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Why Traders Fail (WTF) Series... My personal thoughts & experience!

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  • Why Traders Fail (WTF) Series... My personal thoughts & experience!

    You can never get any 'real' than this...

    1) We do not have discipline, we create a plan to trade, that's good. But:
    1.1) Keeping to the plan after entering the trade is quite a challenge, the longer you are in the trade, the more prone you are changing your initial plan.
    1.2) Keeping to the same plan over and over again is also difficult. If you have executed Plan A over and over again, closing trade after trade in profit or in loss, you will get tired of it over the long run. You will suddenly trade Plan X and Y and that is when you lose all your money.

    2) Over-leveraging:
    2.1) We might over-leverage because of mindset. We have a mindset of getting rich quick, we really want to turn $100 to $1000 overnight, we really believe we can do it so when trade turns against us, we quickly lose our money.
    2.2) We might over-leverage because of revenge, we lost trades over and over again, so we need to re-gain all that losses, so we risk more to gain more, and again, when our trade goes against us, we lose our money faster than expected.

    3) Instant gratification:
    If we are always right in trading, we might not have this problem, but the thing about trading, you can never be 100% correct, so you are bound to have losing trades. When you have too much of losses, you want to just be right at least once or a bit. So when our trades gets a little bit into profit, we will close it. As such, the profit will be a little bit. We do not do the same with losing trades, we try to wait it out, hoping that price will come back, or giving the trade "some room" before it will move in your direction. Over time, the losses will overcome the tiny profits and we will again lose our money.

    4) Impatient:
    It is good to trade according to what we see but we need to have a confirmation. Sometimes we see a seemingly obvious and outrageously big down candle and we jump in a SELL trade, we did not wait for any sort of confirmation like candle close. As such when we enter we are caught at the extreme low point and before the candle closes, it reverse and creates a obvious and outrageously big UP candle. We know we are doomed. We never expected nor could imagine it can ever be a UP candle, our eyes and impatience deceived us.

    ... more to come ...

    In the meantime, LIKE, share and subscribe. Even better, write your own reasons you've failed before.
    Last edited by FanFocusATgmailCOM; 09-06-2016, 12:48 AM.
    The forex market is already so complex, don't make it worse.

  • #2
    Originally posted by FanFocusATgmailCOM View Post
    You can never get any 'real' than this...

    1) We do not have discipline, we create a plan to trade, that's good. But:
    1.1) Keeping to the plan after entering the trade is quite a challenge, the longer you are in the trade, the more prone you are changing your initial plan.
    1.2) Keeping to the same plan over and over again is also difficult. If you have executed Plan A over and over again, closing trade after trade in profit or in loss, you will get tired of it over the long run. You will suddenly trade Plan X and Y and that is when you lose all your money.

    2) Over-leveraging:
    2.1) We might over-leverage because of mindset. We have a mindset of getting rich quick, we really want to turn $100 to $1000 overnight, we really believe we can do it so when trade turns against us, we quickly lose our money.
    2.2) We might over-leverage because of revenge, we lost trades over and over again, so we need to re-gain all that losses, so we risk more to gain more, and again, when our trade goes against us, we lose our money faster than expected.

    3) Instant gratification:
    If we are always right in trading, we might not have this problem, but the thing about trading, you can never be 100% correct, so you are bound to have losing trades. When you have too much of losses, you want to just be right at least once or a bit. So when our trades gets a little bit into profit, we will close it. As such, the profit will be a little bit. We do not do the same with losing trades, we try to wait it out, hoping that price will come back, or giving the trade "some room" before it will move in your direction. Over time, the losses will overcome the tiny profits and we will again lose our money.

    4) Impatient:
    It is good to trade according to what we see but we need to have a confirmation. Sometimes we see an seemingly obvious and outrageous big down candle and we jump in a SELL trade, we did not wait for any sort of confirmation like candle close. As such when we enter we are caught at the extreme low point and before the candle closes, it reverse and creates a obvious and outrageously big UP candle. We know we are doomed. We never expected nor could imagine it can ever be a UP candle, our eyes and impatience deceived us.

