Home Trading Strategies The Reason Why Most Traders FAIL (And How to Avoid it)

The Reason Why Most Traders FAIL (And How to Avoid it)

The Reason Why Most Traders FAIL (And How to Avoid it)

he-hey what my friend in today’s episode I want to talk about you know the reason why most traders feel and how you can avoid it so number one full by randomness so what do I mean by this so imagine this imagine I you know play a game with you a coin toss and every time the coin comes up here you win 2 $2 and every time the coin comes up till you lose $1 so clearly right this coin toss the H is in your favor now let me ask you if the coin comes up till 5 times in a row will you stop playing that game altogether would you unlikely right because you know that it’s a matter of time before hits come up again and then you start you know profiting but in trading when you have five losses in a row or maybe even three losses in a row you start to panic and then you start to abandon a trading trilogy strategy and for something else can you see that there is this discrepancy over here so remember in trading just because it’s a losing trade doesn’t mean it’s a battery let me repeat right just because it’s a losing trade does not mean it’s a bad trade in trading you’re dealing with probabilities not certainty so if you don’t want to get full by randomness my suggestion is have a sample size of traits try depending on kid depending on your trading style but to be safe a minimum of 100 traits to know whether you have an H or not okay you can just you know make an objective decision right whether strategy works or not based on a three or four five traits because of the law of large number because there is this so called a random distribution out there right between your wins and losses is only after a sample size a minimum of 100 traits would you know whether a trading strategy works or not okay so number one right don’t be fooled by the law of large number number two you don’t have an age in the market so this is something I believe I heard from Jack Swagger right he said something really insightful he said that if you wanna make money you’ve got to have an edge in the markets because I’m not sure about you right but I’ve seen stuff like no traders say oh trading is all 80% psychology right all you need is the right psychology the right discipline right and you’ll make money but no I I can’t agree with that why do I say that imagine right you go down to the nearest casino and you’re please you can bring along with you the best psychologists all right the one who can pump you up before every gamble you can you know use the best risk management practices out there and I can assure you I can guarantee you the longer you stay at a casino the more money you lose why because you don’t have an edge over the house and this is the same for trading you can have the best psychology out there the best discipline the best risk management but if you don’t have an itch guess what you lose in the long run as well okay so number two right you don’t have an edge in the markets number three traders they treat the markets like they are atm so another thing that I see often is that Rainer can you teach me a strategy that just you know makes fifty dollars a day all I’m asking is just fifty dollars I’m not trying to be a millionaire all I want is $50 a day well what’s the problem with that statement the problem is if you expect consistent profits from the market every day this has to happen right your trading strategy has to work every single day and if your trading strategy has to work every single day it means that the market has to be in that same particular condition every single day well guess what market conditions they change it is effect okay and if market conditions change it means that your trading strategy well it will go through a period of working and then you’ll stop working and then it goes back to working again so you can see that no trading strategy is going to work all the time and if no trading strategy is gonna work all the time you’re not gonna make money all the time so it doesn’t matter whether you wanna make five dollars a day 50 dollars a day five thousand dollars a day it’s not gonna happen because market changes right and no trading strategy works all the time so if you have the mindset that you know you’re gonna make daily profits I suggest that you look elsewhere I think a fixed paint job would be much more appropriate okay and finally write a four reason why most traders fail is because they are not willing to do the work they want to be spoon-fed I know right it’s human nature we want shortcuts right real lazy we want shortcuts or I want a magic indicator that’s bitten by yourself but the problem is if you’re not willing to do the work you’ll never have the conviction behind your trading strategy for example you have seen you know often the saying that oh you need a minimum of a one to one risk reward ratio to be a profitable trader no right I’ve done my research and write mean reversion trading system you can have a 65% win rate and a risk reward ratio of 0.

8 and you can still make money in the long run or how about this or you need to have a high winrate that 60 70 % win rate to make money in the long run know a trend-following system is anywhere between the 30 and 40 percent win rate but the reason is made it makes money is because the average profit is larger right two to three times larger than the average loss and that’s how trend follows make money despite a low win rate so you can see that if you were to follow right so called trading sayings right although common trading quotes you find that you know you won’t be able to make money because it’s only true the research and development that you’ve done only now will leave the conviction right to trade the systems to trade your strategy so there’s no replacement for hard work and your own due diligence okay so with that said I have come towards the end of this episode if you’ve enjoyed it hit that thumbs up button and subscribe to my youtube channel and I will talk to you soon you


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