Join our investing community

Trading Why Do Traders Fail To Make Money?

Discussion in 'Shares' started by Tropo, 23rd Mar, 2012.

  1. Tropo

    Tropo Well-Known Member

    Joined:
    17th Aug, 2005
    Posts:
    3,396
    Location:
    NSW
    Quote:

    Let me state at the outset of this article that in terms of the number of rules involved in its successful execution trading is the simplest profession on earth. There are only two basic rules in trading.
    They are if the price is trending up over the time frame you are interested in then you buy whatever share you are following.
    Conversely if the price of the share you are following is trending down then you sell whatever share it is that you are following.
    These two rules can be even further truncated to if it goes up buy it, if it goes down sell it.

    These two rules apply no matter what time frame you invest or trade over.
    If you are an aggressive intra day trader then the time frame you are interested in may be minutes.
    If you are managing your superannuation portfolio then the time frame you are interested in may be months or even years. The time frame is irrelevant what matters is the strict application of the rules.

    Whenever I mention these rules in a seminar most of the audience nods in a very wise, sage like fashion.
    Of course the rules are easy to follow, of course you only want to own shares that are going up you don’t want to own shares that are going down.
    Only an idiot would suggest otherwise.

    However ask yourself this simple question, have you ever held onto a share that was going down in value in the vain hope that it would get better.
    Or even worse have you ever engaged in the strategy of averaging down. Have you ever sold a share preemptively in the belief that you should take your profit and run, isn’t there are an old Wall Street adage that you can never go broke taking a profit.
    Or that you should leave something on the table for the next person.

    If you have done either of these two then you have broken the prime rules of trading and if I were to look at your trading history then what I would see is a pattern of selling stocks that go up and buying stocks that are going down.

    Without wishing to sound harsh what you are doing in ignoring the two prime directives of trading is guaranteeing that your performance no matter how you trade and what your methodology will always be very ordinary.
    You can take some comfort in that you are not alone, fund managers and stockbrokers fall prey to exactly the same sorts of idiocy this is why 99% of all fund mangers under perform the index against which they compete.

    However stating the problem only goes part of the way to solving the problem.
    The question is how to move away from habits that are holding your performance back and guaranteeing that your trading or investing will forever remain mediocre. There are a few simple tips that can greatly enhance your profitability.

    Firstly you must state what your objectives are in trading. Why have you invested and before I hear a chorus of ….to make money stupid….
    I have to caution you that this is a far too simplistic answer and may be part of your problem.
    In one of the great paradoxes that seem to abound in markets if your aim is to make money then chances are you wont make any.
    The reasons why this occurs are complex but they are bound up in the various behaviors that this attitude engenders. You must carefully define what you think trading will bring you in terms of your lifestyle.

    Secondly you will need to articulate how you will go about your trading, what time frame will you trade what instruments will you trade.
    If you wish to trade specialist markets such as options or futures then this will require further education and is a form of trading that requires a great deal more active involvement on the part of the trader.
    Do you have a dream about trading overseas markets?
    If you do what makes you think you can make money in an overseas market but not domestically?

    Finally and most importantly you will need to draw all these points into a trading plan.
    Your trading plan is a roadmap for your success it will need to spell out your aims in trading. Any landmarks such as wanting to have achieved a particular equity size by a given date or having undertaken a certain number of courses before beginning your trading.

    The final part of a plan deals with the execution phase of trading and will include features such as what are you triggers for entering a trade, what will cause you to exit a trade and what is your position sizing methodology.

    If you do not have a written trading plan do not trade again until you do. More importantly if you have not understood what I meant when I referred to position sizing never buy another share again until you do.
    This may seem harsh, but there is a secret to trading part of that secret is the planning aspect of trading.
    But the real secret is in understanding position sizing, this is such a secret very few people involved in markets know anything about it.
    Yet it is a prerequisite for your success no matter how or what you trade.
    Chris T.
     
  2. wdongli

    wdongli Well-Known Member

    Joined:
    31st Mar, 2010
    Posts:
    1,292
    Location:
    Perth
    Life is good since you could be good and life could not be good if you could not start your life for good.

    Is it true for the stock market?

    Do you feel good now?

