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Education: The 90-90-90 rule - Why do traders fail?" Many are called, but few are chosen ". Ever heard this proverb? This is certainly true for trading, in fact, there is even a rule in trading about this, the 90-90-90 rule. So what does this rule say? " 90% of traders lose 90% of their money in 90 days " 😱😱😱 That's right, statistics show that 90% of people who start trading lose the majority of their money in less than 3 months. But why is that so? In this post I will try to lay out the reasons for failure, if you are a new or struggling trader, I'm sure you'll find this useful. Let's get into it ... 🤯 EXPECTATIONS Many start trading because they've seen or read about success stories, people becoming rich overnight, they might even have a friend who has been successful in trading and they think (to say it in Jeremy Clarckson's famous words) " How hard can it be? . With this approach, failure is imminent... 📐 NOT HAVING A PLAN " If you fail to plan, you are planning to fail - Benjamin Franklin. Trading without a plan results almost certainly in failure. Your trading plan should include the definition of your setup, entry, stop loss, profit taking, trade management, risk management and money management. 🔄 NOT TESTING YOUR PLAN OK, you have determined how you will trade, what defines your entries and exits, how much of your capital you will risk and how you will manage your trades. But do you know what is the expectancy of that plan? Do you know how much trades you will win on average, and how many you will lose? How much money can you expect to make? Backtesting your plan, executing it flawlessly time after time on historical data will give you that information and the confidence to execute your plan time and time again without hesitation. 😱 EMOTIONS - THIS IS THE BIG ONE! If did not take the time to create a trading plan and backtest it, you don't really know what you are doing and emotions will have the best of you. Fear, greed, hope, excitement, anxiousness, boredom and frustration will drive your hard earned capital away from you. Results of these emotions are : trading too much, letting your losers run and cutting winners short, revenge trading, overleveraging etc... I could write an entire post about each of the emotions and how they can affect you while trading, but it would make this post too lengthy. Just know that emotions are your biggest enemy when trading, for best results you should be in a stoic state when trading. 🕺 EGO " The market can remain irrational longer than you can remain solvent. ". If you want to prove the market that you are right, you are doomed to fail. The market is always right, no matter what happens, so you better learn to accept that your analysis or prediction of what would happen was wrong and cut your losses. Fast! 📚 LACK OF EDUCATION It takes many years to learn a skill or a profession, trading is no different. If you think about making lots of money without putting the time in to learn and test, you pretty much guarantee yourself to fail. You wouldn't want a lawyer without education to defend you in court, or a self-proclaimed surgeon who learned on YouTube to operate on you, would you? 💰 STARTING CAPITAL TOO LOW If you're starting with a low capital, you will tend to try and make it grow fast, resulting in taking too many trades, too high of a risk, too high leverage. If you start with a low capital, you'll have to be OK with the fact that it will grow slowly and that it will take (a lot of) time to build up a sizeable account. 🚦 BUYING OR FOLLOWING SIGNALS " There is no such thing as easy money. " You might think that you don't have the time to learn about trading, making and backtesting a trading plan. So why not follow signals? Ask yourself what you know about this service? How profitable is it (and don't just go from the claims they make)? Do you know anything about the reason for a signal, why was it triggered? Have you talked to other users who used the service, what do they think about it? Why is this person/company selling signals if they are so successful as they claim? Philanthropy ? 🤔 📉 INDICATORS OVERLOAD Indicators can help you make decisions for trading, but too many indicators can and will lead to opposite signals or " analysis paralysis . Most indicators are derived from price, so it makes sense to learn how to read price action and discover the story behind the candles. 🆕 THE NEXT SHINY OBJECT SYNDROME You took the time to develop a trading plan and even tested it, but you run into a drawdown... Rather than counting on your experience and the expectancy that you know is there, you look for a new shiny method of trading, until the same thing happens again with this new method ... Rinse & repeat, never giving the chance for your original method, which you know was working when you tested it, to prove its worth ... Alright, I think I have provided the main reasons why new or inexperienced traders fail. Knowing why they (or you) fail is one thing, doing something about it is not a small feat. But with enough dedication, persistance and the right mindset, you can prove these statistics wrong! Feel like reasons are missing, let me know in the comments below. " Trading is a ruthless business that does not take any hostages, better come prepared. - Nico Muselle So what is your story? Are you a successful trader now but recognize these reasons for failure? Are you a new trader? Was this helpful? What did/will you do to overcome this? What did/do you struggle most with? Help the TradingView community by commenting below. "Trading is a ruthless business that does not take any hostages, so you better come prepared." - Nico Muselle Liked this post ? 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Editors' picks
Education
by Nico.Muselle
182
Trusting your Analysis.Here was a great day for many traders trading GJ. Most traders are aware of GJ being one of the more volatile pairs, although today was volatile it followed simple patterns, reaching highs of 161. and then reversing to low 160. I opened various trades through these motions at different prices, my mistake was not sticking with my original opening trade as It meant I missed out on hundreds of pips on such a simple trade. I also re-entered at different prices, this is a lesson learnt as every time in doing so, I am only increasing my potential for risk. Had I kept my sell at 161, my open risk would've been miniscule compared to my sell at 160.500. Listen to your brain, it's okay for a price to jump around, just have patience, before entering the trade you should try anticipate any fluctuations and at what levels, this will help you understand if your position is on track or not. And don't get FOMO, as you are only increasing your potential for a loss. It will be more beneficial for you in the long run. A bad trade is a bad trade.
