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]

[B]Why do so many aspiring traders only lose money?[/B]

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?

[B]Consider some comparisons:[/B]

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 [I]Futures[/I] 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.”

[B]And, on the topic of gambling…[/B]

Forex trading absolutely is a form of gambling. And, contrary to what a previous poster implied, gambling is [B]not[/B] defined as “a total crap-shoot”. Gambling is [B]not[/B] defined as pure, random chance, involving no skill. The skill of traders like Michael Huddleston (ICT), and others, is [B]precisely[/B] 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 [I]justifiable, economic purpose[/I] 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?

[B]Consider some comparisons:[/B]

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 [I]Futures[/I] 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.”

[B]And, on the topic of gambling…[/B]

Forex trading absolutely is a form of gambling. And, contrary to what a previous poster implied, gambling is [B]not[/B] defined as “a total crap-shoot”. Gambling is [B]not[/B] defined as pure, random chance, involving no skill. The skill of traders like Michael Huddleston (ICT), and others, is [B]precisely[/B] 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 [I]justifiable, economic purpose[/I] 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.

[angelnish]

Poor planning is the key to failure.Poor money management follows.Taking high leverage could be a course too since it posses higher risks.Never enter a trade because the price is suddenly rising or falling. Always plan your trades in advance. Know your desired entry point, Take Profit and Stop Loss rates before you trade and wait for the right opportunity to arise.

[cheetu]

I would agree with the original poster that forex is gambling!

In a business you give something for the money; whatsoever, service, product or training. In forex you make money out of pure risk.

Really, I was expecting some truthfulness from the experienced members but it seams they don’t want to see the truth.

:24:

[TyrannosaurusForex]

…

Because ultimately, trading is gambling, and sooner or later, all gamblers lose.

…

I agree that trading can be considered a form of gambling for the reasons Clint stated. However, the notion that sooner or later all gamblers lose needs to have a time frame associated with it.

IN THE SHORT RUN, sooner or later, all gamblers lose.

IN THE LONG RUN, skill takes over and smart gamblers win money from “dumb” gamblers.

Using poker as an example. If I take a bet with a hand that is a 4:1 favorite over my opponents hand, I have a 20% chance to lose any single hand. Chance has a strong influence in the short run.

However, if I play the same hand 100 times, I will win a lot of money and my opponent will lose a lot of money. The difference between the smart player and the “dumb” player is that the smart player KNOWS he’s taking a bet as a 4:1 favorite and the “dumb” player THINKS he’s a favorite when he’s a big dog.

It’s the same with trading. If your trading system has a positive expected value and if you don’t break your rules while trading your system, you may lose any individual trade but over the long run you must make money. But, you need to put in the work so that you KNOW you have an edge, not just THINK you have an edge.

[cheetu]

But their is nothing wrong in being a gambler; life is the ultimate gamble, I see nothing wrong in it :21:

[pip_slayer1]

But their is nothing wrong in being a gambler; life is the ultimate gamble, I see nothing wrong in it :21:

You are right in a sense cheetu, in that one must constantly seek to surpass oneself if one is to move forward in life. But that is actually far easier to do in our everyday lives than it is in the markets. In life, we can mask many of our frailties and weaknesses and muddle through. But there are no such hiding places in the markets, which will ruthlessly punch us hard in the face the moment we make a mistake, and punch us with the same force as soon as we make another one. There is simply no environment known to man more ruthless than are the markets,initially, unless of course you consider something like a Japanese POW camp during WW2 to be on a par. This harsh environment is just too ruthless for most people to cope with, and they attempt to take money from it BEFORE they have have understood how to do it. Compare learning how to trade with learning how to drive. If there was no requirement for a driving test, if you were just allowed to get into a car and drive the moment you reached 18 years of age, just imagine what the results would be - chaos and death everywhere. And yet this is just what happens in the trading environment, and the results are the same.

Personally, I do not view what I do as gambling, but then again, it depends on how you define the word ’ gambler ', although that will take us into another argument which I don’t want to address here. I merely see trading as an art form like any other, and one that requires the same amount of time or longer to master. Put your money on the line BEFORE that has been achieved, and yes, you can be called a gambler, and you will be punched until you either surrender or can’t get up any more. Treat the markets with the respect they deserve, learn your craft as you would any other, and this thing called trading can provide a wholesome and fulfilling lifestyle. Most people simply do not do this or cannot do it, and they end up bruised, demoralised and frustrated like so many others. I hope you all succeed in your quest to become financially independent traders, I really do.

[JazzyD]

it’s certainly similar to gambling. Anything where there is great deal of fluidity, where there is no absolutes or guarentees, where influences outside yoru own can create a bigger impact than you are capable, would seem like gambling.

However, most areas that you would more closely relate to gambling like poker, or blackjack have a much greater element of chance involved, and you shold never play the house lol

[angelnish]

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?

[B]Consider some comparisons:[/B]

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 [I]Futures[/I] 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.”

[B]And, on the topic of gambling…[/B]

Forex trading absolutely is a form of gambling. And, contrary to what a previous poster implied, gambling is [B]not[/B] defined as “a total crap-shoot”. Gambling is [B]not[/B] defined as pure, random chance, involving no skill. The skill of traders like Michael Huddleston (ICT), and others, is [B]precisely[/B] 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 [I]justifiable, economic purpose[/I] 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.

:60: In each of those points above there is a massive wealth of information to digest and to learn, and it’s for that reason why trading is such a complex business. It’s a learning process which will continue for the rest of your trading life; every true trader never stops learning.

Practice makes perfect, and trading is no different.

[anon88459104]

I personally think that if you did a survey of all new Forex traders and asked them the following question:

Was the reason you became interested in Forex because you found previous forms of gambling to be non-profitable?

Many newbie traders are treating this as gambling because that’s what they do, they also play poker, like going to the Casino, enjoy a little horse racing…Trying to switch from the gambling mentality, which I believe to be an extremely difficult challenge, to a ‘Business Mind’ is not doable for many people.

“A progressive disorder characterized by a continuous or periodic loss of control over gambling; a preoccupation with gambling and with obtaining money with which to gamble; irrational thinking and a continuation of the behavior despite adverse consequences.”…do you really think this person will make it as a successful trader?

[Peter_Brandley]

I don’t agree with you that Forex is gambling- Forex isn’t a place for gamblers; it’s a place for traders; it’s a place for business persons who don’t see FX as an easy way to riches, but rather a business which you build consistently; on a solid foundation. If you hear that they do lose money is because of :
Naivety
Lack of common sense
They’re out of their depth
They don’t know what they are doing
They’re crushed psychologically
They don’t have a method
They aren’t treating trading like a proper, genuine business.

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?

[pip_slayer1]

To Peter Brandley - This list is not a representation of my own personal reasons why most aspiring traders ultimately fail, it is just a list of some of the reasons different people put forward. If you go back and read a couple of my posts above, you’ll see what I think personally. And I agree with all your reasons except " they’re crushed psychologically", which may be the case. but only after their losses, hopefully not before. It’s the process before they get crushed psychologically that results in people’s losses. And by the way, statistically, 95% of all new businesses fail within the first two years, so trading is no different.