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