What makes you go from losing to winning as a trader?

[MacDizzle]

I've read that 90% of traders lose money, that's a large percentage of downside risk. If you have made the transition to a winner what has made the difference in your opinion?

Can you had everything on point and still not be a winning trader and destroy your account year on year?
Psychology on point
Money Management on point
A Back tested system
A Balanced life in other areas

I can see how a system based on historical data could fail and need improvement but Is it realistic to think that the 90% of losing traders are unaware of these other points and simply gamble, trade emotions or bias in the markets?

Cheers

 

[Gringotts Bank]

I can't remember the details of the 90% going bankrupt, but I think it was from a discount brokerage in the US. They looked at all clients' accounts and decided to publish the results. Strange that a broker would do this, because it's not really in their interest. Another way to look at it is this: if it was easy, everyone would do it. So it has to be a smallish % who succeed.

skc gave me some advice when I was struggling which was basically to be much more disciplined and structured. It was good advice, and I took it. I still have an interest in how psychology affects decision making in discretionary trading - I find it fascinating how some people consistently do well in whatever they turn their hand to (not just trading). There's some x factor at play which I continue to investigate. I believe it's possible to win consistently without any system, money management or process... but haven't proven this yet.

It's generally agreed that outside of the HFT brigade, the guys who really cash in are the top discretionary traders. Systems traders might be consistent, but in general they can't match the top disc guys.

The best advice will usually come from the best traders - so identify them and ask them (not me).

 

[CanOz]

The biggest items that changed my account balance were:

• A trade plan, what are the possibilities today? what is the theme? Where can i look for evidense that a particular situation is playing out and what play will i use to enter the market?

• Know you risk plan and stick to it, trade/daily

• Review-Find out what your best trades and how to do more of them and fewer of your losing trades. i.e. weed out the stuff that's not working and do more of what does work.

• Perfect - Become a master at one market first.

 

[MacDizzle]

Cheers guys!

O.k I'll continue to work on those things before I enter the market so I have some controls and ability to review for any deviation away from my rules. I'll also have to select a few patterns to study and trade and select a market.

I'm more confident on defining rules for money management than choosing system to trade as each book or Guru has a different approach, and each one can appear to make sense and discount someone else's trade system that I had in mind to trial.
Currently I like Barry Burns probability model for looking for a series unrelated indicators but no doubt if I read a new book another guru will probably discount this, So ill have to watch myself, be objective, select ONE and go with it until its been mastered

 

[peter2]

1. You must have a basic strategy that fits your opinion of how the market moves.
2. This strategy must be incorporated into a complete trading plan. This TP includes the setups, exits and money management.
3. You must validate the trading plan. Prove to yourself that it can be profitable over the long term and identify what market conditions suit your plan and what doesn't.
4. Execute your plan in the market. Start with smaller position sizes until your confidence grows. Completely accept the risk when you start every trade.
5. Be persistent. I mean this. If your TP has an edge, grind it out relentlessly.

 

[Wysiwyg]

Your system turns up after the drawdown (period of more loss than gain). Look at Peter2 momentum trading how it is/was going through a drawdown but will pick up again. He uses position sizing, exit strategies, participation strategy and discretionary decision making based on his market experience.


p.s. just noticed peter2 posted.

 

[minwa]

They looked at all clients' accounts and decided to publish the results. Strange that a broker would do this, because it's not really in their interest.

I don't think it's bad for business. It's the lure of being the one to make it. Anyone looking to trade/invest themselves usually have over inflated ego on their abilities. They think they are smarter and will be in the 10%. Like people who buy lottery..odds are way worse than 10% yet there are people regularly buying them expecting to win. Or casino where they know the odds are against them but still play to make money (have many friends like this who play not just for fun...with the mindset thinking they will win over the long term).

 

[MacDizzle]

Cheers Guys,

Wise words, I still have a lot of ground work to do so I will definitely paper trade first and review things on an ongoing basis. I just had a look at that momentum trading thread, looks great and I can see the draw downs a system has to go through, I'll definitely read that thread some more

 

[Donkhorsepower]

Cheers Guys,

Wise words, I still have a lot of ground work to do so I will definitely paper trade first and review things on an ongoing basis. I just had a look at that momentum trading thread, looks great and I can see the draw downs a system has to go through, I'll definitely read that thread some more

If you are going down the momentum path... Watch these clips:

Nick Radge with an excellent summary of it all

https://www.youtube.com/watch?v=O7cpNdyku6E

Stop losses. You need to spend some time getting comfortable with using them and making your own set of rules for them.

https://www.youtube.com/watch?v=kY9n8EQqs7w

I found the 'Unholy Grails' book by Nick Radge to be very handy for working out my trading system. If you sign up for his newsletter he often has an offer of getting this for free!

 

[MacDizzle]

Thanks Mate,

Watched the Videos, some excellent tried and true information in them

I'll be planning for longer term trend trading as Ill have to keep my day job for the foreseeable future. I'm still deep in the reading phase and I have a very rough trading plan I modify as new light gets shed on what would suit me, how i see the markets and other realities/what makes sense. I'm also slowly working a folder with chart patterns and a Journal to track psychology/trading issues and things.I downloaded an open source charting package called Jstock to muck around with, its fairly primitive, has moving average function but I cant find a support and resistance levels Icon?. Anyhow i'll be chipping away in my dungeon for a while yet

 

[skc]

Some decent stuff here...

http://chatwithtraders.com/podcast/page/15/

 

[MacDizzle]

Yeah good stuff cheers,

Definitely be doing the things mentioned while I build my skill set and then later in 1 or two longer term position's. I'm a lot more aware of myself these days and the speed limit I have to stick to as I've made many of the common mistakes before