling report in January 2005 called "All that Glitters: The Effect of Attention and News on the Buying Behavior of Individual and Institutional Investors," that suggests that investors lost more money when they went online, primarily due to their own behavior. These investors tend to speculate rather than invest, trade more frequently and sell stocks that are better than the ones they buy. 

Barber is at the Graduate School of Management, University of California, and Odean is at the Haas School of Business, University of California, Berkeley. In their abstract, Barber and Odean "test and confirm the hypothesis that individual investors are net buyers of attention-grabbing stocks, e.g., stocks in the news, stocks experiencing high abnormal trading volume, and stocks with extreme one-day returns. Attention-based buying results from the difficulty that investors have searching the thousands of stocks they can potentially buy." 

*The pair researched the portfolios of 66,400 investors* to find that active online traders (those taking advantage of the discount fees to do their own investing) were beating the market by 2 percent, but after they went online the discount route, they fell under the market by 3 percent. Active traders averaged 11.4 percent versus 18.5 percent for the buy/hold investors. The online discount brokers traded more, incurred more transaction costs, sold winners and bought losers. 

According to Paul B. Farrell, columnist for CBSMarketwatch, "One thing I've learned from long experience, including a few years publishing a market-timing newsletter, is that very few of America's 95 million investors are psychologically strong enough to be successful traders; 99 percent will lose like they did in the 2000-2002 bear market." 

He then outlined why: 

·         Investors tend to buy high, sell low, with a penchant for buying and selling at the wrong time. "Greed gets them in at the top of a bull cycle. Fear pushes them out at the bottom. They lose both ways." 

·         "Markets are random, irrational, unpredictable. Wharton School economist Jeremy Siegel studied 120 of the biggest up and down days between 1801 and 2001. Only 30 could be explained. The market is random 75 percent of the time. You cannot predict the unpredictable." 

·         An optimism bias causes investors to have too much confidence. "We overestimate our skills and our grasp of the market. We underestimate risks. Then we forget about our losses, even tell researchers we're beating the market when our returns are less than inflation. That's denial." 

·         The more you trade the less you earn because active trading increases transaction costs and more trading resulted in losing trades. 

·         Trading online makes losing easier causing traders to fall 3 percent under the market. "Trading is not the get-rich-quick scheme that financial newsletters and trading-system gurus want you to believe. *One study by the North American Securities Administration Association found that 77 percent of day-traders lose money. The "winners" total take averaged $22,000." *

Farrell's conclusion? "By trading frequently, individuals hurt not only their performance net of fees, but they also hurt their performance before fees." 

There's a lesson here for the homebuyers who use discount brokerage to net bigger gains in housing. Buy and hold strategists are being replaced by speculators. Low interest rates, low and no-down-payment loans are helping to fuel more speculative buying. Buyers aren't staying in their homes as long as their parents, using dropping interest rates to "move-up" or buy second-homes. Over one-third of homebuyers are buying homes they don't intend to occupy, according to a 2004 study by the National Association of Realtors. Nearly 23 percent of homebuyers last year were investors and another 13 percent were second-home buyers. 

So what do do-it-yourself stock investors have to do with homebuyers? 

While the relationship has yet to be proven, they could have the same mentality. If they are smart enough to demand and get lower commissions, then they must be smart enough to make their own investments. 

_Published: June 9, 2005_


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## tech/a (23 November 2005)

Great article---In general.


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## Kauri (23 November 2005)

At least it seems the figures have improved since these in 1999...    however it should be remembered that online trading was the new fad in the late 90's attracting a lot of inexperienced people, and also the massive problems that American traders faced with the online brokerages with trading platforms being inaccessable for at times days   , the delays in order processing, buy/sell buttons being deactivated etc.. I seem to remember some courtcases over it at the time..
   Off tack a bit but I think every trader should run their finger over the 8 points listed below.... .... 

*Alpesh Patel – A weekly look at market opportunities and pitfalls*

Alpesh B. Patel is one of the UK's best-known traders and financial journalists. He writes a regular column for the Financial Times, has written seven bestselling books on trading, and makes regular television appearances for Bloomberg, Sky Television, Channel 4, The Money Channel, and the BBC.
​ 
*Women and Men; Mars and Venus*

_14/09/05_ 

As I prepare for three book launches - one in Glasgow, one in Edinburgh and one in London for my new book on Women in Business (I know I am not a woman, but my co-authors are and I wrote the 'male bits' over the past 3 years!) I think about how men and women trade differently. One such difference is men are more likely to be addicted to trading.

Could it be that some people are simply addicted to trading? Several websites are dedicated to recovering "traderaholics". Even professional traders suffer from it.

Nearly 15 million Americans have gambling addiction according to a 1997 study by Harvard Medical School. An equivalent UK proportion would be 4m people. 

In 1999, the North American Securities Administration Association (NASAA) released a study into the most active of trading, day-trading, noting only 11.5% make money. If winners are few, the addicts are not amongst them. Stock market gamblers contacting the not-for-profit New Jersey Council on Compulsive Gambling had losses of $50,000 and $250,000 compared to $38,000 average debt of casino addicts.

During the six weeks following the October 1987 crash 44% of the calls to US based '1-800 GAMBLER' helpline were from traders.

The problem can be more serious than merely debt. This year will be the 6th anniversary of when online trader Mark Barton, suffering massive market losses, walked into two US brokerages offering online trading, and killed 9 people, then himself.

So what does addictive online trading involve? The authoritative Diagnostic and Statistical Manual of Mental Disorders, provides criteria for diagnosing pathological gambling. The more of the following criteria that are met, the more serious the problem.


Excitement. Online trading addicts do it for the excitement not the money. They need to trade with increasing amounts of money to achieve the desired excitement. However, professional traders, for instance those interviewed in my The Mind of a Trader emphasise good trading should neither involve excitement at gains or pessimism at losses. 
Preoccupation. Addicted traders often find trading "took up all their time." However, professional traders talk about their ability to 'switch off' outside work. 
Loss of control, exhibited by repeated unsuccessful attempts to control their trading. Certainly addicted online traders will be unable to stop until all money was lost and huge debts incurred. 
Chasing losses. As an addicted online trader loses more and more money, the urge to get it back becomes increasingly powerful. The very nature of that desire requires active daily trading. The addict will be rapt by the memory of a "big win," when their gambling paid off. They use this memory to justify continuing to pursue their losses. 
Irritability when trying to cut down their trading. Traders deprived of their computer screen or attempting to "cold turkey" can experience withdrawal typical of other addictions. 
Escapism. Trading online to escape other problems. 
Lies to conceal the extent of involvement with trading. Dishonesty is a trademark of addiction. 
Jeopardising a significant relationship or job because of trading. A particular lesson here for those trade at work.


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## ice (23 November 2005)

It's probably impossible to interpret figures on the percentage of traders who fail, without knowing the terms of reference of the 'study' or the checks and balances used. 
I read of a survey done at the height of the tech boom (USA) which found that only 10% of traders made money and only 10% of them made money consistently enough to make a living at it.

However at the height of the tech boom every man and his dog was treating the bourse like a TAB so of course many were going to lose, through either inexperience or ineptitude . Add to that those who were hopelessly undercapitalised (which is the biggest impediment of all), and it's not surprising the statistics were so grim.

If the same survey had been undertaken 12 months after the tech wreck the results may have been much more positive as only the competent would still be trading. 

Bottom line; there are lies, damn lies, and statistics.  


ice


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## Mofra (23 November 2005)

I have been given a figure of 80% of _speculators_ losing money consistently on the market.

This was from the most recent FSRA training I have undertaken, and that figure had been quoted before.

Seems to be a little basis for the 80% figure as the 97% figure, as the 80% seems to have been taken from futures markets at the time of the regulations being enforced.


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## ozewolf (23 November 2005)

brerwallabi said:
			
		

> The comment in the Adaptive Analysis thread that 97% of traders failed really astounded me. Is this comment fact, can anyone show statistical evidence from a reliable source that this the case. Or is the comment used similar to the comments used by real estate agents, used car salesmen and other snake oilers.   Am I one of the 97% or one of the 3%? I wonder how I determine success or failure. Is there cut off point in return from trading capital that determines success or failure. Is a 10% return failure or is 15%? Certainly losing your capital is failure. I would always like to improve my trading but how do I determine if I am successful? I have my trading plan and over the last three years have achieved my goals and have improved my performance (return) each year. So is someone failing if they do not achieve someone elses standard or use their method.




Hi there,

Trading success does start with not being to greedy...that is taking a profit at somewhere near the 25% mark.
Always has worked for me...

Cheers
Ozewolf


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## Julia (23 November 2005)

tech/a said:
			
		

> *brerwallabi*
> 
> This question of what represents a successful trader isnt being addressed.
> Everyone is arguing the 97% failure rate.
> ...




Hi Tech,

Essentially agree with the first part of your post.  As long as I can live off my dividends plus see capital growth each year, I'm happy.

Yes, I had a look at Infochoice before deciding to go with E-trade.  So far I'm perfectly happy.  They have a great website and the customer service so far is good.

Cheers
Julia


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## It's Snake Pliskin (23 November 2005)

tech/a said:
			
		

> Anyone in my view can trade a winner---but,
> 2-5% will consistantly profit from trading--consistantly being over a period of 12 mths or more and over Breakeven including brokerage.
> 
> Tree has quoted statistical evidence.
> ...




Tech,

Where do you get this 2-5% from?

There are too many variables that affect the accurate recording and producing of statistical evidence to back up these claims. I think we will never know. 
Snake


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## brerwallabi (24 November 2005)

tech/a said:
			
		

> *brerwallabi*
> 
> This question of what represents a successful trader isnt being addressed.
> Everyone is arguing the 97% failure rate.
> ...




Yes they are all missing one of my many questions in my threadstarter, basically what represents a successful trader. I did pose a few questions oringinally, sorry about the poor punctuation may be the questions were not quite clear. I feel only Tech has got anywhere near answering one question for me.
Net profitable after brokerage hmmm, could not call myelf successful if I was just a tad in front, someone else said 25%. Is 25% per trade good, or 25% overall good, should this year be treated differently from last year- damn even more questions now.Still don't believe the 97% still smells of snakeoil to me.


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## money tree (24 November 2005)

I think some of you are clutching at straws here.

You secretly hope the statistics show that trading is easy so that you are more likely to succeed. 

This is classic novice mindset. 

What difference does it make if the figure is 97% or 90% or even 80%? If it was 50% would that make YOU more or less likely to cut losses early? 

The house edge at the casino is 3%. IE 97% of people dont lose. The same can be said for the market. Brokerage  / spread is around 3%. The problem is that if you keep betting at the casino your odds diminish. After 10 hands your odds of winning are .97 x .97 x .97 x .97 x .97 x .97 x .97 x .97 x .97 x .97 = 0.737. This means if you walk in with $1000 and spread it over the roulette table, after 10 spins its likely you will have $737 left.