    If not, something wrong inside not outside! It is about the harmonic balance about inside and outside of ourselves.

    ***
    I am focusing on improving my English Listening capability, which would help me to know more about culture which could be used to improve my behavior in the market.

    Culture is more than the art. War is a art. Trading is a art. Art needs more than some simple observations(false rules), rules to get links between the cause and effect, behaviors, and strategies and plan.

    Engineering is the field which let me had chances to see the world around but it has become hurdles or excuses to know more about the market and culture around me for new chances beyond 60s, 70s, or better 80s.

    I would like to work wisely with my mental and financial resources while my labor value is diminishing definitely at ages. I would like to be a creative player rather than a follower of the crowd or popular illogical premises. It doesn't mean I don't trust others but I really don't trust myself before I feel happy about my mental framework for the market.

    Mental framework do need a lot of different materials to be updated and color my life much more.

    ***
    I never feel my limitation so strongly in the market. There are various of vast oceans out of ourselves.

    I could not help but admit it is ridiculous to think we are invincible and not very stupid after putting the toes on the wrong road.

    Why do you lose the money for years if not a decade?

    You don't think you are wrong at the very beginning and keep to believe you could not be wrong in basic!

    Have you watched the TV series, "Super Smart Animals?" All of us should know some basic on the epistemology!

    ***
    We fail in ourselves and then we fail in life(and then the stock market)!

    It is a logic I have realized since I was a boy. I have followed it in all things I want to do but not stock market until 2004. Stock market was, is, will be a new field to most of individuals. We all need the trials and errors for the deserved profit except we are extremely lucky.

    Could you have guts to get trials since errors which could kill you financially? Could you really put efforts to know the causes of your errors? If you just repeat your failed actions you will fail yourself.

    ***
    I believe we need to be educated. We all know it.

    However how could you teach yourself for profits by repeating: you have to know when to buy, hold, and sell as a gambler? I don't think anyone can.

    Someones write for name or money not to help you to get your profit! Do you know that? If you don't know it how could you teach you properly?

    ***
    One of my best friends who furiously traded since 1998 lost too much of his capital since he just could not really know what the next market would move.

    Now if anyone mentioned the stock market, he would burst out angrily. He is very smart and work hard for his own business but he lost nearly all in the stock market.

    I do feel I am lucky and have put a lot of my time to update my mind since 2002 but unfortunately it was still not good enough.

    ***
    I could buy cautiously but I just could not sell when all became crazy at peak.

    Before April 2011, I did know it is important to lock the profit but I still could not help but gambling for a killing! It is not because I didn't know wave theories but I just could not fight against my primary instincts.

    Have you watched the TV documentary Dunkirk Evacuation? Could you believe you should be integral, persistent, wise, disciplined, analytical, and self-responsible for winning? What made the impossible possible? Do you know your goal and the first step for your goal?

    A decade or more between 1998-2012 has shown the lines and patterns could help you but you have to know more than them just not to be losers! Nearly all of genius just knew lines and patters in 2000 have gone as losers.

    Could you be exceptional?
     
    Last edited by a moderator: 23rd Mar, 2012
  3. Tropo

    Tropo Well-Known Member

    Joined:
    17th Aug, 2005
    Posts:
    3,396
    Location:
    NSW
  4. wdongli

    wdongli Well-Known Member

    Joined:
    31st Mar, 2010
    Posts:
    1,292
    Location:
    Perth
    Losers: dishonest naturally!

    When audiences went to see Shakespeare's history plays, they knew they were getting fiction as much as fact.

    In the market the honest traders take the dishonest words for their losing causes with full belief always!

    ***
    Why do you lose for years or a decade? It is a drama to say it is just because we broke some observations from gambling activities in the market. It is a lie or dishonest statement intentionally or unintentionally!

    Most of traders or investors are honest and trustful people in the market in the social moral views. However they are dishonest to themselves first and then they dishonest to everyone and everything. They tell the lies in the belief they hold the truth.

    They don't have the gut to admit something wrong in their minds. They just want to do something and get the money and respects they don't deserve. How many veteran losers dare to admit their own mistakes? How many of them dare to admit they are human and have no chances of error-free?

