The REAL reason why nearly every trader fails. Can you solve this trading dilemma?
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Thread: The REAL reason why nearly every trader fails. Can you solve this trading dilemma?

  1. #1
    After thinking long and hard about why virtually every trader fails, I think I have discovered the answer.

    The simple trading issue is this:

    It is nearly impossible to make the math work.

    Let me offer you an illuion of why it is so tough to create the math spice up trading:

    I traded this method the whole day today and did well but there is an issue that all traders face no matter their methods and it is this:

    You never know just how much profit the commerce will give you.

    You can know, for sure, your cease and entry but you simply can't know how much profit the trade has inside

    This is the main reason why nearly everybody loses money trading.

    For instance, today on all my trades the entries were crystal clear and so was my stops- always set to 15 pips.

    Being you could never know how much the commerce has inside, on lots of my trades I wanted to take the profits before they disappeared, so on several trades I obtained 3 pips profit, 5 pips profit, and 10 pips profit.

    A number of these trades went to give larger profits if I had stayed in the commerce but some of these retraced and my profit would have disappeared if I had not exited with a fast profit.

    So, what I am getting at is this:

    The risk/reward ratios in trading are negative because you can't be GUARANTEED the commerce provides a profit that's equal or more than your stop loss.

    Thus, basically you are risking 15 pips(if you use a 15 pip stop) to create 3,6, 10 and sometimes 15 pips.

    Today, I hit most of my trades but when my 15 pip stop got hit a few times, nearly all of my profits would have disappeared.

    Sooner or later, this may occur and all of those tiny profits will be given back by being discontinued out a couple of times.

    Therefore, my question is this:

    How, precisely, do you manage this issue?

    Is it true that lots of profits, which are smaller than 15 pips, ultimately make up for becoming stopped a couple of times?

    In my opinion, this issue is your principal dillema in gambling and is the reason why practically every trader, in the end, ends up losing all their money.

    It's nearly impossible to make the math functions (your profits add up to more than your losses) because it is impossible to INSURE your profits will probably be larger than your losses because you NEVER KNOW just how much profit a trade has inside.

    Can anyone you think of a way to fix this most basic trading issue?

    all ideas would be appreciated.

    Thanks and Happy Trading

  2. #2
    It seems as if you're a short term scalper, as I'm trying to be.

    Basically, with time, and many recorded transactions which it is possible to analyze... you're going to make decisions to sometimes give up your profit for more profit. Other times, you won't.

    So now that you have your stop loss and place size down. . .start thinking about transaction management (whether to hold more or take profits) based upon:

    1. current volatility
    2. Time of day
    3. Strength of everything is the signal
    4. Price being near high/low, pivots, or plogical levels.
    5. Price being near support/resistance

    All these are the things I'm attempting to consider.... To add additional depth.

    ( by way of example, I try to not enter transactions around round amounts, or pivot points due to high volatility around them. . .though I will Try to hold transactions to ensure my leaves will be near them, because I think price is drawn to these over time)

    My two cents... Good Luck!

  3. #3
    Quote Originally Posted by ;
    It seems as if you are a short term scalper, as I am attempting to be.

    Basically, with time, and many listed trades that you can analyze... you are likely to make decisions to occasionally give up your profit for more profit. Of course, other times, you will not.

    So you have your stop loss and place down size. . .start considering trade direction (if to hold longer or accept profits) based upon:

    1. current volatility
    2. Period daily
    3. Strength of whatever is your sign
    4....
    GREAT ANSWER!

    Thank you very much.

  4. #4
    Quote Originally Posted by ;
    You can't calculate your risk/reward in trading as you can not KNOW how much profit there will be at the trade.

    Without this KNOWLEDGE it's extremely difficult to make meaningful money in trading.
    Well, it's extremely hard. The market reveals itself onto a real-time basis. The orders are flooding in and out as different price levels are made accessible - there is not any KNOWING what will occur. Hop on board with all the currently dominant side and take what you get. Sometimes a lot, sometimes a little - sometimes a kick in your teeth.

  5. #5
    Quote Originally Posted by ;
    It seems as if you are a short term scalper, as I'm attempting to be.

    Basically, with time, and many recorded transactions that it is possible to analyze... you are likely to make decisions to sometimes give up your profit to more profit. Of course, other times, you won't.

    So now that you have your stop loss and position down size. . .start thinking about trade direction (if to hold longer or accept profits) based upon:

    1. current volatility
    2. Time daily
    3. Strength of everything is the sign
    4....
    Also, the main thing required to make big bucks in this sport is a high winning percentage set-up. You are able to search for years until you find one of these.

  6. #6
    Quote Originally Posted by ;
    How can you GUARANTEE a risk/reward ratio of ANY kind if you can not KNOW, for sure, how much profit there'll be in a trade?
    I know because I calculate my TP is 1.5 the space for my SL. I then let PA decide which way it is going to proceed. I know that I'll either get the TP or the SL.

  7. #7
    Quote Originally Posted by ;
    Also, the most important thing needed to create big bucks in this sport is a top winning percentage setup. You are able to search for years before you find one of them.
    With this I will see you and I are on very different wavelengths - that is fine. Fantastic fortune to you!

  8. #8
    Quote Originally Posted by ;
    I know because I calculate that my TP is 1.5 the space to my SL. I then allow PA choose which way it's going to go. I am aware that I get the TP or the SL.
    So you set OCO orders (one cancels another ).

    Imagine if your stop loss is 20 pips and your profit target is 30 pips and the rrade proceeds 25 pips in your favor and starts stalling then retraces 3 or 4 pips, can you still attempt to receive your 30 pips or do you grab the 24 pip profit?

    Should you grab the 24 pip profit, then your r/r ratio is no more 1 to 1.5.

    In case you don't grab the 24 pip profit occasionally you'll return most of your profit and on occasion you'll receive your 30 pip profit.

    Which way do you perform it?

  9. #9
    Quote Originally Posted by ;
    I understand because I calculate that my TP is 1.5 the space for my SL. I then let PA decide it's going to proceed. I am aware that I'll either get the TP or the SL.
    Additionally, I am not sure if a risk reward ratio of 1 to 1.5 or 1 to 2 actually means anything at all as a risk reward ratio of 1 to two ALSO suggests that the odds are twice as likely that you will drop on the transaction, so that I think that r/r isn't the key to trading but rather a high wining percentage set up is your key and it could take years before you find you.

  10. #10
    Quote Originally Posted by ;
    Well, it's extremely difficult. The market reveals itself onto a basis. The orders are flooding in and out as different price levels are made available - there is not any KNOWING what's going to happen. Hop on board with the currently dominant side and choose what you get. Sometimes a lot, sometimes a bit - sometimes a kick in the teeth.
    Well said.

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