The same applies to trading. If you keep deducting brokerage it becomes harder and harder to make money. Add to that the issue with control. Traders hate to take losses and let them build, while they take profits too quick. In the casino you usually have no control over the outcome.

Basically your odds of success in this game are improved by FEWER number of trades and the historical tendancy of long term markets rising. IE, INVESTORS have a high chance of success, while daytraders have a very LOW chance of success. This is why I have always discouraged my students from "trading" as opposed to "investing".


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## tech/a (24 November 2005)

tech/a said:
			
		

> *brerwallabi*
> 
> This question of what represents a successful trader isnt being addressed.
> Everyone is arguing the 97% failure rate.
> ...




Well there is my classification of successful.
There are many business owners I would place in (1) or (2) so wouldnt say they are a success in business.Few are at (3) and have funds from business available for other ventures--excess where their "Money makes money"! These I see as successful.

Now what % of traders are in my classification of Successful. I think nearer the 3%.
If a trader makes profit and dost need it and can use it to compound and re invest then their trading would be successful---even though their ability to do this could be bought about by a business that takes care of the day to day costs.If then they are gaining a *consistent growth * on $$s invested then that would be also Successful in my veiw.


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## It's Snake Pliskin (24 November 2005)

money tree said:
			
		

> I think some of you are clutching at straws here.
> 
> You secretly hope the statistics show that trading is easy so that you are more likely to succeed.
> 
> ...




I disagree,

Casinos and trading are fundamentally different. 

Moneytree post some results to show you are not a novice.


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## GreatPig (24 November 2005)

Snake Pliskin said:
			
		

> Casinos and trading are fundamentally different



The primary difference is the level of skill involved.

With one or two exceptions, casino games have no element of skill what-so-ever. The only rule that applies is that the more you play, the more likely you are to get the average return, which is always less than 100%. A regular player has no advantage over a complete novice.

Trading, on the other hand, involves an element of skill. If it didn't, professional traders like Daryl Guppy would have no advantage over anyone else, and would ultimately tend towards the average return, which is 100% minus the brokerage rate.

For comparative purposes, 100% return means just getting your money back, not doubling your money (that's how returns are usually stated with gambling games).

Cheers,
GP


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## wayneL (24 November 2005)

Snake Pliskin said:
			
		

> Casinos and trading are fundamentally different.




I agree they are different.

However, the way trading is viewed by the vast majority is no different; particularly in leveraged markets like forex.

When you mention expectancy, MM etc, it usually draws a blank. Oh they are gamblers alright.

The difference is that in financial markets you can swing the expectancy in your favour. You can't in the casino.... or, if you do by card counting etc., they throw you out. Heck, in the US card counting is actually illegal!!!!


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## Kauri (24 November 2005)

I personally think that the first step towards being a successful trader/investor is honesty with yourself.Cruise through the popular share forums and see how many posters actually own up to a loss on a trade. Until a person realises that not every trade will be/can be a winner then they are only fooling themselves. 
  Possibly as I'm not the brightest globe on the christmas tree  :homer: it took me the first two years of my trading/investing journey to find the method that suited my personality and actually break even. Could I be classified as a successful trader now... if that means that I live from the profits and have enough left over to invest elsewhere then no I'm not...if it means that I now consistently turn a profit annually and continue to learn and improve then yes, I am.


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## Julia (24 November 2005)

GreatPig said:
			
		

> The primary difference is the level of skill involved.
> 
> With one or two exceptions, casino games have no element of skill what-so-ever. The only rule that applies is that the more you play, the more likely you are to get the average return, which is always less than 100%. A regular player has no advantage over a complete novice.
> 
> ...




Hi GP,
In your comment above "100% return means just getting your money back, not doubling your money", presumably you mean this just as far as gambling is concerned, not with reference to share trading?

e.g. if I paid $1000 for some shares, paid $50 brokerage to buy and the same to sell, and at the time of selling they were worth $1200, then I have made 10% after deducting brokerage?

Cheers
Julia


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## Nick Radge (24 November 2005)

> The house edge at the casino is 3%. IE 97% of people dont lose.




This is incorrect.

The house takes 3% of all funds wagered.

You cannot compare trading to a casino. They are mathematically non-comparable. A player at a casino (ex a card counter on blackjack) can never win regardless of their skill because of the maximum bet size and payout limitations. A trader on the other hand has the ability to create their own betsize and payouts.


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## happytrader (24 November 2005)

Hi there

With regard to card counters.

I saw this documentary on SBS months ago about these US students at a particular campus who had all learnt to 'count' They used to hit the Casinos as 'individuals with varying disguises and table personas' but they were all working as part of a team. They were making millions and really living it up. 

The casino wanted to know why they were lossing money. So they started watching very closely. Jealousy got them dobbed and facial identification technology tipped off the casino to these students. The students were profiled and later couldn't even make it through the door. All new students of that campus are still profiled today. Casinos are THE absolute specialists in security and they take lossing money extremely seriously. Individual counters are observed and thrown out very quickly. 

Cheers
Happytrader


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## It's Snake Pliskin (24 November 2005)

GreatPig said:
			
		

> The primary difference is the level of skill involved.
> 
> With one or two exceptions, casino games have no element of skill what-so-ever. The only rule that applies is that the more you play, the more likely you are to get the average return, which is always less than 100%. A regular player has no advantage over a complete novice.
> 
> ...




Gambling is negative expectant, and the longer you gamble you are assured of going broke. Casinos are designed to keep you gambling in order to take your money. The longer you keep gambling the more you will lose. You may have one win here and there but you will go broke - it's assured. Lotteries included!

With share investing and trading, the longer you do it the more you will make - providing you have used some judgement, used probability to your advantage when stock picking and selling. Oh, and your system must be positive expectant; something gambling isn't.


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## tarnor (24 November 2005)

I'm gunna head off to the casino for some texas hold em down one of these days, only game i would consider playing in a casino,..

I dead set recommend anyone who wants to do short term trading spends some good quality time playing texas hold em ..www.poker.com  great way to learn when to hold em, when to fold em and when to go all in.. 

for example a day trade starts to go against you.. tis ime to quickly fold with that tight stop..  instead of clinging onto the river hoping for the other dt's to pump it back up for you...  and when to raise your stakes when its a sure thing...

probably gunna get flamed for this post but i can honestly say playing poker has helped my trading in so far has handling emotion and risk probability.. etc lol
cheers


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## brerwallabi (25 November 2005)

I can not see any relationship between poker and trading. Poker is pure gambling you get beaten if someone holds a better hand then you and then you lose all.There is a risk element in both but in poker play a hand (make a trade) and you don't win you lose all, make a trade (play a hand) and it goes sour you don't lose all, you lose some. I am not adverse to a bet, Saturday arvo down the RSL with a few mates and have a $100 for a few bets, I do it for a social thing but I know most of the time I am going to lose, expect to lose, even if occasionally I have a few wins.Trading is a different thing, my expectection is I am going to win even if I take some losses and I do win, but should I expense my hard earned money because I do work for it in trading to find out if I am successful or not. $30 for a book is not much, $5k for some trading instruction/package is, all I want to do is have the unit or penthouse on the beach with my lady as soon as possible and never have to trade again. I don't know how successful I am because I can't benchmark myself and if only 3% are profitable then there is huge opportunity. There would be a structure of success in the 3%, I still doubt the figure, so has everyone in the 3% read or a written a book,is that what makes the structure - more knowledge, so what happens when we all became expert traders will the 3% change.


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## BraceFace (25 November 2005)

Another thing to consider when comparing trading to casino's....

Nobody in their right mind would would try and make sense of candlestick graphs, company announcements, trendlines etc after knocking back half a dozen orange whips and a few fluffy cocktails with their mates on a Friday afternoon. :drink:  :screwy: 

Alcohol and irrational emotion help to give casinos the edge.

Commonsense, research and strategy at least give the trader some remote chance of having a win.


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## money tree (25 November 2005)

tarnor said:
			
		

> I'm gunna head off to the casino for some texas hold em down one of these days, only game i would consider playing in a casino,..
> 
> I dead set recommend anyone who wants to do short term trading spends some good quality time playing texas hold em ..www.poker.com  great way to learn when to hold em, when to fold em and when to go all in..
> 
> ...




:iagree: 

YES YES YES !!!

I had never played poker before a few days ago. But I quickly saw the similarities between trading and poker. No other game lets you take control over your losses, and lets you out with a small loss. Most games are win or lose the whole wager, no control over outcome. So I agree POKER is excellent training for trading discipline.  

speaking of discipline, I will start another thread on it.......


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## Nick Radge (25 November 2005)

There are two core issues working against most people who wish to trade. One I explain in my book is the need to be right. That's ingrained in us as we grow. 

However, the other is the requirement for gratification. This has come from Evolutionary Theory which suggests that we are more prone to accept an earlier and smaller reward rather than wait for a very large reward at some stage further on. 

Ask yourself how often you are in a winning position and the only thing that enters your mind is that the market could reverse? This is gratification coming to the surface. You would prefer to take the profit and get the gratification rather than allow a potentially larger gain develop. When we're in a profitable trade we should think, "well, prices can go down, but they can also keep going up". But we don't, we think they will always go back against us.

These two issues are core psychological impediments that exist within us, and both work against creating a positive expectancy. You need to override them in order to be successful.

Nick


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## RodC (25 November 2005)

Nick Radge said:
			
		

> Ask yourself how often you are in a winning position and the only thing that enters your mind is that the market could reverse? This is gratification coming to the surface. You would prefer to take the profit and get the gratification rather than allow a potentially larger gain develop. When we're in a profitable trade we should think, "well, prices can go down, but they can also keep going up". But we don't, we think they will always go back against us.




I know what you mean, I've sometimes found myself in a winning trade almost wishing my trailing stop would get hit just so I could realise the profit.

Now that I'm using a more systematic approach I find it much easier to resist this temptation to take early profits and hang on for the larger ones.

Rod.


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## Milk Man (25 November 2005)

How could these uni guys count cards these days? Doesnt everywhere have those shuffling machines? I did it a couple of times a couple of years ago- about doubling my capital. But that was with about 1 deck just cut off so the system still worked. Does anyone know?

 If anyone is thinking of counting cards it is bloody hard; nearly made my head explode (and my iq is about 120). And casinos dont like it coz they cant handle their own medicine. I can give you guys the basic principle if you want; its just probability and money managment giving positive expectancy.  Just like trading!


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## money tree (25 November 2005)

Nick Radge said:
			
		

> Ask yourself how often you are in a winning position and the only thing that enters your mind is that the market could reverse? This is gratification coming to the surface. You would prefer to take the profit and get the gratification rather than allow a potentially larger gain develop. When we're in a profitable trade we should think, "well, prices can go down, but they can also keep going up". But we don't, we think they will always go back against us.




