They lose because everything they do doesn't work in the long run.
Do you think you can buy a system that makes money over the long term? If such a system existed then there would be no market because the system you bought would own everything - it would only be a matter of time and scale. Besides, the owner of the system wouldn't sell it because they would want to own everything.
Do you think looking at charts and indicators really help? You do realize that you can not make money on historical candles, right? Only the current and future candles can pay out. And you do realize that NO ONE can predict the future, right?
What can you do?
Let's see, you can determine when you enter a trade and what direction. And you do realize the reason you enter a trade has NO EFFECT on the outcome of the trade, right?
You can predetermine how much you are will to lose (risk) per trade. RISK = STOP LOSS * POSITION SIZE.
That's all you can do.
The only way we can expect to win the trading game is to have a method that gives us a positive expectancy and to execute that method flawlessly.
WHAT IF...
You only entered trades in one direction, kept your losses to 2% or less of your account and let the winners run?
Let's say you only enter LONG and you are trading the GBPUSD. We know from statistics the average hourly range usually exceeds 30 pips. Over the last 8000 bars the average is 47 pips.
When the hour opens we enter the trade if the price hit open + 5 pips. (Yes, the Buy Zone!). We only enter ONCE per hour.
Possible outcomes:
* the price never hits open + 5, we do not enter.
* the price hits open + 5, reverses and we stop out.
* the price runs close to or above average and we make a profit.
How many times does price take off like a rocket from the open and never drop more than a pip or 2?
Let's apply some "common sense".
We start with $1000 and only risk 2% or $20 per trade. If we trade 2 minilots, that would be a stop loss of 8 pips ( counting 2 for spread or commission ) for a total loss of $20.
If we make 22 pips on a trade, that would be $44 ($40 net) for a 4% return. Do you realize what $1000 becomes if you compound it at 4% a day?
You do realize that OVER TRADING is one of the mistakes most traders make, right? How many trades PER DAY do you need?
DO YOU SEE IT?
2009.04.04 WHY 95% OF TRADERS LOSE
http://kreslik.com/forums/viewtopic.php?t=1722
2009.05.16 WHY 95% OF TRADERS FAIL - PART II
http://www.kreslik.com/forums/viewtopic.php?t=1815
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