Why do traders fail?

[wayneL]

Wayne.

In the case of any PROVEN methodology or if you like to call it a system you simply have a set of conditions which if met and applied as tested then you can expect a similar result.
No analysis just repetitive application.

You can improve upon profitability on any repetitive application of a proven method,well beyond that that can be gained by attempting (as Nizar says) to find the perfect system through tweeking analysis---often endlessly.

Fundamental OR technical.

OK, got your meaning now.

All clear.

 

[chops_a_must]

Oh! Agree wholeheartedly.

What is equally amusing, if not irritating, is the Buffet minions bagging trading in shorter time frames.

I posted an article somewhere that "day" trading in fact may have the best "Sharpe Ratio" of all. (presuming positive expectancy of course)

Fantastic thread guys!

Wayne and others, I'm wondering if the failure of traders is actually due to the failure to recognise the need to trade in various time frames?

When I first started out, I was looking at mid to long term strategies. Now as I am becoming more confident and more successful, I am looking to learn and increasingly trading in shorter time frames. But it appears as if some traders discard the longer term view in favour of increasingly shorter time frames... which looks a folly to me as you wouldn't be increasing the probability of success over a variety of time frames.

Also (and I was thinking of starting a thread about this), do you think people's occupation or training/ education, can have a positive or negative affect on their trading? And the reasons for this.

Cheers,
Chops.

 

[tech/a]

Fantastic thread guys!

Wayne and others, I'm wondering if the failure of traders is actually due to the failure to recognise the need to trade in various time frames?

Dont know that there is a need.But being able to trade long and short certainly adds a new and profitable dimension.Timeframes may have a lot to do with available time---is the case with me.

When I first started out, I was looking at mid to long term strategies. Now as I am becoming more confident and more successful, I am looking to learn and increasingly trading in shorter time frames. But it appears as if some traders discard the longer term view in favour of increasingly shorter time frames... which looks a folly to me as you wouldn't be increasing the probability of success over a variety of time frames.

I see this chops as more a diversification in trading application.
Wouldnt sayy its necessarily a pre requisite to greater success.

Also (and I was thinking of starting a thread about this), do you think people's occupation or training/ education, can have a positive or negative affect on their trading? And the reasons for this.

Cheers,
Chops.

Absolutely.
Those who HAVE to be right are at a great disadvantage.Those who are over analytical are just as bad.Those who are linear in thought process also at a disadvantage,as are those who avoid risk and dont have the capacity to understand it.

All can be overcome/learned and improved---by most---.

 

[Wysiwyg]

My personal account....

I don`t know why others fail,but my failings are purely emotional.I feel as if I`m taking someones money if I take a profit, and in return someone will take mine later on.I feel bad about it. It is my personality not to take from others.

Buying in at the right time I`m o.k. at, but when it comes to taking profit it seems like I`m taking directly from another person.In order for me to be a successful trader I need to be able to execute the sell when I know it is time.

 

[Julia]

My personal account....

I don`t know why others fail,but my failings are purely emotional.I feel as if I`m taking someones money if I take a profit, and in return someone will take mine later on.I feel bad about it. It is my personality not to take from others.

Buying in at the right time I`m o.k. at, but when it comes to taking profit it seems like I`m taking directly from another person.In order for me to be a successful trader I need to be able to execute the sell when I know it is time.

You're not "taking from others". You are offering someone else the opportunity to fulfil their wish which is to buy your shares. They have valid reasons for wanting to buy them. Presumably you have a valid reason for wanting to sell them, i.e. taking a profit.

You are not exactly holding a gun to some anonymous buyer's head and forcing them to buy or sell. Each buyer/seller is an entirely free agent as you are and they are willingly choosing to buy "your" shares.

Don't put any personal slant on it whatsoever. Next when you buy something you will be castigating yourself for stealing someone else's shares against their will!!!

Investing/trading simply has nothing to do with your personal philosophy of not wanting to take from others. There is just no connection.

 

[nomore4s]

You're not "taking from others". You are offering someone else the opportunity to fulfil their wish which is to buy your shares. They have valid reasons for wanting to buy them. Presumably you have a valid reason for wanting to sell them, i.e. taking a profit.

You are not exactly holding a gun to some anonymous buyer's head and forcing them to buy or sell. Each buyer/seller is an entirely free agent as you are and they are willingly choosing to buy "your" shares.

Don't put any personal slant on it whatsoever. Next when you buy something you will be castigating yourself for stealing someone else's shares against their will!!!

Investing/trading simply has nothing to do with your personal philosophy of not wanting to take from others. There is just no connection.

Good post Julia, as far as I'm concerned when you sell a stock to someone else there is as much chance of it going up as down. Maybe like Julia said you should think of it as giving someone else an opportunity to make money, not take it off them.

