Thread: The reason why 95% of new traders consistantly lose money

Hello

I have been trading forex fulltime on and off for over 7 years. I've purchased and finished several forex courses, read books, did online research on forums such as this one and even tried out EA robots. The only consistent thing that kept on happening was that I was bleeding cash. Sure, I would have one or two profitable months, however I mainly lost cash. I've wiped out several trading accounts causing myself terrible heartache during this time period.

I would bet that each and every trader studying this post is identifying with me. Most of us reading these forex forums are constant losers in forex and also we wouldn't be here if we weren't looking for a better approach to exchange...

Have you ever wondered why 95% of traders lose always? What's the most typical thing that most traders always do? What's the most barbarous mantra that's drilled into our brains while learning how to trade? Can anybody guess?

It's using stops! CUT YOUR LOSSES AND LET YOUR PROFITS RIDE!

95 percent of all traders consistently eliminate money since they use stops. Big stops, small stops, trailing stops, you name it. Who of us can actually know which way the market will go? Even by using each indior, being a technical or fundamental fundie, nobody can predict market movement.

Who people thought that the usd would collapse 200p against the gbp in the Feb 2008 nfp report. The worst report in 4 years generated exactly the opposite result than we expected! Just how many fib bounces did exactly work out as you hoped? How often did the market take out your stops if you least expected it and turn around to enter the first path you planned?

That is my theory. Traders that lose always, use stops. Forex trading is a guessing/ gambling sport. The market manufacturers indirectly take part in the forex market by finding traders stupid enough to really trade and by trading that I mean losing their cash to the brokers' account. The brokers earn money in forex not by trading themselves, but by having noobies exchange for them and shedding.

The traders who are very successful and who have stuck around long enough knows that no egy using stops, always works and earn money. So what have they completed? These traders needed to begin thinking out of the box. Only by turning what they understand onto its mind were unable to change their results.

Because I had this 'awakening' I've not lost one trade. I have track record that is winning! No Bull! Do not worry, I'm not promoting anything...

Ok, so how can this work? Lets say instead of using stops to book your losses, you use stops to book your profits... Huh?

It's quite easy... As has been said by another renowned trader/ mentor, CUT YOUR PROFITS AND LET YOUR LOSSES RUN! If your stops are going to be struck anyway, why don't you let them make you money rather than losing you money?

This is exactly the opposite of the mantra each broker/ market maker drills into you. They make you believe that you will be safe if you reduce your losses short and use stops to protect yourself. They make you feel that using some cool system you may always win more trades than you lose or win more cash than you would lose by having the ideal risk/ reward ratio. These guys fully know that you will lose all your money eventually just like the other 95 percent of traders out there. You'll be just another usual statistic if you exchange like everyone else trades.

Now this is really where gearing and cash management really come in. If you use low gearing 1% of your account per transaction it is possible to let the market swing very broad and very far from the position. If at this point you use a stop to take profits, it will eventually be triggered just like your stop for reduction would have eventually been triggered.

Now look for possible turning points. I am sure you are able to find an indior/ price pattern that does that. Simply work on longer time frames, 4hr minimum, daily is great. Hedge your position, go long/ short in the same price with exactly the same profit goal both ways. You can also create your profit goal bigger in the direction of the larger trend. Your stops will definitely be hit no matter which way the market swings.

However, you might ask, what about open positions that really run away against you? No issue. Since your account balance grows, you will still use 1:1 gearing. If your account balance keep increasing by booking profits, the percent drawdown of previous open positions using smaller lot sizes will shrink in relation to overall account size since the current lot dimensions you use today will grow too and so determine your bigger profits as well.

By using low gearing you consistantly publiion, say 1-5% profit on each transaction. Your equity equilibrium will fluctuate along with your free margin equilibrium will additionally change but in a relatively constant percentage of your entire account balance. If you use larger gearing like say 5:1 and 10:1, your account might be wiped out because your margin will not be able to carry it if you have several positions open.

Now you have to consider what is the reason for you trading? Can it be a longer term investment egy or are you suicidal? I recommend you keep your day job, for today By suicidal I mean, trying to scalp or using any other short term egy that doesn't work in the future and under various market conditions. Using more time frames because of this particular investment egy is definitely better! It's a simple fact that if you close your account, using my egy, in the end, that the adverse open positions will then be shut as well and you will then book your initial real losses.