    ... more to come ...

    In the meantime, LIKE, share and subscribe. Even better, write your own reasons you've failed before.
    Wow, nice post FanFocus. You're a lot wiser than your avatar looks

    This is spot on and pretty much encapsulates every reason a trader fails under their own steam.

    Personally I'm guilty of over leveraging, wanting instant gratification and being impatient.

    I police these faults by only trading during the Asian session (when my strategy works), having very tight stops that allows me to use higher leverage than most importantly keeping myself busy between trading set ups so I'm not tempted to trade just for the hell of it.
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    Comment


    • #3
      Originally posted by Nick View Post

      Wow, nice post FanFocus. You're a lot wiser than your avatar looks

      This is spot on and pretty much encapsulates every reason a trader fails under their own steam.

      Personally I'm guilty of over leveraging, wanting instant gratification and being impatient.

      I police these faults by only trading during the Asian session (when my strategy works), having very tight stops that allows me to use higher leverage than most importantly keeping myself busy between trading set ups so I'm not tempted to trade just for the hell of it.
      You aren't the only one. Although I'm beginning to master the need to over leverage. I'm now able to stick to my lot sizes and enter small enough and add multiple times on smaller corrections if market goes my way.
      My largest issue to date is the need for instant gratification but this also due to being impatient and entering too soon. I'm actually correct with my analysis but I have a hard time waiting for a clear entry signal and correction (I like to trade break outs) causing me to enter too soon. As a result the market first goes one last time "against me" causing me to close in a loss to then, a few hours, later go in the direction I envisioned and move to my TP. This in turn causes me to then be too cautious and not enter when my plan actually tells me to. Once I finally make that *click* I believe I can finally be consistent for years.
      http://widgets.myfxbook.com/widgets/2229599/mini.jpg

      Comment


      • #4
        Originally posted by reaper_unique View Post

        You aren't the only one. Although I'm beginning to master the need to over leverage. I'm now able to stick to my lot sizes and enter small enough and add multiple times on smaller corrections if market goes my way.
        My largest issue to date is the need for instant gratification but this also due to being impatient and entering too soon. I'm actually correct with my analysis but I have a hard time waiting for a clear entry signal and correction (I like to trade break outs) causing me to enter too soon. As a result the market first goes one last time "against me" causing me to close in a loss to then, a few hours, later go in the direction I envisioned and move to my TP. This in turn causes me to then be too cautious and not enter when my plan actually tells me to. Once I finally make that *click* I believe I can finally be consistent for years.
        Nice, thanks for posting ur take.
        The forex market is already so complex, don't make it worse.

        Comment


        • #5
          "Always good to be out of the market when things get a little crazy. Minimizing your time in the market is always good. Just like opening your mouth always exposes your intellect for everyone to see and to be judged. Keeping your mouth shut gets people thinking how much this person actually knows..".

          Something i wrote in the live trade room today... About being on the side lines. It is well known that markets can affect us emotionally. Having positions in the market already exposes us to risk. So it is beneficial to remain out of the market and only be in it as long as necessary.

          The take away here is preferring to be out than to be in. Till next time. Trade safe.
          The forex market is already so complex, don't make it worse.

          Comment


          • #6
            Reverse psychology;

            Treat your winning trades like your losing trades.

            When you have a losing trades, you have hope that price will turn around back into your favour. You will have that drawdown so big that it will be too late.
            When you have a winning trade, you are so tempted to close it so that you can realized the profit. Eventhough it has not reach the maximum profit potential. You are also afraid that you will lose the profit if the price goes against you before you are able to close your trade.

            These are some of the main causes people lose in trading, close winning trades prematurely and hold losing trades for longer that you should.

            Stop Loss places on every trade as an insurance in cases World War 3 or Ecomic Collapse happens and your not at your desk. Taking stop loss should always be on your mind and it is fixed. If certain situation happens, take stop loss automatically. An encouragement could be that you can entee the trade at a better price at a later time.
            Take Profit target should be placed on every trade to visualize your end goal to help remind you that there is so much more that you can make instead of listening to that instant gratification voice in your head.