 

[Wysiwyg]

You're not "taking from others". You are offering someone else the opportunity to fulfil their wish which is to buy your shares. They have valid reasons for wanting to buy them. Presumably you have a valid reason for wanting to sell them, i.e. taking a profit.

You are not exactly holding a gun to some anonymous buyer's head and forcing them to buy or sell. Each buyer/seller is an entirely free agent as you are and they are willingly choosing to buy "your" shares.

Don't put any personal slant on it whatsoever. Next when you buy something you will be castigating yourself for stealing someone else's shares against their will!!!

Investing/trading simply has nothing to do with your personal philosophy of not wanting to take from others. There is just no connection.

Thanks Julia...I am becoming more comfortable with taking profit as time goes on.What you say makes a whole lot of sense.I will try not to casterate myself on future trades.Just my upbringing mindset needs to adjust to sharetrading.Thanks for your input.

p.s....also at times I could have more money than I have had in my whole life and that is scary too.I will get over this barrier.

 

[nizar]

Exactly. This is what some don't grasp. T/A is not about prediction. It doesn't matter how many times you point it out, they come back with the same (non) point.

Exactly.
TA is more about reaction.
See where the price is going, and react to it.

I think fundamental analysis is all about prediction.
Prediction is when you think a company is undervalued, and you predict that one day it will trade at what you reckon is fair value. If it doesnt ever go up to your value, then you think that the market is stupid (!) and because you dont like losing money and its not a loss until you sell you end up holding a dog forever. Or it becomes bottom drawer until it at least breaks even. Or even better, buy on the way down to reduce average price After all, if it was cheap at $X then its even cheaper at $X-40% !!

Pretty much sums up fundamental analysis for me

 

[hongwong]

Question.

Has there been anyone doing the techincal trades that has proven success over the long run ?

If so, could you list him/her and what books they have written ?

Looking at a 10-20 year time peroid of trading.

Thanks !

 

[Slothhead]

Question.

Has there been anyone doing the techincal trades that has proven success over the long run ?

If so, could you list him/her and what books they have written ?

Looking at a 10-20 year time peroid of trading.

Thanks !

Are you asking has there been people that have traded for this long. I am not sure that i fully understand what you are asking. There are many people out there that have been trading for this many years.

Or are you asking, is there people buying shares (trading) with a 20 year forecast?

Yeah i got no idea what you mean, but then again it is getting past my bedtime

 

[hongwong]

Are you asking has there been people that have traded for this long. I am not sure that i fully understand what you are asking. There are many people out there that have been trading for this many years.

Or are you asking, is there people buying shares (trading) with a 20 year forecast?

Yeah i got no idea what you mean, but then again it is getting past my bedtime

Just asking if there are any good books ... for ppl who want to learn about techincal trading.

I am looking to read and understand their styles.

Looking to read about techincal traders that have had the test of time.

Techincal trading game for about 10-20 years.( doing well)

Good night and thanks

 

[wayneL]

Question.

Has there been anyone doing the techincal trades that has proven success over the long run ?

If so, could you list him/her and what books they have written ?

Looking at a 10-20 year time peroid of trading.

Thanks !

Nick Radge immediately springs to mind. Perhaps Weinstein, Wyckoff, Gann, Curtis Faith, Nick Darvas, Linda Raschke... thats just off the top of my head.

Lol, there are dozens!

 

[hongwong]

Nick Radge immediately springs to mind. Perhaps Weinstein, Wyckoff, Gann, Curtis Faith, Nick Darvas, Linda Raschke... thats just off the top of my head.

Lol, there are dozens!

cool thanks for this.

I will look into Nick Radge, since he lives in australia.

Here we go.

 

[wayneL]

cool thanks for this.

I will look into Nick Radge, since he lives in australia.

Here we go.

Nick is straight down the line, no BS, no embellishment. You will get the "real" picture from him.

 

[hongwong]

Nick is straight down the line, no BS, no embellishment. You will get the "real" picture from him.

WayneL, I dont doubt this. I am not here to say tech vs fund. Personally if it make money and the style suits u. I would say go for it.
READ this:
This is my outlook on the stock and I am telling you to buy/sell/hold.
I just want to give a fundamental outlook on the stock from my angle!


https://www.aussiestockforums.com/forums/archive/index.php/t-2694.html

Taken from the above:
It obviously skews the win/loss ratio the wrong way. You must remember that trading is about capital gain, not income growth. You never put your capital at more risk than is acceptable. Your mind will do everything it can to keep you in a bad trade and get you out of a good trade. Discipline is the core ingredient and there is no harm in having another go if prices go back again. But after 20-years of trading you will learn that sometimes prices will never go back. Look at MGW, PPX, PBG, IIN, WYL, PBB etc etc. These are top quality companies that kept diving and diving. I haven't even suggested HIH, ION, SGW, ONE, etc etc. From a trading perspective, holding these beyond reasonable risk will take you out of the game.