I call this "irrational exiting". Seems to be very common, even among highly successful, highly experienced traders. Often I see traders in my chatroom enter a long position. All goes well. The stock rises a fair bit. Then, for absolutely no reason, they decide to sell. I get quite annoyed. 

here is an actual conversation I had with the best trader I know:

Trader X is long and places a sell order with the stock still rising.

me: "hey X, you reckon ABC stock is a short here?" 

X: "hell no! Its a long!" 

me: "well if its a long here, why are you putting in a sell order? Is there something on the chart that says sell?"

X: "chart does not say sell. its not a short order, its exiting a long"

me: "and theres a difference?....a sell order is a sell order. Your position prior is irrelevant. Why would you place a sell order when the chart says buy?"

he thinks about that for a minute, then says: "I guess you are right, I never thought about it like that. I do always exit my longs too early. So you think I should wait for a sell signal?"

me: "well you may never get one. But certainly exiting for no reason whatsoever is not the way to go. You dont have to wait for a sell signal, but you can at least wait until the buy signals stop"

X: "good point. Will give it a try"


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## Milk Man (25 November 2005)

> I call this "irrational exiting". Seems to be very common, even among highly successful, highly experienced traders. Often I see traders in my chatroom enter a long position. All goes well. The stock rises a fair bit. Then, for absolutely no reason, they decide to sell. I get quite annoyed.
> 
> here is an actual conversation I had with the best trader I know:



 This could work in theory if a profit target strategy were in place could it not? If he is the best trader you know I assume thats because he makes the most money. Maybe this is why. What do you reckon?


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## money tree (25 November 2005)

I have no idea how much money he makes. What I do know is that he picks direction very well. he is the first to admit he is not perfect and often complains that he should have let his profits run. As I said, he could not give a reason for the exit, certainly not a 'profit target'. 

Profit targets are a good strategy, but only in conjuction with very tight stops, and must be decided before entry.

The reason I said this to him, and the reason I am repeating it here, is this:

He is a far superior trader to me. But, I have a trait he admires. I have absolutely no issue with letting profits run. He calls it "infinite patience". Just recently, I shorted GBPUSD @ 7782, and did not cover until 7160. How many traders would let a profit run to over 600 pips? On the flipside however, I am usually the worst at cutting losses early, so I rank myself pretty low overall. The reason I usually dont cut losses quickly is because I need justification.....ie a sell signal. Sometimes this is little further down. Im not one for selling just because I am a few pips/ticks behind. I like to wait for support/trendline to be lost. Personally I think tight fixed stops are superior....I just dont have the mental ability to do it every time. It seems illogical to sell when you have a buy signal.

Anyway, I thought it might be valuable to hear how I think with regards to letting profits run.


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## Milk Man (25 November 2005)

money tree said:
			
		

> I have no idea how much money he makes. What I do know is that he picks direction very well. he is the first to admit he is not perfect and often complains that he should have let his profits run. As I said, he could not give a reason for the exit, certainly not a 'profit target'.
> 
> Profit targets are a good strategy, but only in conjuction with very tight stops, and must be decided before entry.




Ive heard it said that entries are not the most important part of any strategy. Obviously its handy to know when something is going to go up, dont get me wrong. Imagine how good this guy would be if he could pick exits as well as entries. Unless he knows and its just a cut and dry case of him pulling the trigger too early. Maybe a profit target strategy would be best for him.


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## Happy (25 November 2005)

A thought:

 Superior entry man should just do that and leave it to superior exit man to call it a day.

Maybe you can open a joined account, could be rewarding,


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## It's Snake Pliskin (25 November 2005)

money tree said:
			
		

> :iagree:
> 
> YES YES YES !!!
> 
> ...




Yes, I agree that poker is like trading in a few ways.
You don't need technical analysis or fundamental analysis, but you need money management and MUST determine your risk and reward for each hand. If it's not worth it take a small loss. If it's worth it and the balance of probabilities is in your favour go for it - if your competitor is a novice more than likely he doesn't have his risk to reward thought out and is gambling. The good poker player is not. He is working. And will take advantage of the situation by reading faces etc. It's a zero sum game just like trading so there is only one winner.

I will try the Vegas competition oneday after I have my poker plan/system backtested and find it is positive expectant.


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## GreatPig (25 November 2005)

Julia,



			
				Julia said:
			
		

> In your comment above "100% return means just getting your money back, not doubling your money", presumably you mean this just as far as gambling is concerned, not with reference to share trading?
> 
> e.g. if I paid $1000 for some shares, paid $50 brokerage to buy and the same to sell, and at the time of selling they were worth $1200, then I have made 10% after deducting brokerage?



I think it's just a convention in the gaming industry, especially with respect to poker machines.

When they say 100% return, they mean whatever bet you place, you get 100% of it back again - ie. only your bet back, no profit. So it's not 100% _profit_, just the ratio of money back to money spent.

With investments, when you say you made a 10% return you mean a 10% profit. With poker machines, that would be called 110% return.

Cheers,
GP


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## happytrader (26 November 2005)

Happy said:
			
		

> A thought:
> 
> Superior entry man should just do that and leave it to superior exit man to call it a day.
> 
> Maybe you can open a joined account, could be rewarding,




Thats an excellent strategy happy. However, I remember suggesting that to one particular trader who thought they would get their marriage mate (who was quite concerned about the losses) to exit on the stops. But when the time came to do as instructed the partner somehow turned into an 'analyst' and decided against exiting to their trading accounts detriment. 

Actually I'm a loser this week and self inflicted too, by the way. I make around 8 to 10 trades per month. Usually 2 of those are losses.

My weak points are greed and hope driven.

Example

No.1 Mistake - Getting in on the second day (double dipping - greed and hope)

No.2 Mistake - Not taking a sure quick 20% as soon as it is offered usually within hours. (holding out for more - greed and hope)

Funny now that I'm proof reading this I can see how I'm disguising greed as hope.

I can assure you that if I did neither of those things I would be a millionaire many times over. I would not mind at all having someone take care of the exits.

Cheers
Happytrader


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## Double Six (26 November 2005)

if most traders are failures, then I suspect it is because they

1- Do not treat it as a business.
2- Are amateur gamblers, with egos.
3- Simply not suited to trading environment.

How many of you think you would be good brain surgeons ?
Then why the hell do you think you would be good traders ?

Dreamers all !


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## tarnor (26 November 2005)

> No.2 Mistake - Not taking a sure quick 20% as soon as it is offered usually within hours. (holding out for more - greed and hope)





I'm with ya on this one, one mistake that I fall into is eagerly working out how much of a killing i'm making each time it clicks up and tantalising myself with overly ambitious fantasies.. or sometimes things like working out whats the 1k profit mark on this trade caue that would feel so much better then 1k :/..

I do alot better when i just focus on being in tune with the momentum.. instead of trying to decide in my head what i would like the market to do for me...

I also noticed that when i started and my day trading parcel was small (money i was totally prepared to lose) i was way less attached to it emotionally .. after a bit of success and it had  grown substantially, a lot more fear came into play... have to force myself to remember this is still the small parcel that i'm 'playing' with... 

like
i'm stuck in CAZ atm.. got one trade in the 90's out on close above a dollar.. went back the next day got 1 good trade, came back for another and caught the trading halt by 3 seconds..  it looks pretty good now but at the time the amount of concern it caused wasn't to flash, was only going for a quick trade on a run towards the close.. I'm going to split it up into smaller parcels after this so i can trade it with less emotion...  

tis still all learning for me but i seem to be doing exponentially better out of day trading/short term then when i was med/long term..  as for successful trader let see how it goes over along period of time...


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## RichKid (26 November 2005)

brerwallabi said:
			
		

> There would be a structure of success in the 3%, I still doubt the figure, so has everyone in the 3% read or a written a book,is that what makes the structure - more knowledge, so what happens when we all became expert traders will the 3% change.




hi brer,
Assuming the figure is right, it's just a percentage and can stay about the same in the long run, only a small fraction of people will come across this money/risk mgmt info. ASF and Reefcap, for example, only have a few thousand members, and a few hundred (or less who read/post regularly, of those an even smaller number will care much for the types of things Nick mentions). 

There's a sucker born every minute so they will continually join the market and help keep that figure intact (or close to it by losing money). Remember how important the psychological part of it is, humans have behaved like this for centuries. For example, as a beginner, I'm not profitable yet, even though I now know of these things now, but that's because I'm only just learning this stuff and I intend to persevere, there are others who'll just go back to their bad old ways of merely punting on the ASX or who'll dismiss the maths because they don't like math- market corrections and downturns will sort them out. 

Just for the record I'm sure there are many fundamental investors who don't use the type of mm/risk mgmt that Nick talks about but they'll be doing well (ie profitable), again I don't know of many.


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## ice (27 November 2005)

Probably many of the people who are longterm successful  maintain a very low profile.
I know a couple and for starters they wouldn't know what a stockmarket chat site was.

ice


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## RichKid (27 November 2005)

ice said:
			
		

> Probably many of the people who are longterm successful  maintain a very low profile.
> I know a couple and for starters they wouldn't know what a stockmarket chat site was.
> 
> ice




Hi ice,
Yes, that makes sense, maybe they are also older investors who don't use the internet much to interact with other traders/investors.

'Investor' was someone who said  he was doing really well out of his long term fundamental strategy (I'm afraid he doesn't post here anymore, to our great loss). I'm sure there are lots of highly profitable short term traders too who stay quiet.


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## websman (24 December 2005)

How can one not be successful in the market?  It's like taking candy from a baby. :twak:


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## GreatPig (24 December 2005)

websman said:
			
		

> How can one not be successful in the market?  It's like taking candy from a baby



Depends on whether you're the taker or the baby... 

GP


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## bullmarket (24 December 2005)

Hi everyone 

I remember reading in a charting book once that anecdotal evidence suggested that less than 10% of traders are profitable in the long run.

And when you sit down and think about it, less than 10% is probably right because if it was as easy to make a living out of trading as some rampers would have you believe then everybody would be doing it and our unemployment rate would be much higher than the ~5% it is now because everyone would be sitting at home all day infront of their pc's punching in buy and sell orders all day 

Those that are successful will have had a trading/investing plan (that worked) which takes time and effort to get right for one's particular circumstances and stuck to it.  The vast majority of mug punters who continually post alleged profits are most probably struggling to make a quid imo.

From what I saw over at commsec and some other sites, there are many rampers/spruikers in chat rooms who imo try to create illusions of success by 'advertising' their supposed profits in the hope that the gullible and less experienced will follow their next ramps when the rampers are in reality trying to recover losses.  Obviously some claims of profits will be true but since I can't tell which are and which aren't I disbelieve all of them...but that's just me being cautious.