            -Mr. Fan
            The forex market is already so complex, don't make it worse.

            Comment


            • #7
              We don't keep it simple like the trend is your friend and we trade too big a size. Trendlines and proper size is all you need.

              Comment


              • #8
                Trade with an edge as much as possible, this will not only help you but it can save you...

                Edge Number 1: Time. Time is your friend and time will tell all market movements so don't rush it.
                Edge Number 2: Lot sizing. Lot sizing helps on the emotional control of a trader. No sweat so no worries.

                Market movements are right in front of your eyes, MT4 won't hide anything from you. Charts are there for everyone to see, there's no deleting them. Additionally historical charts are always so obvious. Why is this so? Because they get finished painting when everything closes/end. In other words, wait till the end to make a decision. Do not trade what has not been confirmed, in another other words... WAIT. It is confirmed when candles are finished painting and it closes.

                Do not trade the news, reason above and also everything is still moving and nothing is being confirmed. However, you are in the thick of the action, your heart is racing, everything feels good when you are winning and you feel like "trading", well in most cases, you are losing. Unless there are so many factors being met when news is release, try to stay out of trading it.

                There are many scenarios when you can the direction right but got stopped out. There can be many reasons you get stopped out, maybe because; your stops are too close, or additionally, your trade size is too big that you cannot "afford" a bigger stop loss distance. Stop loss are placed in world-crisis scenario, in other words, it's a backup. If you can't take your own loss, your not a man yet. Think about this. Grow up and then get back in the "game". (This is not a game). Personally, I've place a very small lot trade and let it run, It went against me for 6 months and came back into profit and I closed it (I made a video of this in YouTube). This shows that eventually, 1) everyone is right at some point in time, 2) each trade can be profitable, when the time is right, 3) this could be used as an edge. When time in on your side, and limitless drawdown is on your side, and you can sleep at night because lot size is small, all this is your edge against the market.

                ---more to come---
                The forex market is already so complex, don't make it worse.

                Comment


                • #9
                  Which is better...?

                  High probability trades are better than blind/gamble/lucky trades.
                  Trades with a take profit is better than trades with no target.
                  Trades with a stop loss is better than trades with limitless loss.
                  Entering a trade late is better than having a high probability losing trade.
                  Losing trades is better than over-leveraged trades.
                  Taking a small loss and looking out for a better entry is better than holding on a losing trade hoping it will turn around.
                  Not trading and waiting is better than having losing trades.
                  Not trading is better than news trading.

                  ---more to come---
                  Last edited by FanFocusATgmailCOM; 02-28-2018, 06:22 AM. Reason: Added more...
                  The forex market is already so complex, don't make it worse.

                  Comment


                  • #10
                    Obviously, not every trader can fall in this winning bracket, so the iconoclasts who do have to set themselves apart from the crowd with smart strategy and a different approach. To be one of the minority who consistently succeeds in trading, avoid making the following ten mistakes.

                    1. Looking for a Holy Grail. Traders who skip around from one method, system, indicator or service to the next in order to find a perfect solution with instant gratification usually end up disappointed. If this describes you, stop right where you are.

                    2. Not sticking to a plan. A methodology, or trading system, is essential. The markets can be chaotic and confusing, especially for someone without a specific plan of action that can be used again and again. Without a plan, you will react to the market instead of anticipating the market. Creating a trading plan is a highly individual process and usually stems from years of experience.

                    Here at Aspen, we have a methodology that allows us to make sense of the market day after day. This is what we share with our clients. We follow this strict process on each and every trade we take, and we pass those trades with the exact stop/entry/exit parameters on to you.

                    3. Improper mindset. Humans are emotional creatures by nature, but being emotional in the uncertain environment of trading can be calamitous. Almost every book on the subject of trading psychology hammers home the idea of more discipline and less emotion. Emotions will inevitably come into play while you are trading. Itís how you deal with those emotions that will define you as a winner or a loser.

