The number of losing traders overwhelms those who are
succeeding
"Do Day Traders Rationally Learn About
Their Ability?"
Do day tradersmake money?
The majority of day traders quit relatively
quickly
Investors irrationally attribute success
disproportionately to their ability rather than
luck
Many day traders are remarkably persistent in their day trading activity despite a history of losses
Most people who take up trading quit
Think they are skillful instead of lucky
Have a history of losing
Trading brokers report that losing traders
make up the bulk of their clients
When we survey typically the number of people losing ranges
from 88% - 92%
There has to be others that struggle
MethodRisk management
Psychology
Most still have a hard time following these
mantras
We came up with these 5 actions that most failed traders don't bother with
LOOK FOR A 65% WINNING PERCENTAGE
I've seen plenty of people trade with 90%+ win ratios, only to wipe out weeks or months of gains with outsized risk
This is a goal and an objective that can
stand the test of time
ACCEPT REASONABLE AVERAGE WIN TO AVERAGE LOSS
RATIOS
A closer reality?
Reward/risk ratios from as low as 1:1 up
to about 1.5:1
With a 65% win rate, a simple $1 risk and $1 reward can work
beautifully
EMBRACE THE POWER OF QUITTING
For us when we day trade, it tends to be
2 winning trades + positive results
= Quitting Time
If we get two winners but are still negative, we continue until we reach a hard time-
based stop.
Most US futures markets tend to be
valid to trade the first 2-3 hours, then fall
into a rut
This applies to ALL day trading in particular -
forex, futures and stocks
YOU MUST ACCEPT REGULAR LOSING
TRADES
You need to look at successful trading as how you did over 50 trades, 100 trades, or
much more
You have to be able to outlast the whims of markets you cannot
control
CAN YOU TRADE YOUR SYSTEM
CORRECTLY 25 TIMES IN A ROW?
If you're anything like me, who has time for
that, right?
The Point?You will not master the
trading rules by watching a video or
reading a book
Until you start to train your mind and develop
some habits and instant instincts, you
will lose money
Most will neverfollow this
Knowing why traders lose money allows you to improve on the very
things they fail at
The fact is that there are many successful
day trader stories
You know success is possible because other
people have done it
Knowing how traders make money and
actually doing it are two very different
things
It's important to acknowledge and even confront what stands in the way of success.
Simple things like cutting losses and letting winners run seem to be easy to do
With work and determination though, you stand to possess a skill that can be used
for life