Why do so many aspiring traders only lose money?

[pip slayer1]

They are not intelligent enough.
Their psychology is all wrong for trading.
They underestimate the skills required.
They overestimate their own abilities.
They risk money before they have learned how to trade.
They over-complicate their charts.
They over-simplify their charts.
Their heart is just not in it.
They lack the necessary patience and perseverance to succeed.
Their losses are too large in relation to their wins.
They have no tried and tested strategy.
They are not disciplined enough to stick to their strategy.
Because ultimately, trading is gambling, and sooner or later, all gamblers lose.


Most of the above are inter-linked, and I'm sure you have reasons of your own that I've omitted. What do you think?

[Haley12]

Most of the above mentioned mistakes done by new traders as well and due to this they also lose money. However, I am not in favor to compare it with gambling.

[Dirk David]

I wouldn't say that all trading is gambling...but I would say that the house always wins lol

[packiesla]

I think it's just due to lack of experience. After losing for a while you start to realize your mistakes.

[AlchemistX]

They are not intelligent enough.
Their psychology is all wrong for trading.
They underestimate the skills required.
They overestimate their own abilities.
They risk money before they have learned how to trade.
They over-complicate their charts.
They over-simplify their charts.
Their heart is just not in it.
They lack the necessary patience and perseverance to succeed.
Their losses are too large in relation to their wins.
They have no tried and tested strategy.
They are not disciplined enough to stick to their strategy.
Because ultimately, trading is gambling, and sooner or later, all gamblers lose.


Most of the above are inter-linked, and I'm sure you have reasons of your own that I've omitted. What do you think?

I don't agree that trading is gambling, but everything else you said is right on the money. I can't think of anything you have missed.

[jollygreenfello]

If forex is a total crap shoot, why are there traders like ICT and TmoneyBags who can consistently rake in profits from it? Yeah Forex is hard, but once you have a strategy, incorporate proper risk management and follow your trading Constitution 100%, you can succeed. If you train enough, I think almost anything is possible. If you are impatient and jump into trading live without adequate experience and proven demo results, you will most likely fail...

You have to train before you get the gold.

[AlchemistX]

If you are impatient and jump into trading live without adequate experience and proven demo results, you will most likely fail...

I think that applies to the vast majority of new traders. They think they can make a lot of money very quickly and with minimal effort. They find out the hard way that trading is not easy money, there is no free ride.

[Clint]

Why do so many aspiring traders only lose money?

Your first post in this thread lists a number of ways that trading success can be threatened, or destroyed. As you have discovered, there are many, many ways to fail.

And, as you have implied, success involves --- among other things --- avoiding those traps.

"What's right is what's left, after you've done everything else wrong." --- Robin Williams

New traders have a tendency to ask the same questions that new traders before them have asked time and time again. And one of those questions is this: Is it true that 90% of forex traders lose money? And, if so, why does this happen?


Consider some comparisons:

Ninety percent, or more, of new businesses --- fail within 5 years of start-up.
Ninety percent, or more, of the new drugs developed by the pharmaceutical industry --- fail to make it to market.
Ninety percent, or more, of the manuscripts submitted to publishers by aspiring authors --- fail to get published.
Ninety percent, or more, of boys who dream of making it to the professional level in sports --- fail to do so.
Ninety percent, or more, of girls who dream of becoming super-models --- fail to do so.

Why would you expect forex trading to be an easier path to fame and fortune, than any of those endeavors?

We all put our money in one big pot, and then we grapple to take more money out of the pot than we put in.
The strong succeed in scooping up the big shares of a finite pot.
The weak come up short, and wonder how the strong managed to take their money.
Forex trading is a zero-sum game, and you'll be one of the "zeroes" unless you train yourself to fight and win.

I read an article in the current issue of Futures magazine, in which Billy Williams --- not to be confused with
Bill Williams, Larry Williams, Tom Williams, or Robin Williams --- asked and answered a rhetorical question:

"It's common to look for advice on how an average trader can be successful in today's market; the answer is not to be average. Average traders lose money, while exceptional traders take money from average traders."

