WELLCOME

WELLCOME TO MY BLOG.
"Don't trade when there aren't clear opportunities" Jesse Livermore "The only way to "get better at trading" is to practice dealing with losses, with money, with your real trading system "Rob Booker "There are old traders and there are bold traders, but there are very few old, bold traders." Ed Seykota "Don't think about what the market's going to do; you have absolutely no control over that. Think about what you're going to do if it gets there"Bill Eckhardt

Saturday, August 20, 2016

WHY DO 90% of TRADERS LOSE MONEY

Not following a clear and simple trading methodology. Methodology includes: your analytical tools and how to use them.
Only by trading systematically  you will know when to buy or sell  without using your instinct ,
how to trail the position and when to exit. Instinct does not work over the long run.
Lack of Discipline. You should  consistently follow your proven system . The trader should define 
the best methodology that works ,write it down and follow it systematically.
Lack of Patience. Market only trends 20% of the time, meaning that 80% of the time the markets are not trending in one clear direction. Hence, there are only few good setups in a given week to take.
However, if you miss a trade remind yourself that there is always another trade tomorrow or next week.
Lack of Money Management.you should limit your position risk to 1%-3% of your portfolio (we have 1%risk) .You also need sufficient capital to make sure you will not be stopped out prematurely .To determine the level of the stop loss use either fixed stop  or ATR (volatility) stop loss. Fixed stop loss  is usually used under previous low-high or resistance -support . 
Do not put on one trade big percent of your portfolio (we have 15%)
Money management also includes  risk/reward analysis. Don't trade less than 1:2 ratio,meaning your the distance between you stop, entry and target should be not less than 1:2. When trading, we all the time should apply probability of success and failure and protective stops. Trader with small account should reduce risk by trading small, having fewer shares of stocks, so the risk on any given position will be relatively small .
Unrealistic Expectations. It is difficult to have above average returns trading your own account.
The trader (esp  the beginner trader) should concentrate on not losing his own money.(Jeffrey Kennedy)

No comments:

Post a Comment