You'll notice that many rampers also get very defensive and aggressive/abusive towards others when their claims or views are challenged. Imo, these types of chatters with their aggressive and abusive tactics are most likely struggling to be profitable and so take out their frustrations on others when they don't agree with their view/claim. For me, if someone was successful at trading/investing or whatever, why should it matter to them at all if someone else didn't believe their claims of profits unless of course they had another agenda behind their profit claims in that they have a need to be believed so that the gullible will follow their next ramps......bottom line for newbies, and even not so newbies, beware of claims of alleged profits as imo the vast majority will not be true.

I'm only new to this forum and so far have found it a very pleasant forum 

Merry Christmas everyone and I'm off to bake some cookies for santa to have a snack when he stops by tonight. 

bullmarket


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## Gauss (24 December 2005)

bullmarket said:
			
		

> And when you sit down and think about it, less than 10% is probably right because if it was as easy to make a living out of trading as some rampers would have you believe then everybody would be doing it and our unemployment rate would be much higher than the ~5% it is now because everyone would be sitting at home all day infront of their pc's punching in buy and sell orders all day



Unemployments should actually be lower if you think about it  

Can someone define what a "trader" is? Are traders people who arbitrage for profit?


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## captain black (24 December 2005)

Here's the ATO's definition of a person carrying on a business as a trader:

http://www.ato.gov.au/businesses/content.asp?doc=/content/21749.htm&pc=001/003/007/001/006&mnu=9447&mfp=001/003&st=&cy=1


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## Julia (24 December 2005)

captain black said:
			
		

> Here's the ATO's definition of a person carrying on a business as a trader:
> 
> http://www.ato.gov.au/businesses/content.asp?doc=/content/21749.htm&pc=001/003/007/001/006&mnu=9447&mfp=001/003&st=&cy=1




I've just had a look at the above links and it's interesting to note that some of the criteria which determine a "trader" are the same as those set down as mandatory for those who have self managed super funds!!

Seems that if one adheres rigorously to the rules of record keeping, including regularly revising the "Investment Strategy" for a SMSF, one can be considered a share trader!

Julia


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## Bobby (24 December 2005)

GreatPig said:
			
		

> Depends on whether you're the taker or the baby...
> 
> GP



That comment did make me laugh  ! .

Cheers Bob.


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## powwww (27 December 2005)

bullmarket said:
			
		

> bullmarket




You raise some interesting points.  Some of which I have spend a lot of time researching - particularly the ones you raised about rampers and people exagerating profits.  Another interesting point you raised was "why doesn't everyone make money on the stock market,"  and obviously this is a valid question.  

As I have time contraints at the moment I will answer only that point in the most timely manner.  80% of traders fail because they do not have a plan, they let their emotions take over - they chase losses and seek risk when losses are involved and they are risk evasive when gains are involved. Certainly this juxtaposes what any profitable trader partakes in!  It is our instynct to follow our emotions but often, instyncts are wrong!

Regards for now,

powwww


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## Bobby (27 December 2005)

Yep Powwww you do have a point, I've being using mental stops for so long that stuffing up has become part of my trading.

But recently I now pay the small price to make it happen.( Paid Stop )
The best thing I ever did !!.

Take note new traders.
 Bob.


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## bullmarket (28 December 2005)

hi powwww,

yes, totally agree with you re why most traders fail in the long run and that is why I mentioned in my original post that successful traders will very likely have had a trading/investment plan that took time and effort to develop and fine tune and most importantly they will have stuck to it.

cheers 

bullmarket


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## mit (28 December 2005)

At work there are around 3 or 4 other people who trade shares. They ALL lost money this year. I think the vast majority of the 90% that fail are like these guys. If they have a spare $20k and see a stock they like they buy $20k of it.

I think that being on a forum like this, where words like risk management/position sizing are discussed will increase the probability of success a lot more.

MIT


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## matti_pacman (27 November 2006)

Hi all, this is a very interesting post and I had a great time reading through it.   

I guess I find day-trading and gambling very similar in nature is because both are betting/trading with things that are *UNPREDICTABLE*. Benjamin Graham once said,'In the short run, the market is a voting machine, but in the long run it is a weighing machine'. As history has consistently shown, the daily market is driven by individuals sentiment, their greed and fear.

The market/individual stock will go up/down the next couple of days is anyone's guess, but traders are put in a huge disadvantage due fees/brokerage. TheREAL winners are the brokers and ASX.

In the longer run however, as long as the economic and productivity of the country improves, the share market will follow.

Last couple of years would have been easy for daytrading as Oz stock market is doing a great bull run... Its rather difficult to be losing money other than trading shorts/pull options all day long. However, as the volatility of the market increases, especially if there is a bust of the commodity boom, greed and fear will overwhelm most ppl and I guess theres when only 3% of day traders will be still in the black.

its just my two   .  :


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## professor_frink (27 November 2006)

matti_pacman said:
			
		

> Hi all, this is a very interesting post and I had a great time reading through it.
> 
> I guess I find day-trading and gambling very similar in nature is because both are betting/trading with things that are *UNPREDICTABLE*. Benjamin Graham once said,'In the short run, the market is a voting machine, but in the long run it is a weighing machine'. As history has consistently shown, the daily market is driven by individuals sentiment, their greed and fear.
> 
> ...



Another Graham/Buffett wannabe thinks that they know what trading is about because Benjamin Graham said so.
It's funny how alot of 'value' investors think trading would've been easy during the past few years, yet rarely come out and make similar comments about other investors. The performance of the 'value' investor has absolutely nothing to do with bullish conditions. It's all about picking the right stock, isn't it?


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## matti_pacman (27 November 2006)

professor_frink said:
			
		

> The performance of the 'value' investor has absolutely nothing to do with bullish conditions. It's all about picking the right stock, isn't it?




You are right  in some sense professor, it has been an easy ride for most traders/investors last couple of yrs, its almost like randomly picking a number of stock (blue chips), you would have got yourself at least 10%p.a return.. Picking the right stock helps, but as the old saying goes- when there is a flood, it floats all boats!  : 

The problem comes when there is a *sudden* downturn... which is unpredictable, and often catch ppl off guide. Those company that are fundamentally strong can make changes/ride through the storm, and those that are speculative in nature will disappear into the dark. 

Let us all pray that the day will never come and everyone keep benefiting from the raising market!


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## Sean K (27 November 2006)

matti_pacman said:
			
		

> Let us all pray that the day will never come and everyone keep benefiting from the raising market!



Hhhmmm, I'd like to convey the same wishful sentiment, but I'm going to say that a lot of punters are going to lose their shirts down the track. Economic cyles are inevitable, supply will catch up with demand, and people will jump on a bandwagon just as it rolls over a cliff. 

I'm hoping the supercyle keeps on getting more super and Chindiapanaiwanporeland keeps growing around 10% for the next 20 years using our valuable dirt and rocks to do so, but, with the US tettering on the edge of a knife, econimc disaster is just a housing crash away. Don parachutes punters. 

Make hay, but have some gold stashed under the mattress too.


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## professor_frink (27 November 2006)

matti_pacman said:
			
		

> You are right  in some sense professor, it has been an easy ride for most traders/investors last couple of yrs, its almost like randomly picking a number of stock (blue chips), you would have got yourself at least 10%p.a return.. Picking the right stock helps, but as the old saying goes- when there is a flood, it floats all boats!  :
> 
> The problem comes when there is a *sudden* downturn... which is unpredictable, and often catch ppl off guide. Those company that are fundamentally strong can make changes/ride through the storm, and those that are speculative in nature will disappear into the dark.
> 
> Let us all pray that the day will never come and everyone keep benefiting from the raising market!




Another incorrect assumption(but don't worry, you are far from alone in this view, there are lots on the forum who think that way). I think you are confusing traders and small cap "punters" a little bit.
My returns are more closely linked to volatility, not direction.
So far this year, my most profitable month has been May, with daylight a very distant 2nd.
The closest thing to a storm for me will be a low volatility environment like 2004, but I have longer term(position trading, not investing "long term"  ) methods that I can implement.
The storm you speak of, is simply business as usual for others.


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## tech/a (27 November 2006)

matti_pacman said:
			
		

> Hi all, this is a very interesting post and I had a great time reading through it.
> 
> I guess I find day-trading and gambling very similar in nature is because both are betting/trading with things that are *UNPREDICTABLE*. Benjamin Graham once said,'In the short run, the market is a voting machine, but in the long run it is a weighing machine'. As history has consistently shown, the daily market is driven by individuals sentiment, their greed and fear.
> 
> ...




A common misconception by those who cannot trade the most difficult of timeframes. Not necessarily day trading but very short term.

All to often traders think that to be profitable you have to pick the right stock more often than not (right being profitable).
When the fact is that you need to have a higher Reward to Risk Ratio over time in your favour.
Not understanding the concept and indeed the application of this principal is the downfall of the majority of traders.

Even in Bear Markets there are stocks which out perform.

Even if you get 2 out of 8 you can be extremely profitable.
If you cant workout how then your in the 90%.


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## constable (27 November 2006)

tech/a said:
			
		

> A common misconception by those who cannot trade the most difficult of timeframes. Not necessarily day trading but very short term.
> 
> All to often traders think that to be profitable you have to pick the right stock more often than not (right being profitable).
> When the fact is that you need to have a higher Reward to Risk Ratio over time in your favour.
> ...



couldnt agree more my most profitable week so far contained 13 wins and 11 losses. As far the thread goes i wonder how many who fail at trading have really met the criteria of a trader. How many are plain mug punters who heard a special tip or had a couple of good wins and then tanked on the last few. With some commitment , discipline and sacrifice their is no difference to trading no special secret or skill that makes it different to any other business.
Being aware of your own weaknesses however is a handy prerequisite.


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## tech/a (27 November 2006)

> How many are plain mug punters who heard a special tip or had a couple of good wins and then tanked on the last few. With some commitment , discipline and sacrifice their is no difference to trading no special secret or skill that makes it different to any other business.
> Being aware of your own weaknesses however is a handy prerequisite.




Common Constable thats an easy one---95%.

Being able to run a successful business is another handy trait-- upto 90% fail at this too!!


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## trader (27 November 2006)

tech/a said:
			
		

> A common misconception by those who cannot trade the most difficult of timeframes. Not necessarily day trading but very short term.
> 
> All to often traders think that to be profitable you have to pick the right stock more often than not (right being profitable).
> When the fact is that you need to have a higher Reward to Risk Ratio over time in your favour.
> ...




I'am averaging 3 wins out of ever 10 in the last year but have been making
a return of 8 % a month and thats not counting AGS. I use very tight stop
loss, if it doesn't go up I'am out. I also spend a hell of alot of time researching.


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## matti_pacman (27 November 2006)

tech/a said:
			
		

> All to often traders think that to be profitable you have to pick the right stock more often than not (right being profitable).
> When the fact is that you need to have a higher Reward to Risk Ratio over time in your favour.