And, on the topic of gambling.....

Forex trading absolutely is a form of gambling. And, contrary to what a previous poster implied, gambling is not defined as "a total crap-shoot". Gambling is not defined as pure, random chance, involving no skill. The skill of traders like Michael Huddleston (ICT), and others, is precisely what makes the difference between their success vs. the failure of the 90%.

So, why is forex trading gambling? Because you, as a speculator, have no justifiable, economic purpose in being here, except to try to take money from other players who are not as smart, or not as lucky, as you are.

In other words, your reason for being here is exactly the same as your reason for sitting down at a poker table.

All things considered, a pretty interesting place to be seated.

[PerchTird]

Your first post in this thread lists a number of ways that trading success can be threatened, or destroyed. As you have discovered, there are many, many ways to fail.

And, as you have implied, success involves --- among other things --- avoiding those traps.

"What's right is what's left, after you've done everything else wrong." --- Robin Williams

New traders have a tendency to ask the same questions that new traders before them have asked time and time again. And one of those questions is this: Is it true that 90% of forex traders lose money? And, if so, why does this happen?


Consider some comparisons:

Ninety percent, or more, of new businesses --- fail within 5 years of start-up.
Ninety percent, or more, of the new drugs developed by the pharmaceutical industry --- fail to make it to market.
Ninety percent, or more, of the manuscripts submitted to publishers by aspiring authors --- fail to get published.
Ninety percent, or more, of boys who dream of making it to the professional level in sports --- fail to do so.
Ninety percent, or more, of girls who dream of becoming super-models --- fail to do so.

Why would you expect forex trading to be an easier path to fame and fortune, than any of those endeavors?

We all put our money in one big pot, and then we grapple to take more money out of the pot than we put in.
The strong succeed in scooping up the big shares of a finite pot.
The weak come up short, and wonder how the strong managed to take their money.
Forex trading is a zero-sum game, and you'll be one of the "zeroes" unless you train yourself to fight and win.

I read an article in the current issue of Futures magazine, in which Billy Williams --- not to be confused with
Bill Williams, Larry Williams, Tom Williams, or Robin Williams --- asked and answered a rhetorical question:

"It's common to look for advice on how an average trader can be successful in today's market; the answer is not to be average. Average traders lose money, while exceptional traders take money from average traders."

And, on the topic of gambling.....

Forex trading absolutely is a form of gambling. And, contrary to what a previous poster implied, gambling is not defined as "a total crap-shoot". Gambling is not defined as pure, random chance, involving no skill. The skill of traders like Michael Huddleston (ICT), and others, is precisely what makes the difference between their success vs. the failure of the 90%.

So, why is forex trading gambling? Because you, as a speculator, have no justifiable, economic purpose in being here, except to try to take money from other players who are not as smart, or not as lucky, as you are.

In other words, your reason for being here is exactly the same as your reason for sitting down at a poker table.

All things considered, a pretty interesting place to be seated.

I tried to double-like but it wouldn't allow it

[pip slayer1]

Look at a price chart...

you'll notice that most often, the most favourable prices to enter are not available for very long. Often excessive volatility accompanies the best entries. Often the best prices come at the end of a strong trend.

New traders are "taught" to avoid fighting the trend, taught to avoid excessive volatility. So when the big boys are entering, scooping up those contracts at inflated/bargain prices... the average joe is sitting there scared out of his/her wits, waiting for things to "calm down" before they make their move!

This is an extremely valid comment, and I thank you for it as I thank everyone else who has replied to this thread. You are so right. Opportunities to Buy or Sell present themselves to us, and as long as they are recognised as such, there is a short window of opportunity within which must decide to take the trade or not, and these opportunities more often than not come amidst high volatility, the very such times the gurus and trading manuals are telling us to avoid. The best traders I am certain have, through years of trial and error, learnt to recognise these opportunities for what they are, a time to enter the market at the best possible price with minimum risk, whilst the majority of retailers are waiting for a ' safer ' opportunity to present itself, one of course, that seldom comes.