                    4. Improper trade size. Capital preservation is paramount. Poor account sizingó risking too much per tradeó is a surefire way to fail. Trading is not a sprint; itís more like a marathon, and a very long marathon at that. You will lose trades here and there. Itís how you deal with losing that matters.
                    At Aspen, we follow strict account sizing rules (which we pass on to you). We tell you exactly how much to risk per trade and exactly where to exitówhether that exit is at one place or multiple places. There is no guesswork for us in trading, which is what makes us successful.

                    5. Poor risk-to-reward ratio. There are two reasons traders end up with a poor risk-to-reward ratio:
                    a. They donít have a trading plan and instead simply react to the market.
                    b. They simply canít hold their winnersÖ but they hold their losers.

                    Having a plan gives you the confidence to see your analysis through to the end. At Aspen, we have a 62% win/loss ratio, and our risk/reward ratio is better than 1:2.

                    6. Holding on to losing trades and getting rid of winning trades. Here we go again: the old ďbut I donít like to loseĒ argument. Itís human nature to hold onto losses in the hopes that they will rebound. You will have losing trades; get used to that fact. Focusing on how you manage lossórather than trying to ignore itówill put you ahead of the crowd.

                    On the flip side, traders often get out of winning trades too early so they donít have to deal with ďgiving profits back.Ē If you want to lose money trading, holding losses and getting rid of winning trades is a surefire way to achieve it. In trading, itís much more important to be profitable than to be right, and in order to be profitable, you need to cut your losses early and let your winning trades keep working for you.

                    7. Thinking of trading as black and white. It might pain you to hear this, but trading is not a black and white process; thereís a lot of gray. Another losing analogy is the ďred light/ green lightĒ system. Having a simple 3-step process to help you frame and identify a trade set-up is okay, but experienced traders know that nuance is where real insight lives.

                    Some days, trading is indeed A + B = C. Other days, trading is A + B = 1 (or D or F or Z). If trading was A + B = C all the time, everyone would know exactly how to win. This is not realistic.

                    8. Overtrading. This one is simple. If youíre trading simply for the sake of trading, youíre overtrading. Trade because you see genuine opportunities in the market. Trading is not like a 9-to-5 job where you are rewarded for constant productivity. You donít get paid to push buttons all day long; you get paid by making good, winning trades. Itís that simple. Movement in the markets doesnít mean you must trade. Trade when things line up for you. Be patient, wait for setups to occur, and when they do, take action. If you want to succeed at trading, you need to act like a winning trader, and winning traders are patient and wait for setups.

                    9. Not taking trading seriously. Iím often puzzled by how often people approach trading with a different attitude than they do any other moneymaking venture. Trading is a business, and like most vocations, it takes time to learn how to perform well. People go to school for years to become doctors; but many so-called hobbyist traders think that simply reading a few ďFor DummiesĒ books or scanning some indicators will suffice. This attitude toward trading is like throwing darts at the wall with a blindfold on. Shortcuts and scams donít work. Trading is not easy, and you canít learn it without effort. You can, however, enlist a seasoned expert (like us) to guide you.

                    10. Not having a successful mentor. Any successful trader once had a mentor, coach or service help him to formulate a plan and strategy and learn how to be successful. I am no exception to this rule.

                    Yes, there is a lot of free advice available, especially on the internet. You can spend your time sorting through it, guess which nuggets of information are authentic and valuable, and then hope for the best. If youíre really an ambitious D.I.Y.-er, you could, in theory, learn to do just about anything with a few books and an internet connection. But will you learn to do it well? And how long will that take, exactly? And do you really have that kind of time and discipline?

                    Working with a mentor is a powerful shortcut that helps you tap into proven trading approaches so you can start making money faster. When you enlist a mentor, you are essentially buying knowledge and training that is an investment in your future trading. Over time, as you learn a framework that works, youíll eventually be able to add your own investing twist to it. But like a house, a solid foundation is the very first step.

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