I couldnt agree more!! The trouble lies in HOW to achieve a higher reward to risk ratio over time.

I guess alot of day traders try to a achieve the above through predicting the action of human. (thus charting) However, I personally find it very unpredictable as market can behaviour very irrationally in the short term.

Thus for me, evaluating a business makes more sense. A good quality business,  saling at a low price is not without its risk, however it does present a big mirgin of safety, in turn offer a higher reward to risk ratio.

I am not saying an indepth analysis can offer a sure-win formula, alot of things I realise cannot be 'priced'. How much premium are you willing for pay for quality management? how much discount should we give if the CEO depart?

I recently purchased RPC after its MASSIVE drop, because to me, it offers significant discount and its priced as if it is going to liquidate. I can see a further 50% drop downside, but potentially a 300% to 400% rise if it return to profit... which I am comfortable it will as it has a good history and strong cashflow too. But to other 'realist', no price can discount into the poor management, and the 'MAJOR' brokers all rated it as AVOID/SELL.

Oh well, thats the fun part of investing... if everyone have the same sentiment on buying/selling, there will be no trading!

Good luck all and many happy returns


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## It's Snake Pliskin (27 November 2006)

matti_pacman said:
			
		

> I guess alot of day traders try to a achieve the above through predicting the action of human. (thus charting) However, I personally find it very unpredictable as market can behaviour very irrationally in the short term.



There are some grammar problems here.



> Thus for me, evaluating a business makes more sense. A good quality business,  saling at a low price is not without its risk, however it does present a big mirgin of safety, in turn offer a higher reward to risk ratio.



Does quality relate to profits for the investor/trader?



> How much premium are you willing for pay for quality management? how much discount should we give if the CEO depart?



Does this relate to profits for the investor/trader?



> I recently purchased RPC after its MASSIVE drop, because to me, it offers significant discount and its priced as if it is going to liquidate. I can see a further 50% drop downside, but potentially a 300% to 400% rise if it return to profit... which I am comfortable it will as it has a good history and strong cashflow too. But to other 'realist', no price can discount into the poor management, and the 'MAJOR' brokers all rated it as AVOID/SELL.



The key word here is "IF". 



> Good luck all and many happy returns



You too.


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## matti_pacman (28 November 2006)

It's Snake Pliskin said:
			
		

> Does quality relate to profits for the investor/trader?
> 
> 
> Does this relate to profits for the investor/trader?
> ...




hehe... thats right, IF it does make profit... its a risky situation, but the risk/reward ratio looks good to *me*, so I am taking a punt...  : 

If you adapt a 'business owner' mentality (which i think most investors does or should) when investing, it is easy to see how quality and price of a business has a DIRECT relationship for the investor. 

To me, I classify a quality company as one which can consistently generate high return(or profit) over their equity/asset. 

The reason you start/own a business, ultimately, is to earn money. As a shareholder, every dollar the company make, you actually earn PART of it..The lower price you pay for the ownership, the less risk (loss less money if theres a fallout) and more profit you can generate (say every dollar give u 50c return instead of 40c) from your investment. Thats why to me, the quality and price of a business has a direct link to the profitability of an investor.


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## tech/a (28 November 2006)

matti_pacman said:
			
		

> hehe... thats right, IF it does make profit... its a risky situation, but the risk/reward ratio looks good to *me*, so I am taking a punt...  :




There is no place for punting in the markets. Having a percieved reward to a percieved risk is NOT a positive expectancy,its simply a hypothetical. Positive expectancy and R/R ratio's are KNOWNS that are related to the numbers which your trading methodology returns.You are simply gambling regardless of how you "think" you value a company.Note that "Your" opinion is not supported by others.Whay are you right and they wrong?



> If you adapt a 'business owner' mentality (which i think most investors does or should) when investing, it is easy to see how quality and price of a business has a DIRECT relationship for the investor.




Its a percieved quality and price YET to be proven.Ducati has been attempting to prove your methodolgy of valuation on another thread. 

Here is Ducati's thread https://www.aussiestockforums.com/forums/showthread.php?p=95603#post95603



> To me, I classify a quality company as one which can consistently generate high return(or profit) over their equity/asset.




Pop a couple up here and we can see how they go.Not old ones new ones. 



> The reason you start/own a business, ultimately, is to earn money. As a shareholder, every dollar the company make, you actually earn PART of it..The lower price you pay for the ownership, the less risk (loss less money if theres a fallout) and more profit you can generate (say every dollar give u 50c return instead of 40c) from your investment. Thats why to me, the quality and price of a business has a direct link to the profitability of an investor.




Again your definition of value may not be mine or anyone elses.I'm yet to see this demonstrated as a sound investment strategy.


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## It's Snake Pliskin (28 November 2006)

matti_pacman


> hehe... thats right, IF it does make profit... its a risky situation, but the risk/reward ratio looks good to *me*, so I am taking a punt...  :



Punt away!  



> If you adopt a 'business owner' mentality (which i think most investors do or should) when investing, it is easy to see how quality and price of a business have a DIRECT relationship for the investor.




Does that business provide you with income? Do you realise a gain for the risk taken on? It is ok to romanticise   the fact that you own part of the business as a shareholder, but don't fool yourself that you have any controlling share. It's foolish to think in such terms because it is your capital that you are putting at serious risk.



> To me, I classify a quality company as one which can consistently generate high return(or profit) over their equity/asset.



Then why punt?



> The reason you start/own a business, ultimately, is to earn money. As a shareholder, every dollar the company make, you actually earn PART of it..The lower price you pay for the ownership, the less risk (loss less money if theres a fallout) and more profit you can generate (say every dollar give u 50c return instead of 40c) from your investment. Thats why to me, the quality and price of a business has a direct link to the profitability of an investor



Share price determines your profitability.
You'll need very large dividends to erode the effect of a falling shareprice.


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## nizar (28 November 2006)

tech/a said:
			
		

> A common misconception by those who cannot trade the most difficult of timeframes. Not necessarily day trading but very short term.
> 
> All to often traders think that to be profitable you have to pick the right stock more often than not (right being profitable).
> When the fact is that you need to have a higher Reward to Risk Ratio over time in your favour.
> ...




Just to add a few points about trading:

Three ways to be profitable through trading a wise man once told me:
(1)Pick more winners than losers - to do with reliability of the entry
(2)Average win is greater than average loss - to do with exit
(3)A combination of (1) and (2)

Also note that the well known phrase:
"Cut your losers short and let your winners run"
is all about EXITS.

Just another point/topic to add, i think a hallmark of a really PRO trader, is not overtrading.

In a bearmarket, not many stocks going up means you trade less. It doesnt mean you enter into a less than ideal entry.

In fact, the more pro you become, the less you trade, and the more profitable you are.

As a beginner, the tendancy, and im speaking for myself here, is to overtrade. You have a big win, you get over confident, and you take on more risk, thinking you have a "buffer" that you can lose, and shortly after, you lose it all. 

OR - You have a string of losses, you are keen for "revenge" on the market, and you tend to be in a hurry to re-enter the market, entering on stocks with a less than ideal entry ie. not following your trading plan or "blueprint". And then you lose more.

And thats without considering the cost of brokerage.

You just have to kick back, take it easy, take a few days off if you feel you might do something irrational, and be disciplined enough to stay out if the entry is not ideal.

Trading teaches you alot about yourself. Patience, yes, but most of all, discipline.


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## professor_frink (28 November 2006)

nizar said:
			
		

> Just another point/topic to add, i think a hallmark of a really PRO trader, is not overtrading.
> 
> In a bearmarket, not many stocks going up means you trade less. It doesnt mean you enter into a less than ideal entry.
> 
> In fact, the more pro you become, the less you trade, and the more profitable you are.



I don't necessarily agree with that Nizar. Trading frequency doesn't really have much to do with how 'pro' someone is. A good, long only position trader will more than likely trade less in a bearmarket.
Someone who has shorting strategies that they employ will probably still be trading as often as they get a signal to do so. Which could be quite often.


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## nizar (28 November 2006)

professor_frink said:
			
		

> I don't necessarily agree with that Nizar. Trading frequency doesn't really have much to do with how 'pro' someone is. A good, long only position trader will more than likely trade less in a bearmarket.
> Someone who has shorting strategies that they employ will probably still be trading as often as they get a signal to do so. Which could be quite often.




Yeh exactly.
As often as they get a signal to do so.
Shorting strategies i could imagine would get less entry signals in a bullmarket. The inverse of those that go long.

If you get many entry signals that meet your criteria then by all means trade them. This is not what i meant by overtrading. Overtrading is when emotions take control and you enter even on less than ideal trades.


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## professor_frink (28 November 2006)

nizar said:
			
		

> Yeh exactly.
> As often as they get a signal to do so.
> Shorting strategies i could imagine would get less entry signals in a bullmarket. The inverse of those that go long.



Depends on the timeframe. My intraday trades work out at roughly 50/50, with shorts being more profitable than longs-that's only based on a few months of trading though, so could change down the track). End of day is obviously a different story given conditions over the last few years.



			
				nizar said:
			
		

> If you get many entry signals that meet your criteria then by all means trade them. This is not what i meant by overtrading. Overtrading is when emotions take control and you enter even on less than ideal trades.



Under those situations you wouldn't be a trader, you'd be a punter 
But I do see your point.


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## matti_pacman (28 November 2006)

Yes, I agree value investing is not a fool-proof investing method. Its just personally I feel more comfortable trading via that route.

I appreciate the feedback and I am sure when I gain more experiences in trading, I can incorporate some of the advice.   

Hope I dont end up in the 97%!  :


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## CanOz (28 June 2007)

Well I'm in the 97% now. The first part of the year was good to me. But this last half has killed me. I've gone from no structure to my trading to having a structured disciplined plan. I've read 7 books & took 2 courses. It seems i just cannot pick a winner at the moment. Is this a timing issue?

Any of the more experienced want to give some advice on how best to recover from large drawdowns? What should i do? I have been reducing my risk gradually by using position size related to my dwindling available capital.

Perhaps i should take even less risk, and risk 1% of my available capital? Do i change my scans and try to look for higher probability trades?

Appreciate some general advice from those experienced technical traders among us that have been through this before.

Cheers,


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## prawn_86 (28 June 2007)

im not very experienced and im not a technical trader, 

but about 3 months in to my investing career i lost a hell of a lot on one share, and due to my small portfolio size it equated to 16% of my entire portfolio. I know i should have had stops etc etc thats what i have learnt from that and wont make that mistake again.

but in order to claw my way back i stuck to more bluechip stocks staying mainly in the top 200 and it took 6 months to get myself back to even but i preffered doing it that way than on riskier spec stocks. i know that tech trading may be different however.

just a thought for you.


