StockFetcher Forums · General Discussion · Why do 95% of traders lose?<< >>Post Follow-up
6,362 posts
msg #48228
Ignore TheRumpledOne
11/29/2006 1:54:19 PM

Why do 95% of traders lose?

First, do you really believe that 95% of all traders lose?

To me, it's hard to imagine 100 traders sitting in a room and 95 of them losing.

But, let's say it's true. Why is it true? Why do 95% of traders lose?

I know we have all read the usual answers like FAILING TO PLAN, FAILING TO USE STOPS, FAILING TO ....

I don't think that's the case at all. I don't think it's about failing.

I think it is about FOCUS.

We are here creating filters to find what?

Stocks. Stocks that if we trade them, we make money.

Let's assume we can only go long, so then we are looking for stocks to buy and sell later for more than we paid.

So this brings us to the point of this discussion... are we looking for stocks that ARE GOING UP or stocks that we THINK may go up based on our formulas? Where is our focus? The PRESENT or THE FUTURE?

I think most traders are looking for stocks that they THINK will go up rather than stocks that ARE going up. And that may the be the REAL reason 95% of the traders lose. They are looking into the future rather than looking at the present.

Muddy's "WAIT FOR GREEN" is simple. If a stock is above yesterday's close, then guess what, it's going up so enter long. It sounds too simple. But it works! Muddy doesn't lose often.

In my chatroom, traders ask me what I think and my reply is always the same... I DON'T THINK, I ANTICIPATE AND REACT.

First, thinking while trading is too slow especially if you are a scalper. Thinking is always biased and you can't really afford to be biased while trading. You need to be objective. If you think, you are probably wrong and that's why you could be part of the 95%.

While trading, the focus needs to be on what the stock you are trading IS doing rather than what it might do next. If you think it may go up just because an indicator gave you a signal but the price is still going down then guess what... THE PRICE IS GOING DOWN! It sounds simple but indicators blind people to the reality of the situation.

Muddy told me he didn't use indicators when he trades. That intrigued me and I was determined to find out you can trade without indicators. Well I did. It's simple. LOOK AT THE PRICE ON THE CHART!! That tells you all you need to know.

If the price is going up, then it's going up. If the price is going down, it's going down. THAT SIMPLE.

I know there's a few of you who hate it when I say, "IT'S NOT WHAT YOU TRADE, IT'S HOW YOU TRADE IT" but that's a true statement. It IS the difference that makes the difference. It determines if you are part of the 95% or not.

I make a distinction between stock selection and stock trading. We write filters that select stocks to trade but we still have to trade them. If the filter says a stock should go up and you buy it and the result is a loss then DON'T BLAME THE FILTER. The filter didn't enter the trade, YOU DID! The filter did it's job, it found the stocks that met your selection criteria. That's all filter can do.

Running backtest on filters tricks you into thinking the filter picks "good" stocks. Backtesting never makes you money, only trading can do that.

That's my take on why 95% of traders lose. What's yours?

172 posts
msg #48229
Ignore ham1198
11/29/2006 2:43:38 PM

TRO, I like to follow Matt Claassen's trading rule: Buy if stock price trades above tge previous day's HIGH. This gives me a good idea that the stock is going UP. This I feel elimates the head fakes you can get if it trades above yesterday's close.

But hey, I'm not arguing with you. You probably know 1000x more than me.

Thanks for all your input here.

622 posts
msg #48231
Ignore luc1grunt
11/29/2006 4:20:03 PM

Seems like at least 94% of them (losing traders) are in chat rooms chasing stocks to "get rich quick" and they are the one's who rely on someone else to chart their own destiny. Sad, but after watching over time it becomes very clear that the sheep will always want...the easiest way. They seem to prefer taking losses with the group for some psycholigical consolation prize as well (we all lost, so I must not be the "dumb money").

Good info everywhere (if you are looking). Great strategies, techniques, and technical abilities by smart folks. Tremendous benefit in learning from someone else's mistakes. Never stop asking and learning from those who are accomplished in any given field.

Advice I got when I was a kid. "Wanna be successful, wealthy, happy, and independant? Watch those who are not, and don't do as they do".

My $.02...Happy Trading.

19 posts
msg #48232
Ignore papawally
11/29/2006 5:37:30 PM

Seems like we need a SF days ahead script.

msg #48233
Ignore __fetcheruser123
11/29/2006 6:00:42 PM

What's the point in having a group if it's not to trade ideas and learn from each other? Everybody wants things easier, it's human nature. That's why there are groups to trade ideas, so individuals don't have to think of everything themselves.

283 posts
msg #48239
Ignore heypa
11/29/2006 8:12:24 PM

I previously charted on Quotes Plus.Excellent charts but lonely.Stockfetcher has much greater filter element choices(which I don't use or need) and much inferior charts and programming language. Without the forums I wouldn't be here. We all should learn from the mistakes and success's and and failures of others.We can learn even from the questions of others.An open discussion is always desirable.

People continuously search for the better filter--the Holy Grail. They backtest filters or pick conditions from historical charts searching for better signals.If during this searching they ignore the overall market itself during the period being evaluated they delude themselves.You must always compare to the market when evaluating results. We're all great pickers in bull markets.The preceeding does not apply to scalpers.Mid term or long term it is really hard to consistantly beat an honest market average.

622 posts
msg #48241
Ignore luc1grunt
11/29/2006 8:35:34 PM

Agree wholeheartedly (sp?) on the sharing and group input. My statements were to those looking for the free ride without the effort needed. And then following it up with additional and continuous free-rides with no additional effort.

Thanks to all who post here. I DO learn something everyday.

StockFetcher Forums · General Discussion · Why do 95% of traders lose?<< >>Post Follow-up

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