    ***
    It may not be properly to use the word "dishonest" to explain these honest people in their social life but they cheat themselves is a fact. Is it dishonest to cheat whoever they are?

    Could you sustain or would like to storm your brains after you lose again and again? Why do you try so hard to protect your biases in the market? Do you really know what market is? How could you be thrive rather than survive by compensating your loss from your labor value or pensions?

    I believe everyone at their 50s have great chances to have another 20 years to be alive. Life is really good and it means creation in the way you should enjoy. If last 20 years were good enough for you to realize your labor value, could you realize your intangible value of your wise mind in the next 20 years?

    ***
    Don't expect quick money even we would not give up the chances to get fortune tomorrow!

    Too quick to be honest about yourselves! Could you be a Engineer in days for the income for your families? It is a lie evidently if anyone say so. Could you an intelligent or wise traders or investors in days? Everyone seems boast to say say so especially in 2000. They told lies? Yes even they didn't realize it then.

    Market would defeat any dishonest activities or words if the time lasts long enough. Unfortunately we have very limited life span and then losers come in generations after generations.
     
    Last edited by a moderator: 23rd Mar, 2012
  5. Tropo

    Tropo Well-Known Member

    Joined:
    17th Aug, 2005
    Posts:
    3,396
    Location:
    NSW
    Dude

    Hey Dude...
     

    Attached Files:

  6. wdongli

    wdongli Well-Known Member

    Joined:
    31st Mar, 2010
    Posts:
    1,292
    Location:
    Perth
    Who is a dude?

    Am I?

    Possible and perhaps if the context and conditions are available!

    ***
    Human is intelligent, right? Intelligence doesn't mean human is error free. Is it right?

    So who is a true dude in the market? It is a quiz to define whom you are. Be careful to pick up your answer!

    Is it any helpful to inflate your emotion? God says no(of course if you believe the God).

    ***
    All choose to accept, which is true for all of intelligent animals, right?

    Why does human get its dominant position?

    What's evolution in the market to you? Still stick to your cheap personal feeling and guess work? No way!

    ***
    No personal provoking doesn't mean we should accept any words blindly!

    Youtube is a great tool for communication and sharing of ideas.

    Could you trust all in Youtube for your market causes? I don't trust them at all before I digest good enough!

    It is a issue about principle, right? Anyone has not basic understanding of the principles in the market and life would be the losers.

    ***
    Do you care about to be called as a dude?

    Definitely when I was a market boy, teenager, or premature adult in the market!

    Now? I feel very good to be called as a dude by anyone of the crowd. How many people have called Warren Buffett as a dude? He was a tiny snowball roller actually a few decades ago!

    In 2007 did you believe Buffett was outdated?

    My problem is I still could not trust myself that I could not be a dude if the market becomes hot again!

    ***
    It is easy to enjoy what we don't own.

    Any enjoyment from what we don't own needs the payment.

    In the enjoyment and gratification, it is not easy to have cool and sane minds at critical moment when we have to say no!

    What's the critical moment? What consequences from the critical moment? Could you identify the critical moment?

    Vision, value, turning point, and your integration would be tested in these critical moments.

    You fail at these critical points? You are the losers!
     
    Last edited by a moderator: 23rd Mar, 2012
  7. wdongli

    wdongli Well-Known Member

    Joined:
    31st Mar, 2010
    Posts:
    1,292
    Location:
    Perth
    Nothing to fear but fear itself

    I first knew it as a boy and it has inspired me to find the way to the future. However I have to admit I fail to understand it unto the earth.

    We all fear something. In the market we do fear to lose; we do fear to miss the train and stay in the station lonely and depressingly; we do fear we are taken as inferior traders or investors let alone to be called as dude; and we stay in the constant fear and have to stop the losses and check the patterns every minutes.

    Fear comes from paradox; uncertainties; distrusting on our own; and the feeling of insecurities. Why do you come into market? You want to get profit but you get loss!

    ***
    You get losses which are lessons; you don't want to repeat the big losses such as sale all on fire; you saw the recovery and you missed the train so that you are fearful you would miss next one; and we are fearful to any things which out of our expectation.