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## CanOz (28 June 2007)

prawn_86 said:


> im not very experienced and im not a technical trader,
> 
> but about 3 months in to my investing career i lost a hell of a lot on one share, and due to my small portfolio size it equated to 16% of my entire portfolio. I know i should have had stops etc etc thats what i have learnt from that and wont make that mistake again.
> 
> ...




thanks prawn!

I trade mainly CFD's with a universe that does not have many specs if any. I do trade a few specs through my share portfolio, but again, very few.

Cheers,


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## CanOz (28 June 2007)

CanOz said:


> Well I'm in the 97% now. The first part of the year was good to me. But this last half has killed me. I've gone from no structure to my trading to having a structured disciplined plan. I've read 7 books & took 2 courses. It seems i just cannot pick a winner at the moment. Is this a timing issue?
> 
> Any of the more experienced want to give some advice on how best to recover from large drawdowns? What should i do? I have been reducing my risk gradually by using position size related to my dwindling available capital.
> 
> ...




Actually now that i'm reviewing all of my previous positions i'm seeing that my stops were too tight givven the recent volitility. Should i take this into consideration when taking trades in more volitile markets? Go for stops below/above areas of major support, and only where i get really good bang for the buck?

Cheers,


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## professor_frink (28 June 2007)

CanOz said:


> Well I'm in the 97% now. The first part of the year was good to me. But this last half has killed me. I've gone from no structure to my trading to having a structured disciplined plan. I've read 7 books & took 2 courses. It seems i just cannot pick a winner at the moment. Is this a timing issue?
> 
> Any of the more experienced want to give some advice on how best to recover from large drawdowns? What should i do? I have been reducing my risk gradually by using position size related to my dwindling available capital.
> 
> ...




G'day canuck,

Sorry to hear you aren't going well at the moment


All I can say is this-Stop trading. Come back when you've had a bit of time to reflect on what's happened, and are in a better mental state. Then figure out what's gone wrong(if anything), fix it, and start very small until you get your confidence back


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## tech/a (28 June 2007)

CanOz said:


> Well I'm in the 97% now. The first part of the year was good to me. But this last half has killed me. I've gone from no structure to my trading to having a structured disciplined plan. I've read 7 books & took 2 courses. It seems i just cannot pick a winner at the moment. Is this a timing issue?




*Can *
I would say probably not.



> Any of the more experienced want to give some advice on how best to recover from large drawdowns? What should i do? I have been reducing my risk gradually by using position size related to my dwindling available capital.




As stupid as it sounds dont have a large drawdown to start with!
But seeing you have one,you must start with what you have---clean slate.



> Perhaps i should take even less risk, and risk 1% of my available capital? Do i change my scans and try to look for higher probability trades?




Firstly be ruthless in identifying WHY you have such a large drawdown.
Examples.
(1) Picked 55 losers?
(2) Let trades fall far to far before pulling the pin---(ignore stops.)
(3) Didnt stick to your risk plan.
(4) Traded Too often
(5) Traded parcel sizes to large for capital account.
(6) Have no trading strategy NUMBERS.

I reckon you'll find the reason/s there!


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## CanOz (28 June 2007)

tech/a said:


> *Can *
> I would say probably not.
> 
> 
> ...




Thanks Prof and T/A,

I'm not putting on any new positions until i can get a my trading capital back up to above 30k. Might be a couple of months.

During this time i'll go over all my records and try to see where i went wrong. I suspect already that i've over traded, having 20 losing trades out of 25 since May 30th.

I haven't actually got to MaxDD yet, but i've had enough to know somethings wrong.

For sometime i've been thinking about putting all my effort into systems work, but its the old 'scared of missing out' that gets me. 

I really appreciate your kinds words and advice.

Cheers,


----------



## tech/a (28 June 2007)

CanOz said:


> Thanks Prof and T/A,
> 
> I'm not putting on any new positions until i can get a my trading capital back up to above 30k. Might be a couple of months.




Hell I started a margin account with no1 son with the Min (at the time) $15,000. So dont have to have large capital base (Now 6 x that).



> During this time i'll go over all my records and try to see where i went wrong. I suspect already that i've over traded, having 20 losing trades out of 25 since May 30th.




Could be part of the problem.
Why not start a trading blog here (wether you trade it or not with real $$s) and walk us through the trades with ideas from us.Log up the results and learn from the experience.



> I haven't actually got to MaxDD yet, but i've had enough to know somethings wrong.




See a problem already.
Your miss inturpreting MaxDD with Maximum your prepared to lose!!!!
Max DD is a figure calculated from peak to valley drawdowns from within a system over a period of time.Its the maximum your methodology has retraced at anyone time through out the testing period.
A figure you use as a benchmark to see wether your method trades ouside the boundaries tested.
2 VERY different things.



> For sometime i've been thinking about putting all my effort into systems work, but its the old 'scared of missing out' that gets me.




Good Idea! Better to miss out than be Taken out of the industry!!



> I really appreciate your kinds words and advice.
> 
> Cheers,




Hell normally I'm referred to as an egotistical self opinionated GURU! (Not by you).


----------



## happytrader (28 June 2007)

I only know 2 traders who didn't get knocked about in their first years.

Its very important to have an identity. Are you a trader or an investor? The distinction you make will ultimately affect your actions. As a trader you will not be looking for an attachment or a multitude of reasons to stick around. You're only there for the party and your stoploss is all the only reason you need to take your leave. Traders are indomitable, travel light and don't carry much baggage. 

Investors are the exact opposite.

Cheers
Happytrader


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## CanOz (28 June 2007)

```
Could be part of the problem.
Why not start a trading blog here (wether you trade it or not with real $$s) and walk us through the trades with ideas from us.Log up the results and learn from the experience.
```

This is a good idea. I could paper trade while i re build up my capital. 



```
See a problem already.
Your miss inturpreting MaxDD with Maximum your prepared to lose!!!!
Max DD is a figure calculated from peak to valley drawdowns from within a system over a period of time.Its the maximum your methodology has retraced at anyone time through out the testing period.
A figure you use as a benchmark to see wether your method trades ouside the boundaries tested.
2 VERY different things.
```

Yes i know, wrong term, i meant that i have lost as much as i can stomach...which is in itself, a huge learning experience. 

You know, as i go through my yearly records, its quite a learning experience too.

I must admit Tech, your full of some good ideas sometimes.

I'll post some humbling stats later once i finish, then we can come up with a trading plan. 

Still have testing to do on the system today too.

Cheers,


----------



## >Apocalypto< (28 June 2007)

The reason 97% of traders may fail is because they give up.

If you work at it hard enough and study study & study evaluate your mistakes and keep plugging you will succeed. Things come faster to different people.

Any one having a hard time, don't despair that's the fun of it keep learning from your mistakes write a plan with rules study and always be confident about what your doing be objective and never be one sided. 

Good trading!


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## >Apocalypto< (28 June 2007)

tech/a said:


> Hell normally I'm referred to as an egotistical self opinionated GURU! (Not by you).




Tech we all love your work in our own special way! 

Well at least I know I do!


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## MattB (28 June 2007)

...if 97% of traders fail, I find it really hard to believe that there's even a forum here talking about trading, or that an entire section of the daily newspaper is dedicated to stocks!  If that were the case, wouldn't we all just put money in the bank, then 100% of us succeed by making a tiny bit of interest!

Whats the 'fail' criteria here?


----------



## Julia (28 June 2007)

MattB said:


> ...if 97% of traders fail, I find it really hard to believe that there's even a forum here talking about trading, or that an entire section of the daily newspaper is dedicated to stocks!  If that were the case, wouldn't we all just put money in the bank, then 100% of us succeed by making a tiny bit of interest!
> 
> Whats the 'fail' criteria here?




Matt,

I think it's in the interpretation of "trading" as opposed to "investing".
e.g. my preference is for stocks mostly in the top 200 held on a long term basis (or as long as they are performing well), but several members here regard that with scorn and prefer to trade on a very short term basis.
I'm sure some traders will explain further if necessary.


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## tech/a (28 June 2007)

> Whats the 'fail' criteria here?




For me its a net profit of all costs related to trading.(May not be others idea).

(1) Software
(2) Hardware
(3) Feeds
(4) Education
(5) My time involved.

(5) Most people ignore.
If you costed your time out at even $20/hr and then related that back to the number of hrs you spend researching and trading,I'm sure you'll find the 97% around the mark.

If I costed out the Hrly rate my company returns me over the 12yrs V the time I have spent on the business of trading then I'm well behind that which the company returns me---thats one of the reasons why I dont wish to trade fulltime,to most my results arent to tardy! ( I dont think they are that bad).

Anyone can turn a profit now and again but over 12 mths or more???


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## >Apocalypto< (28 June 2007)

MattB said:


> ...if 97% of traders fail, I find it really hard to believe that there's even a forum here talking about trading, or that an entire section of the daily newspaper is dedicated to stocks!  If that were the case, wouldn't we all just put money in the bank, then 100% of us succeed by making a tiny bit of interest!
> 
> Whats the 'fail' criteria here?





Matt, 

you never heard of the term Work in progress

And one replaces the other.


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## bingk6 (28 June 2007)

Can,

Irrespective of how good a trading plan you (or for anybody else, for that matter) have, there will always be drawdowns in your trading. This is part and parcel of trading. Sometimes, these drawdowns will occur right at the start where you can least afford to lose and is emotionally challenging. Other times, it may come when you have accuulated  a lot of profit, in which case, drawdowns can more easily digested. If your trading plan has been extensively tested and you have confidence that it has positive expectancy then, I believe, the correct action is to persevere with it and allow that positive expectancy to play itself out. Psychologically this can be very difficult, particulaly after recent bad performances, which is a major reason why 97% of traders are failures. It takes more mental strength than you can imagine. Having this "bullet proof" psychology together with the ability to look long term in the face of short term adversity is what separates the "winners" from the "losers". Such confidence can only come from extensive testing of your systems so that you know its characteristics back to front, whereby the results would have given you a lot of ideas as to what to expect from your system.

Tech,

I am curious as to why you and a few other people often mention "overtrading" as possibly a problem. Surely, if your system possesses positive expectancy, you would surely want to trade it "until the cows come home". If after a large number of trades, your system is not performing as you had expected, or indeed making a loss, then your system does not have positive expectancy. A positive expectancy system will always generate a positive return if you pump enough transactions through it. To me, it is *not* possible to have a system with positive expectancy and still suffer a loss as a result of overtrading, unless we are talking making too many mistakes in carrying out your trading plan as a result of the sheer number of transactions, which is a different issue altogether.  

Just my


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## Spaghetti (28 June 2007)

I have no trading plan at all really. If I could plan and record and show discipline I could earn lots working for someone. I trade because I am dysfunctional in paperwork and plans. I hate it. Hate charts, hate spreadsheets, hate balance sheets. I look at all the above though, problems stick out like the proverbial. Can't see any reason to over analyise.

I know I could have made more money if.......... but I cannot believe so many lose money when it has been a period when making money is so easy.