by HBSPG
BTC Chart Formations, Trendlines and DivergencesChart Patterns 2018 was an interesting time. Bitcoin had gone berserk and there where both prophets of prosperity and doom preaching about the future of bitcoin and all the new folks had to decide if they still wanted to play and what to do with their money. Lots of people correctly identified this descending triangle but many people were so bullish they saw it instead of being a triangle being a saucer or a cup and handle, basically anything but a bearish formation. I remember being uncertain as well, at times I played the triangle resistance very will with some outstanding shorts and other times I made some trash trades. It takes way more experience than people think to trust a chart formation and trust the targeting on it. Especially with triangles, they are some of the easiest of formations to recognize but they have some of the worst performance. The Head and shoulders is different. Mr. Bulkowski wrote one of the most important texts on charting with ranking patterns on chances of throwbacks, chances to get full performance, and average performance. The head and shoulders is 9 out of 36 for reaching target, so it is in the top quarter formations you could try to play. thepatternsite.com Stats on the head and shoulder from traditional markets Break even failure rate: 19% Average decline: 16% Pullback rate: 68% Percentage meeting price target: 51% Highlight from the trading tips Velocity: A high velocity rise leading to the pattern often results in a larger decline post breakout. Since we had a high velocity move into the pattern we can expect a larger decline than traditional targeting would suppose. But since we are on the log scale traditional targeting gets harder to do and so we have to use fib levels. And the target based on fibs alone is show and it is below the previous high. Trendlines Various chartists have correctly identified some long term trend lines that would act as support here and I have mocked one of them up in magenta. Thing is people were hoping for the exact same thing with the purple trendline before the big dump below $5.7k. Now obviously every chart formation is made out of support and resistance and therefore some trendlines. But trendlines flip from resistance to support all the time and when they fail they can fail to violent price action. Horizontal levels as well as angled trendlines can fail as support or resistance and you cannot guarantee that this magenta trendline, or a similar one, will hold forever. Divergence I am a big believer in divergences but I have many times looked at getting into a move way to early because I was not patient enough. Moves often will have a combination of hidden and cassic divergences in them. For a bullish example price action can display bullish divergence by setting a higher low on price and a lower low on the indicator but until that low has bullish divergence within itself it won't trigger, and that often occurs in waves of three. Hopefully this chart below will help. I don't forecast BTC having a sustained uptrend until we see classic bullish divergence on the weekly within the low that is still developing. Conclusion More downside and then a lot more upside. Until I get an invalidation of the head and shoulders or another major signal of trend change (like getting a whole candle above the 20 week SMA) I am still bearish. Please see the linked post for target setting.