This is not a big deal if your available equity has grown much larger than your introductory balance when you close your account. I, by way of example, am currently expanding my account with a minimum of 10 percent weekly and this current week around the gbp/usd is up 23 percent up to now. The power of accumulated expansion is really amazing! I've fine tuned this egy to produce far better results and started using it on a new account and I've so far doubled this account because 7 Jan 2008 15 Feb today.

I'm not writing this to show off how amazing I am, but to challenge the broker triggered/ losing trader mindset that you have been taught that prevents you from becoming successful in forex.

If you're able to begin with $1000 and grow it always over time, you will be able to show a spectacular return on your investment when you close your account even after taking the reduction in the end from the accumulated losing rankings. If you manage to earn 10% gathered expansion each week on your capital over a calendar year, your available equity at the end will probably be many times larger than your opening account balance. Work it out on paper and you will prove it on your own.

The ability of hedging is great. If, however, you only trade in one direction, say the management of the weekly trend is upward and you keep buying the drops/ possible turning points on a daily chart in the weekly management along with the market for some reason keeps moving against you and you find yourself 1000p down, after which you face the risk of wiping out your account since your entire open positions will likely be adverse and will rise until your margin drops. By assessing every new position in this situation, you maintain booking profits on the way down and you may just await the market to turn around to return again and restart the weekly bull trend.

Now I'm not trying to sell you a system and that I won't give you my system either. I've endured too much to just give it away. That is my intellectual capital and my trading advantage. I've paid my dues to learn this sport the hard way. I am sure you guys understand that. I do not care to prove myself into the skeptics among you so I will not post some of my results. You have to determine if you would like to take me in my word or not. I just need to make you consider what I wrote and to challenge you to begin thinking out of the box. If you begin working on it, you will find your own market beating egy and have loads of free time to enjoy your profits.

I've now become one of the 5 percent of traders who always win, without using stoplosses, and earn decent money.

Good luck

I have edited my response!!

In my rush out the door, I have actually managed to answer to the wrong post, in the wrong forum!!

Dumbass that I am.

Ignore me.

I am just going to say fast though that you're a bit contradictory.

Using stops to reserve profit remains using ceases.

And recommending not using ceases is crazy.
And that traders consistently loosing usage stops is rubbish.

And now I really have to go...

Definite food for thought here, but I still can't help believing you will get to keep your lot dimensions very small in order to defy the drawdowns you're necessarily going to possess. For myself, payoff is futile, as my type of trading involves just trading with the dominant trend. By keeping lot size small, I don't need to hedge, and can still defy the drawdowns more comfortably. That being said, I just use stops when I am going to be gone from the computer for a while, this comprises trailing stops as well- I have found that as my skills increase with time and practice, my TP orders generally provide me a better ROI.

BWILC is read by me. Tried run and, guess what?

One of them ran, and ran, and ran some more.

I soon decided that stops were for me, and bird viewing was not.

Ha ha ha, that's a great one blue ruby!

Wow so many reasons in Such forums Concerning why 95% don't make it, which one to choose

Originally Posted by ;

Wow numerous reasons in these forums as to why 95% do not allow it to be which to choose

That's exactly what I was thinking. Recently there seems to be a huge upsurge at the 95 percent versus 5 percent type of threads.

Perhaps we should start a poll on which thread has the best motive? LOL!!!

Since 95 percent or whatever it's currently THINK, This Is EASY They Are mistaken.

Best Wishes
The Scot.

Originally Posted by ;

This is my intellectual capital and my trading advantage.

First of all, FX Titan, Good post.
When you look at my signature below, I believe you'll very much relate to that. The only way to win in the FX is to find an edge. I did and I am glad you have.

Originally Posted by ;

I've paid my dues to learn this sport the hard way.

Yes, I've too. And I've been consistently profitable for the last 3 years.

Originally Posted by ;

I've now become one of those 5% of traders who consistently win, without using stoplosses, and earn good money.

Depending on your egy, you dont necessarily need to use stop losses.
Stop loss is bread and butter for brokers. Everyone must earn a living.
The conventional way to exchange FX would be a losing egy proven from the 90-95 percent of traders dropping. Follow the same egies because the herd, that is for sure.