I think a plan will be nesessary when the market is off the boil but at the  moment how can one possibly lose?

I do honestly believe if you lose money in this sort of positive climate then perhap a broker would work better.


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## Spaghetti (28 June 2007)

For a total beginner though timing entry is crucial. If you started last week...ouch. If you started yesterday


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## CanOz (28 June 2007)

bingk6 said:


> Can,
> 
> Irrespective of how good a trading plan you (or for anybody else, for that matter) have, there will always be drawdowns in your trading. This is part and parcel of trading. Sometimes, these drawdowns will occur right at the start where you can least afford to lose and is emotionally challenging. Other times, it may come when you have accuulated  a lot of profit, in which case, drawdowns can more easily digested. If your trading plan has been extensively tested and you have confidence that it has positive expectancy then, I believe, the correct action is to persevere with it and allow that positive expectancy to play itself out. Psychologically this can be very difficult, particulaly after recent bad performances, which is a major reason why 97% of traders are failures. It takes more mental strength than you can imagine. Having this "bullet proof" psychology together with the ability to look long term in the face of short term adversity is what separates the "winners" from the "losers". Such confidence can only come from extensive testing of your systems so that you know its characteristics back to front, whereby the results would have given you a lot of ideas as to what to expect from your system.
> 
> ...




Some great points there Bingk6...but aren't you assuming i'm trading a mechanical system? At the moment ii'm trading a descretionary system.

Sorry mate if my incorrect use of the drawdown term confused you.

Cheers,


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## tech/a (28 June 2007)

That was my assumption Canaussieuk.(Discretionary)



> For a total beginner though timing entry is crucial. If you started last week...ouch. If you started yesterday



Depends on timeframe.
Entry is one of the *LEAST* important components.


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## CanOz (28 June 2007)

tech/a said:


> That was my assumption Canaussieuk.(Discretionary)
> 
> 
> Depends on timeframe.
> Entry is one of the *LEAST* important components.




Theres no way i can test my Descret. system ,but its right out of Nick's course. I really do suspect that if i'm more patient, and wait for higher probability opportunities and risk less, then i would do ok through this volitility. But until my coach (Nick, for another 2 months) comes back from AL i'll stand aside, lick my wounds and prepare for the tax man.

Live and learn, i'm very fortunate that i'm single with no dependants, living away from home saving every penny i earn to learn the hard way.

Got a few more years left yet.

Cheers,


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## Chorlton (28 June 2007)

tech/a said:


> Positive expectancy and R/R ratio's are KNOWNS that are related to the numbers which your trading methodology returns





Hi Tech/A,

Can I ask how one would go about assessing "known" R/R ratios in relation to the trading methodology under consideration?

I assume that the only two options would be either (i) to look back at past trades or (ii) to look at values derived from backtesting.

With option (i),  How would this be achieved?  For example, on the winning trades, would you look at the price you actually entered and exited together with the original stop level (which obviously hadn't been hit)? 

However, with the losing trades, I assume that this could not be calculated as there would be no actual exit (with profit).  If this is the case, then assuming that you've had a long run of losing trades, how can the actual average R:R be assessed???  

With option (ii), I assume that this would only be possible with a pure mechanical system that you can code. In the case of a discretionary system, IMO this option would not be possible.

Therefore, if you were trading a discretionary system that was currently picking only losing trades, how could this R:R ratio be recorded??


Thanks in advance as this topic has always confused me a little.....

All the best,

Chorlton


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## happytrader (28 June 2007)

tech/a said:


> That was my assumption Canaussieuk.(Discretionary)
> 
> 
> Depends on timeframe.
> Entry is one of the *LEAST* important components.




If you are trading short time frames with leverage or derivatives everything matters. Then if it doesn't work out you have the satisfaction of knowing you did the best you could in the areas within your control. Doing excellent work and aiming to trade well is where the edge is.

Cheers
Happytrader


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## wayneL (28 June 2007)

happytrader said:


> I*f you are trading short time frames with leverage or derivatives everything matters.* Then if it doesn't work out you have the satisfaction of knowing you did the best you could in the areas within your control. Doing excellent work and aiming to trade well is where the edge is.
> 
> Cheers
> Happytrader



Exactly.

Entry may not matter on long trends, but in swing trading, it is at least as important as the exit and has a profound effect on the ultimate expectancy figures.

In fact the exit is defined by the entry.


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## motorway (29 June 2007)

> In fact the exit is defined by the entry.




And the stop defines the entry

motorway


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## theasxgorilla (29 June 2007)

CanOz said:


> Theres no way i can test my Descret. system ,but its right out of Nick's course. I really do suspect that if i'm more patient, and wait for higher probability opportunities and risk less, then i would do ok through this volitility. But until my coach (Nick, for another 2 months) comes back from AL i'll stand aside, lick my wounds and prepare for the tax man.
> 
> Live and learn, i'm very fortunate that i'm single with no dependants, living away from home saving every penny i earn to learn the hard way.
> 
> ...




CanAussie;

I like Alexander Elders goal posts for a beginner...snippets quoted:

"The *minimum acceptable performance level for a beginner* is a loss of 10% of trading capital in a year...many lose 10% in a month, if not a week...if you can survive for a year, learn about trading, and lose less than 10%, your education is cheap and you are way ahead of the crowd".

"The *goal of a beginner* is to cover trading expenses and generate an annual return on his/her account equal to one and a half times the current rate on T-Bills or a comparable riskless instrument (ie. ING Direct)".


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## nizar (29 June 2007)

theasxgorilla said:


> CanAussie;
> 
> I like Alexander Elders goal posts for a beginner...snippets quoted:
> 
> ...




I think Alexander Elder's book is a great one for beginners.
But unfortunately for me i read it after a couple of years out.
Top book though, but i wouldve got alot more out of it if i had read it at the outset. Van Tharp as well, top book, just didnt read it early enough.


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## moxy (29 June 2007)

well said asxgorilla

trading is the ultimate experience...I'm convinced.  I've lost 50%. Made it all back plus more. Lost 50% again ( I know..f+++wit)...but...I'm learning. Putting your bucks on the line is the real deal....made 50% back...armed with van tharps expose....god help me!!! wish he had more of Sidney sheltons tone!!...enjoying the ride and learing a hellava lot along the way.!!!:


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## It's Snake Pliskin (29 June 2007)

wayneL said:


> Exactly.
> 
> Entry may not matter on long trends, but in swing trading, it is at least as important as the exit and has a profound effect on the ultimate expectancy figures.
> 
> In fact the exit is defined by the entry.




There must be a small club of us here.


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## theasxgorilla (29 June 2007)

CanOz said:


> Actually now that i'm reviewing all of my previous positions i'm seeing that my stops were too tight givven the recent volitility. Should i take this into consideration when taking trades in more volitile markets? Go for stops below/above areas of major support, and only where i get really good bang for the buck?
> 
> Cheers,




You've already mentioned dropping back to 1% of total equity per trade...perhaps a future enhancement to your plan might instigate that sooner, after x number of consecutive losers for example.

Being more selective will also decrease trade frequency there by steming the rate of loss.  As you have mentioned, you can reduce your trading to ONLY the high risk/reward setups.  But keep your position sizing conservative...if you're in a losing streak beware of falling into the trap of thinking that because your stop is tighter you can bet bigger and make it all back quick.  Reality is you're probaly going to have to _grind_ your way out of the hole.

If the system is discretionary the challenge is that you don't have a blueprint to tell you things like what is the approximate max number of consecutive losers you can expect to see, what was the MaxDD evidenced during backtesting.  Without this information its difficult to position size in a way that will allow you to survive through the big drawdowns.  And its psychologically tough because you dont know whether its you, the system, the market etc.

Sounds like you might already know what to do!


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## tech/a (29 June 2007)

Chorlton said:


> Hi Tech/A,
> 
> Can I ask how one would go about assessing "known" R/R ratios in relation to the trading methodology under consideration?




Unfortunately you need to be able to test it.
You need "significant" numbers ie a large data sample to be able to have confidence.You need to buy and learn the software or hire someone who can test/write it up.To look back and do it manually unfortunately will take years for significant numbers.



> I assume that the only two options would be either (i) to look back at past trades or (ii) to look at values derived from backtesting.






> With option (i),  How would this be achieved?  For example, on the winning trades, would you look at the price you actually entered and exited together with the original stop level (which obviously hadn't been hit)?
> 
> However, with the losing trades, I assume that this could not be calculated as there would be no actual exit (with profit).  If this is the case, then assuming that you've had a long run of losing trades, how can the actual average R:R be assessed???




Add up every winner
Add up every loser
Add up the capital used in trades
Add up transaction costs.
Add up number of trades.


Then do your averages.
Winners/losers = Winning %
Total profit or loss/into capital used in the trades = $return expectancy.
Losing trades/into winning trades = Expectancy / trade.

There are many more ratio's.



> With option (ii), I assume that this would only be possible with a pure mechanical system that you can code. In the case of a discretionary system, IMO this option would not be possible.




Everything can be coded but agree we are limited to knowledge and software capability (Well I am!).



> Therefore, if you were trading a discretionary system that was currently picking only losing trades, how could this R:R ratio be recorded??




The losing trades and the nett losses would be deducted from the nett wins.

*Happy*
In your case yes your correct.
However those learning should be involved in trading which is perhaps a little longer in time,where the equation of having to be right isnt as important.
Its easier to trade a weekly methodology than a daily than a short term method than a day trading method.(If trading in a discretionary manner).---well Ive found.

*ASXG*


> you dont know whether its you, the system, the market etc.




The problem with most traders I would expect.

*Snake/Wayne and co.*

How do you guys work your expectancy (Manually,Test it/Record trades ad hock) and what are an idea of Acceptable numbers for you?


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## wayneL (29 June 2007)

tech/a said:


> *Snake/Wayne and co.*
> 
> How do you guys work your expectancy (Manually,Test it/Record trades ad hock) and what are an idea of Acceptable numbers for you?



Crude backtesting (i.e. code it up as best as you can) and I keep a total expectancy of all trades, plus moving expectancy of the last _x_ trades to track recent performance.

In round figures over at least the last 3 years
Risk/Reward a touch over 3
Win% a touch under 60%
Expectancy a touch over 1.4

The moving figure moves either side of that of course.


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## clowboy (29 June 2007)

Spaghetti said:


> I have no trading plan at all really. If I could plan and record and show discipline I could earn lots working for someone. I trade because I am dysfunctional in paperwork and plans. I hate it. Hate charts, hate spreadsheets, hate balance sheets. I look at all the above though, problems stick out like the proverbial. Can't see any reason to over analyise.
> 
> I know I could have made more money if.......... but I cannot believe so many lose money when it has been a period when making money is so easy.
> 
> ...