    Under the pressure of the fears, we are too easy to be honest to ourselves; we are excited or upset by any words from anywhere in the words; we even lose the gut to face the truth and the words about the life logic.

    Fear is a critical element to fail or one of consequence of fear. If you are invincible and could win out with sure you don't need to be fearful. It is impossible for us to be invincible but could we be fear-free?

    ***
    Risks are there and profits are there too. Nothing to fear but fear itself!

    You put your money out and then fire can burn it into ash. You don't put your money out and then you would never get your dreamed profit. Most of us are simply instinctive primary market animal with the hungry for the money only.

    We need a mental framework to make us fear free with sufficient protection for profit. It is so evident and so provoking to our primary instinct. We tend to run in ruins and drunk in the parties.

    ***
    Why do you lose for years? You are coward and fearful to the challenge of the market; you are coward to read different voices; you are lack discipline, analytical capability, knowledge, creation, and vision of your future.

    I know why we call others dudes since we are already! We want to point at dudes without matter they are or not to prove we are not stupid. Could we do so? We can not! We just want to delude ourselves for cheap illusion! We are fearful to face ourselves!

    Gut could not be strengthened by the environment and anyone else. Lines or patterns could not get rid of our fears. Gut needs the wisdom to care about! Do you get the ideas why you lost and kept to lose?
     
  8. Tropo

    Tropo Well-Known Member

    Joined:
    17th Aug, 2005
    Posts:
    3,396
    Location:
    NSW
     
    Last edited by a moderator: 17th Sep, 2016
  9. wdongli

    wdongli Well-Known Member

    Joined:
    31st Mar, 2010
    Posts:
    1,292
    Location:
    Perth
    There are too many idiots in the stock markets of China and Australia, actually everywhere.

    They usually refuse to admit their stupidity. Don't mistaken me. They are not criminals. They are just too hungry for the money in too short time period.

    It is wrong if you assume Tropo is stupid. He is a genius who was a expert to copy Youtube and paste here or there.

    I admire him very much. He doesn't need to write the words from his mind about market. I feel inferior sine I have to update my mind and improve my English!

    ***
    Charley Monger said we needed to invert what we assume. Is it characteristics of inferior traders or investors? I don't trust myself without more efforts to update my minds. I believe Tropo has all of reasons why he thought Warren Buffett were out of date let alone Charley.

    So some questions are necessary for me to raise even I don't think he needs to question himself which is things he doesn't need to do with some gift of lines and patterns. Questioning partly is to cure myself so don't link my words with Tropo!

    Is he really super? Did he act in his primary instincts? If it is true why he doesn't know? Why does he allow his primary instinct shed out so easily?

    Is he really a man as he boasts, a disciplined, analytical, and self-reliant? Why did he admire Livermore's plunging but refuse to get any lessons from his suicide?

    ***
    From his words, which were all glossy, seemed he gripped over the market in his hand. Is it true? It is not really wrong. All of us make some human errors. Is it logic if he is so perfect as he boast?

    Are you really believe there are this kind of super man in Australia stock market?

    He seems too easy to be upset and lost his temperament. He seems enjoy to cry in the darkness from his posts about US GFC, EU debt crisis, and Australia house sector.

    ***
    Was he really self-reliant? Any chances if no YouTube he would not know how to write his English about his thought on the stock market?

    Do believe he could honestly answer these questions. I would like to upset here and get profit in the market. It should be very logic assertion. Could he get the similar deduction with his super mind?

    Could he be honest to himself? Don't worry he would if a decade later he still puts his toes and some money into the stock market. It would be without any question if he would like to use his super brains and never insane.

    Could he uses his brain and be not insane in the market? He will if he is perfect being.

    ***
    Do you like to protect his sincere, charm, glossy, and genius personalities?

    If you want I would feel very relax since he deserves the specific protection in case we have too many idiotic minds or hands around! I am a very ordinary and old(even I still feel I could have another 20 years in the stock market).

    Whom is Tropo? Why is he so perfect? Are there too many biases toward him from me? How dare do I question him and his perfect? Everything could save you in the market but bias and not perfect without necessary buffers for the imperfect.

    Anyone can lose and run away but not him. He is noble and knows what is shameful to do!
     
    Last edited by a moderator: 25th Mar, 2012