Here is what Nick has said.

I am going to take a look at MGW.
This is from what I can see.

MGW
The company is trading at P/E 70.26 now(BAD)
Revenues has been going up - good point
The EPS is good until 04/05. – investigate, could be once off cost or something.
Worrying factor:
This company has started to get into debt since 02
Inventory level has risen from 2003, therefore this shows signs that demand has stop and receivable is dropping. Too much stock in warehouse and a right off could be coming.

For me I would have pulled out from 2003/04
Because of the debt level, increase in stock and slow down in receivables.

To confirm all this I would ring up a store like “Dan Murphy” and ask them
How sale are going for MGW or what wines/beers they sell.

This is what I have seen in the books.
All information has been taken from commsec.

I can take a look at PPX, PBG, IIN, WYL, PBB if people are really that interested, but u can all do this for yourselves.
Just need to ask Nick or anyone, what he saw in the charts etc during etc and what made him sell out ?

edit
This was a very quick over view of the stock and looking over the books.

 

[wayneL]

Just need to ask Nick or anyone, what he saw in the charts etc during etc and what made him sell out ?

Hong,

It's probably not even what Nick saw in the charts that made him sell. (I don't know I'm just guessing) It was probably the parameters in which he wants to be in a trade were breached, so trade exited, simple as that.

To understand the premise of technical trading, I recommend Nicks book "Adaptive Analysis For Australian Stocks". It is not expensive and the first few chapters explain how profitabilty is obtained in the technical setting as clearly as I have seen anywhere, without fluff and padding.

Cheers

 

[wayneL]

Hong,

It's probably not even what Nick saw in the charts that made him sell. (I don't know I'm just guessing) It was probably the parameters in which he wants to be in a trade were breached, so trade exited, simple as that.

To understand the premise of technical trading, I recommend Nicks book "Adaptive Analysis For Australian Stocks". It is not expensive and the first few chapters explain how profitabilty is obtained in the technical setting as clearly as I have seen anywhere, without fluff and padding.

Cheers

BTW, I would never advocate Tech over fundie or visa versa. It's horses for courses; both methods have merit and work exceptionally well for those who apply it properly.

It is good however to recognize the merits of others methods.

Cheers

 

[wayneL]

Fantastic thread guys!

Wayne and others, I'm wondering if the failure of traders is actually due to the failure to recognise the need to trade in various time frames?

When I first started out, I was looking at mid to long term strategies. Now as I am becoming more confident and more successful, I am looking to learn and increasingly trading in shorter time frames. But it appears as if some traders discard the longer term view in favour of increasingly shorter time frames... which looks a folly to me as you wouldn't be increasing the probability of success over a variety of time frames.

Also (and I was thinking of starting a thread about this), do you think people's occupation or training/ education, can have a positive or negative affect on their trading? And the reasons for this.

Cheers,
Chops.

It's a good point. Raschke and other advocate having systems in various time frames. Obviously it would depend on personal circumstances and the ability/opportunity to be able to monitor all the trades.

The challenge I had to overcome in this regard is having separate "mindsets" for different time frames. This wasn't easy to to do, for me at least.

For instance if I have a trend trade going that is starting to move against me having moved into profit, but well within my trailing stop, the swing trader in me is SCREAMING to take profit. This despite having started off as a trend trader. But to do so would sabotage the system... internal conflict.

I had to devise ways to manage my head...tough.

 

[nizar]

Question.

Has there been anyone doing the techincal trades that has proven success over the long run ?

If so, could you list him/her and what books they have written ?

Looking at a 10-20 year time peroid of trading.

Thanks !

Long-term trend followers that trade from purely mechanical systems include:
John W.Henry
Bill Dunn
Ed Seykota

They dont solely trade stocks though, also commodities, currencies, etc.

Its amazing, they do other stuff during the day. WHenever their computer beeps, one of the traders calls a broker to buy or sell. And they dont outperform the market by percentages, they do it by multiples.

A book called trend followers by Michael Covel will really open up your eyes to mechanical trading and make you see its potential - well, thats what it did for me.

 

[Temjin]

Nick Radge immediately springs to mind. Perhaps Weinstein, Wyckoff, Gann, Curtis Faith, Nick Darvas, Linda Raschke... thats just off the top of my head.

Lol, there are dozens!

Not to mention you missed Dr Van Tharp as well. His book will give you a whole new view on what it takes to succeed in trading. He mainly focuses on developing trading system for all markets which include the concept of R-distribution (VERY IMPORTANT), and money management and position sizing. He also focus alot on psychology as well in his Peak Performance course, how humans naturally DO EXACTLY THE OPPOSITE of what it takes to succeed.

I've read alot of books out there (including the ones already listed here) and it's only Van Tharp's work that truly gave me a whole different perspective on trading.

www.iitm.com

www.mastermindforums.com

http://www.smarttraderblog.com/