We all have to start somewhere.
I lost money for the first two years of a bull run, and may not have made as much money over the last if I had just held onto a few stocks that never stoped going, however the real test will be to see if I have learnt anything when the bull ends and the bear shakes the snow of his coat.


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## clowboy (29 June 2007)

theasxgorilla said:


> CanAussie;
> 
> I like Alexander Elders goal posts for a beginner...snippets quoted:
> 
> ...




they are good quotes asxgorrilla.

Doesnt change the emotional torment of losing money in a bull market though.


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## happytrader (29 June 2007)

When I started I not only failed to plan for every possible outcome but my own reaction to it.

Even though I trade short time frames which is anywhere from half an hour to a week, this does not exempt me from knowing what a stock has been doing in all time frames from yearly, quarterly, monthly, weekly, daily to hourly. These time frames and the price overlaps set the scene for entries in short term trades. For instance with regard to the banking sector, 

1. the Santa Claus rally is almost a given. 

2. take note of where that banking stock opens at the beginning of the year because this information and the range of the previous year will provide you information you can use now. 

3. be aware that there are heads and tails on most pricebars so there is no   need to rush into trades. 

4. sitting on your hands is a prerequisite. 

5. by honouring your entries, profit targets, stoplosses and thorough research you honour yourself.

6. don't take it personally

No need to buy software when you have www.bigcharts.com. and their interactive option. It charts back 20 years. If you confine your backtesting to 10 stocks or less, it does not take much time at all. Keep your expenses low to take the pressure off having to make a return.

Cheers
Happytrader


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## tech/a (29 June 2007)

Happy some good stuff there.

But this??



> No need to buy software when you have www.bigcharts.com. and their interactive option. It charts back 20 years. If you confine your backtesting to 10 stocks or less, it does not take much time at all. Keep your expenses low to take the pressure off having to make a return.




Do you mean choose 10 stocks and test them only or use just 10 to design a trading plan/test results etc?
I can see where this is possible with just 10 stocks and a good idea,but if your talking about the whole market based on the above statement---???


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## happytrader (29 June 2007)

tech/a said:


> Happy some good stuff there.
> 
> But this??
> 
> ...




Hi Tech

10 bluechips or a lot less such as the big four banks, the big insurance companies, the big miners, the big consumer staples etc. The easier and more predictable to read the better. What may not be obvious on a short time frame will often be abundantly clear on the longer time frames I talk about in my last post. Focus equals productivity.

Cheers
Happytrader


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## tech/a (29 June 2007)

Happy.

Nothing wrong with that!


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## theasxgorilla (29 June 2007)

clowboy said:


> they are good quotes asxgorrilla.
> 
> Doesnt change the emotional torment of losing money in a bull market though.




Yes, and that's not an easy situation to put into perspective.  After all, it's only the longest bull market of the last 25 years.

I think a lot of us are all struggling with something.  Whilst I've been fortunate (makes me sound lucky, but its been a semi-trailer load of hard work) enough to make returns that exceeded the indexes every year since the bull market began, I suffer with not having evolved confidence in my trading until later on  and hence not committing an amount of funds earlier on that could have actually made a real difference (I've also been playing with TechTrader in Amibroker during the last couple of weeks and it makes me sick how much money I would have made if I turned that system on and followed it "with confidence" early during the bull run.  That and pulling large amounts of trading capital out of the market during the longest bull run of the last 25 years to go and buy property (on two occasions!).

Missing an opportunity to really prosper in this market sucks...but missing the opportunity to learn and get at least some benefit while its here is even worse.  Woulda, coulda, shouldas....we've all got them.


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## sails (29 June 2007)

happytrader said:


> ...
> No need to buy software when you have www.bigcharts.com. and their interactive option. It charts back 20 years. If you confine your backtesting to 10 stocks or less, it does not take much time at all. Keep your expenses low to take the pressure off having to make a return....




Happytrader, I think you may have mentioned some time ago that bigcharts give live pricing in the last couple of hours.  If so, do you know if this still available?


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## happytrader (29 June 2007)

sails said:


> Happytrader, I think you may have mentioned some time ago that bigcharts give live pricing in the last couple of hours.  If so, do you know if this still available?




Hi Sails

Yes its still available for asx stocks at 2.20pm.

Cheers
Happytrader


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## sails (29 June 2007)

happytrader said:


> Hi Sails
> 
> Yes its still available for asx stocks at 2.20pm.
> 
> ...



Thanks happytrader - I checked it sometime after 2pm today and it was still delayed.  Didn't notice the exact time of checking, but could have been before 2.20pm, so will look again on Monday!


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## Chorlton (29 June 2007)

tech/a said:


> Unfortunately you need to be able to test it.
> You need "significant" numbers ie a large data sample to be able to have confidence.You need to buy and learn the software or hire someone who can test/write it up.To look back and do it manually unfortunately will take years for significant numbers.
> 
> 
> ...




Thanks for the reply Tech/A .... and all the best......


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## clowboy (29 June 2007)

theasxgorilla said:


> Missing an opportunity to really prosper in this market sucks...but missing the opportunity to learn and get at least some benefit while its here is even worse.  Woulda, coulda, shouldas....we've all got them.




AMEN to that


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## BSD (29 June 2007)

From another perspective:

97% of traders can't rebuild a diesel engine
97% of traders can't prepare a risotto
97% of traders can't run 10 metres in 12 seconds
97% of traders can't build an extension on their home

97% of traders have no information, training, dealflow, newsflow, experience, contacts or capital - let alone sufficient interest and time to study economics and finance. 

Just as people who trade for a living wouldn't contemplate doing the above duties, maybe 97% of traders need to outsource their 'trading' to professionals - particularly if their lifestyles depend on it.

Many 'traders' in the current market would do just as well plying their trade on sports betting markets.


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## chrisdedavid (29 June 2007)

Well, I guess that means 97% of us wont be here long :

So... forum admins/owners... any stats for us? 

Personally, I'd be very critical with myself, I would class "fail" to be where my final profits (before tax) do not cover the normal 5% gain offered by banks (or to be more aggressive use avg % from Managed Funds), and time with hourly pay to do all the trading. If I can't make enough to cover that, then it's not worth the time I spend on it.

Putting money in the bank and getting 5% interest is till "failure" to me. Failure to not invest wisely.
Being a trader and not making 20%+ per year is failure to not just give it to funds to invest for you, wasting your time.
*Making 0% and learning in the process, that is a level of success that stats will not see.*


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## tech/a (30 June 2007)

97% of Traders 

*Do the same thing day after day and EXPECT a DIFFERENT result.*


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## motorway (30 June 2007)

tech/a said:


> 97% of Traders
> 
> *Do the same thing day after day and EXPECT a DIFFERENT result.*




When are these studies done ?

When it is newsworthy and a lot of moths are attracted to the flames

What is the universe tested ?

Usually one that is not representative

How So ?

Usually, they look at discount broker accounts
Who's clients represent

novices starting,
Those Who have not progressed much over time,
Those about to give up,
Some who struggle along at break even
some with more or less success.

Who are missing are those who become successful in a significant way
And progress OUT of that universe to concentrate on
FX Commodities and various derivatives etc

ONE impressive study made these findings
Most studies are skewed by the particular snapshot of "traders"
those who succeed are are soon transitioning to different arrangements, trading vehicles and structures.

Only 97% of a particular type(s) of traders fail
The others move on to greener pastures and are then out of this frame of reference


motorway


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## CanOz (2 July 2007)

I just had to post this, from Floyd Upperman's COT report site...i think i'll print it out and post at home and the office.



> 10 Traits Shared by Successful Traders
> Floyd's own success as a professional futures trader has enabled him to develop professional relationships with other successful traders. Through these relationships, he has been able to identify important key traits that are common among consistently successful traders.
> As a commodity trading advisor, Floyd has discovered that there are many misconceptions among the general public regarding the traits and lifestyles of professional traders. Down through the years, and even today the professional trader remains somewhat of an unsolved mystery to the general public. Fueled by the lure of easy money, the public has portrayed futures trading as an easy way to get rich over night.
> New traders look for a magic key or what is known as the "Holy Grail." This search for the Holy Grail is a major obstacle facing most new traders, and must be overcome before success can be realized. There is no holy grail in the sense of a trading formula. The key to lasting success in this business actually depends more upon a disciplined common sense approach where the focus is on minimizing risk.
> ...


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## CanOz (2 July 2007)

Con't.....


> 6.Successful traders do a great deal of waiting for the right conditions. Contrary to what you might think, there is NOT always an opportunity. The inexperienced traders will often trade when there is no real opportunity.
> 7.Established veteran traders have a trading system that they use and follow. They make their own trading decisions rather than waiting for someone to tell them what trade they should get into.
> 8.Professional successful traders are more concerned about risks than they are the rewards. The public tends to be preoccupied about the potential profits. The professional on the other hand is more concerned with assessing, controlling, and managing risk and exposure to risk. Professional traders always use stops.
> 9.A simple trait that exists among the majority of off-floor professional position traders is careful record keeping. They keep track of all trades along with a detailed journal of notes and observations on market conditions, psychological reactions to gains and losses and so forth. Floyd updates a journal daily with his trades, entries, exits, stops, crowd reactions to reports, market tone at specific price levels and other meaningful observations.
> ...


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## nizar (2 July 2007)

Great great post Can.
Thanks for sharing


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## nizar (2 July 2007)

Some great advice here guys.
Interesting how the champion clean up traders focus on risk management and preventing losses as opposed to having price targets and focussing on profits.



> Paul Tudor Jones
> That cotton trade was almost the deal breaker for me. It was at that point that I said, "Mr. Stupid, why risk everything on one trade? Why not make your life a pursuit of happiness rather than pain?"
> 
> I had to learn discipline and money management. I decided that I was going to become very disciplined and businesslike about my trading.
> ...




http://members.aon.at/tips/citation.html


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## nizar (2 July 2007)

Gotta love Jesse Livermore:
Investors are the big gamblers. They make a bet, stay with it, and if it goes the wrong way, they lose it all. 

And Ed Seykota:
One evening, while having dinner with a fundamentalist, I accidentally knocked a sharp knife off the edge of the table. He watched the knife twirl through the air, as it came to rest with the pointed end sticking into his shoe. "Why didn't you move your foot?" I exclaimed. "I was waiting for it to come back up," he replied.


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## nomore4s (2 July 2007)

nizar said:


> Gotta love Jesse Livermore:
> Investors are the big gamblers. They make a bet, stay with it, and if it goes the wrong way, they lose it all.
> 
> *And Ed Seykota:
> One evening, while having dinner with a fundamentalist, I accidentally knocked a sharp knife off the edge of the table. He watched the knife twirl through the air, as it came to rest with the pointed end sticking into his shoe. "Why didn't you move your foot?" I exclaimed. "I was waiting for it to come back up," he replied.*




lol, thats gold.

Good posts Can, Nizar. Thanks


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