COINBASE:BTCUSDShort
by This_Guhy
A Day Traders Results of not Sticking to the Plan! feat. BoeingAt times I find myself locked in to trying to find a better entry while my trade plan is setting up during the day. More often than not, when the internal battle is won by the impatient voice in my head, I sneak into a trade early and pay the price for it. Well... today was one of those days I'm not sitting here saying that my set-ups are always right, nor am I saying I'm some trading savant that wins every trade. What I am saying is the important part is to have a plan and follow it. In doing this, it eliminates a lot of the emotion that can go into the decisions being made throughout the trading day. It allows for well-thought out entry and exit points, manages exposure of losses when wrong, and provides a picture of what the profit/loss will be depending on if the analysis is right or wrong. Below is just an example of a position I took today in which I didn't follow my plan and ended up being on the wrong side of the trade. The technical analysis explained is simply included to describe the approach and thought process I had in entering this trade. In no way am I suggesting for anyone to use these types of set ups, nor am I claiming these set ups are a successful way to trade. SPOILER ALERT: The price action would have given me my entry if I would have stuck to the plan. This morning I posted the trade idea image below before entering a trade in BA At this point I had been patient and let the 1st move settle. I noticed that the price action was stuck dead in the middle of a battle between two previous action zones; one supply (top gray-shaded zone) and one demand (bottom green-shaded zone). I was licking my chops knowing that this was setting up perfectly for a day trade. I anticipated that the price action would give me a good point of confirmation before making its move either to the up or down-side. The plan that if the price broke up above the supply zone, entry would be triggered at a rejection of downside re-entry into supply. Or to enter a long put position at a rejection of upside re-entry back into the demand zone, following a break below. The confirmation of a call entry would give a change of about 3 delta to the upside while placing my stop-loss at a break below the supply zone, giving a delta of -1.5. Profit target was decided by an above descending trendline in which the angle was produced by previous highs of supply resistance connected to the following confirmed demand zone before a lower supply was formed. So, a higher supply based resistance would be drawn to a lower demand-found support, angling down towards but above the current price range. My thought here is that if there is downside rejection to a previous supply zone, the sellers are currently no longer there. Inversely, an upside rejection to a previous demand zone shows that the buyers are no longer there. The confirmation to enter a put position provided the same risk/reward profile as the call entry. Similarly, the profit target was decided by the inverse of the supply to demand (descending) trendline. Which results from a previously lower supply zone connected to a higher confirmed demand zone, ascending towards but below the current price action. Whether it was because I got impatient, or maybe I thought I had solved the Rubik's cube equivalent to arbitrarily drawn trendlines for intra-day breakouts... It didn't matter, I didn't really have a plan. Below is where I decided to enter the trade. - I posted this chart as an update to the trade idea shortly after I entered. I wasn't sure what resistance would be produced from a break of that level and I wasn't really sure at the time where my stop loss should be placed. After entering the trade I realized that the entry would give me higher negative delta to reach my stop (increasing it to as potentially high as -2). I still really wasn't sure where price would find upside resistance, so I just used the same resistance as the original plan. So what came as a result? After a break of the supply zone failed to hold, a higher low was found but was quickly met with a rejection to break back into supply. The result? A potential diamond top developing! Translation = quick, everyone long simultaneously set stop losses on a break below the bottom trendline support. Next up. You guessed it Stop was hit and I exited the trade for a loss. The result of entry from the original plan is as follows. Lessons to be learned- 1. Yes, although in this case my original trade plan would have given me my entry and produced the expected profit, this will not always be the case. If a trade plan is created and it doesn't end up triggering your intended entry, GOOD! you were wrong anyways but you didn't have to lose money this time to figure that part out. Take this as an opportunity to review your trade plan. See what indications you may have missed to enter or not to enter. See where you can improve your edge. 2. Maintain control of your emotions during price action, don't let quick moves produce a reaction. If a move is already happening quickly, guess what you're late to the dinner party. Don't try and convince yourself that the stale crackers and warm coleslaw left is the meal you really want to be eating. 3. If you miss a trade or your plan doesn't produce an entry, try an identify where others entered and why. 4. Look at both sides of every trade. -If you intend to go long ask yourself if you already held a position what would keep you from selling at your entry, or what would reasons would there be to add to your position here. -If you're short ask yourself "why wouldn't I buy here" or "why would I want to be quick to sell at this level?" 5. The best part about trading is learning. At times, it is more rewarding to learn than it is to win. -I have included the link to my original BA trade idea
Editors' picks
NYSE:BA
by rickhubbard10
65
INO: lost opportunity, not the first and not the last one.Crazy bull run from INO, which was missed and partially screwed up.. I realized some profit, but well below my target. Entered the market at 4.28 and jumped out at 5.13, while my target was around 8.45.. I should have followed the initial plan, i should't have jumped out, i could realize more.. now i would do this, i would do that, blablabla... It's easy to speak and difficult to act. This is one of the lessons that I got during my trading career and which I want to share: "shoulda, coulda, woulda" obviously doesn't work. I believe there are still plenty of them waiting out there, so everyday is a lost opportunity, but at the same it's just another one to focus on. Move on and concentrate on what you have instead of what you don't. // I want to thank you guys (and of course my future wife) for all of the support you gave me during this 2 month, it helps me to improve and motivates me to do what i am doing here.
NASDAQ:INOEducation
by GIgor_021
3
Parabolic trend continuation confirmed. Target 9,600$ - 10,000$Hey guys, I hope everyone is having a good weekend, as I shared with you my opinion last week, Bitcoin parabolic trend ket in place and is heading for 9.6K to 10K. I hope you didn't short the market, especially leverage trading, If you did, learn from it and do not to predict the market especially when the market is neutral and trying to make decision. It is so sad to sometimes hear stories about people who trade in these situations especially on large amounts and leverage trading, like a trader in china who recently committed suicide.
BITSTAMP:BTCUSD
by UnknownUnicorn1928174
1