Why 90% of Traders Lose
The failure rate for financial market and commodity traders has remained at a consistently high 90% for many decades, this despite all of the advances in information technology and the flood of new learning materials that is churned out annually, therefore why is it that 90% of traders still lose ?
In my opinion, a high 90% of traders are destined to lose because they are in fact learning from / listening to the 90% of losing traders that preceded them, who following wipe out in the markets have gone on to focus on writing about market price action and methodology with an even greater concentration observed to occur in the mainstream press as account busted traders / investors turn failure to trade into full time media careers and thus perpetuate a continuous cycle of failing traders guiding new traders towards similar failure.
This explains why those in the mainstream financial press can literally miss WHOLE Bull and Bear markets despite trends that end up spanning many, many years. They can be recognised by their rhetoric such as the perpetual the end of the trend is coming mantra that is based on fundamentally flawed understanding of what actually moves markets, which is why they failed to succeed in trading in the first place.
Given that 90% of trader fail, it can be assumed that that at least 90% of those that provide financial commentary are failed traders that spend their time writing about the act of trading rather than ever engaging in actual trading which culminates in the big name media whores that we see prancing around between make up rooms and TV Studio's, usually regurgitating what other failed traders have already commentated upon or make such weak statements that can be easily applied to virtually any outcome i.e. that the market will definitely fall, but then again it may definitely rise. The media whores are well practiced in applying such phraseology that ensures that they can always claim victory for publicity purposes whatever the actual outcome is, as the viewers are left to perceive whatever they want to in the media whore sales men's commentary, based on their own pre-existing market bias. The mainstream financial media is more than eager to push the selectively edited past commentary that results in nothing more than blatant misleading advertisements masquerading as financial market commentary. Stop for a moment and dissect what the latest utterance of a media whore actually is and you will soon realise the game of deception that is being played in an attempt to hook you in towards ultimately purchasing a product or service.
In actual fact perhaps as little as 1% of the material floating out there is produced by successful traders because successful traders are primarily going to be focused on trading rather than writing about trading or marketing trading services, with probably only enough spare time to write a couple of books over their whole lifetime which compares against the book factories that can churn out as many as several titles per year that virtually ensures that at least 95% of your trading book shelf is packed full of garbage, totally useless, and you know it!
Still it could be worse, academic economists inhabit a zone that is based purely on mumbo jumbo that is guaranteed to result in unforeseen outcomes, for academic economists tend to be the second greatest media whores just a step down from politicians, who exist purely to give off the air of authority and certainty as though economics is a science when in reality it is pseudo science more akin to the art of psychologically managing the general populations expectations aka economic propaganda than in determining any sense of economic reality. Economic theories are just that theories that have been modeled on selective editing of past economic data for political purposes which every trader should know (failing or successful) is just over optimised back fitting onto selective past trends that proves totally worthless going forward.
The Real Secrets of Successful Trading
For at least the past 5 years I have wanted to write a book on the real secrets of successful trading but have never found the time to get around to doing so. However I have alluded to where the secret lies many times, in articles and more specifically in comments. The most notable of which is suggesting those wanting to learn the real secret of successful trading should watch the early 1980's film Excalibur, for the seed for their own light bulb moment.
The Excalibur movie is the 1980's replay of the King Arthur myth focused on the hunt for the holy grail, (I think I first watched this movie in 1983). That should perk your interest because most traders very early on in their trading careers are convinced and easily seduced by the search for the holy grail of trading, even more so today where the internet is full of a multitude of competing holy grails out to hook traders into handing over huge sums of money for the privileged for learning.
However, I have had several advantages over today's traders in my early years such as there was no internet, no smart phones, and the local library shelves bare of trading books so there was nothing to pollute my understanding of markets and trading unlike the case today where traders of all abilities can easily find themselves drowning in an ocean of various holy churches of Technical Analysis of tools, methodologies and theories. Neither was I immersed in a reinforcing trading culture as many today find themselves at the heart of the worlds major financial market trading cities such as London, New York and Chicago. Instead, I found myself trading in the back waters of far distant from the centres of the financial world, a blank canvas with no access to the consensus view of how one should trade or interpret markets.
The movie Excalibur planted the seed that germinated into an important element involved in the development of my trading methodology that ultimately was able to even beat the Great Crash of 1987 that claimed many traders in its midst's. Not because I was somehow special but because I literally traded in a bubble that was filled with the likes of Excalibur and Chaos Theory, and NOT TA, and as long as I remained in that isolated bubble I was immune to the effects of the holy Churches of TA whose missionaries are always eager to seek convertion of others for a fee on promises of untold riches, that in my opinion amounts to nothing more than a sales industry geared towards selling what does not actually work as I illustrated earlier.
Excalibur Light Bulb Moment - The Real Secret of Successful Trading
What is the message from the arthurian myth, what is the message of Excalibur?
Grail Figure: What is the secret of the Grail? Who does it serve?
Perceval: You, my lord.
Grail Figure: Who am I?
Perceval: You are my lord and king. You are Arthur.
Grail Figure: Have you found the secret that I have lost?
Perceval: Yes. You and the land are one.
Do you understand ? Maybe you need to watch the movie to understand that YOU are the Grail!
I am tempted to diverge here and extend the scope of this light bulb moment far beyond the realms of trading, but you are probably not ready for that so will stick to trading. Now you understand what 90% of traders fail to understand during a lifetime of trading, as they remain on a constant hunt for the holy grail of trading where it seems to be a search for ever more complexity as being the answer, when instead the exact opposite is true, as Perceval discovered during his quest, the answer exists within you and not anywhere else!
If you want to succeed in trading then pick the simplest tools such as basic trend analysis, use hand drawn charts and practice its application in a real-time trading environment and not only will you start to make money but it will literally become easier over time as you become expert in its application, as you reinforce your brain with the successful patterns of behaviour in interpreting the market price action. All with the added bonus that you need not worry yourself about latest great theory or technical tool that is about to be published.
Pick one market and monitor / trade that market only.
Use hand drawn charts to get close to the price, draw open high,low,close graphs for the daily, weekly and monthly charts and you will learn more about the markets you are trading then from any book or trading course.
The Real Secrets of Successful Trading
1. That you don't need to know ANY Technical Analysis to Trade
2. That you don't need to read ANY Trading Book to Learn to Trade. Do not invest yourself in Trading theory, for KNOWLEDGE is not the goal of trading! It does not matter if you ever heard of Gann or Elliott that will only seek to confuse and corrupt how you think and act. The only thing that matters is that you are able to grow your trading account!
3. To focus on trading Only ONE market.
4. To learn to imprint the price action into your mind through concentrated practice, anything that gets in the way of this process will NOT help you trade i.e. the hundreds of technical indicators because you are supposed to be trading the PRICE, and NOT the indicator! So when the indicator says one thing and the Price says something different then you will be CONFUSED, so forget ALL trading indicators and focus on just the Price.
5. The Holy Grail of Trading is YOU. Not any theory or tool or trading service - But How YOU REACT to Price Movements in REAL TIME.
6. Money Management is a Critical Real Secret to Successful Trading - Using Stops, Limits and Moving them in your FAVOUR as prices move in real-time. Your sole objective is to bank profits and let losses be stopped out short. If you have any doubts about a trade then you EXIT. It is not rocket science it is trading with determination of Gain vs Loss, Plus vs Minus, nothing more!
