If 90% of traders fail, why not just do the opposite? - Psychology and Money Management | futures io social day trading
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If 90% of traders fail, why not just do the opposite?
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View Poll Results: Would trading the exact opposite turn the 90% traders who lose into winners?
Yes! They'd be rich! 21 15.91%
No! Trade management defines success. 111 84.09%
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If 90% of traders fail, why not just do the opposite?

  #31 (permalink)
Trading Apprentice
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although this old thread... wanted to tell this:

90% traders fail because the number of ways things can go wrong in trading is extraordinarily high
and very few type of behaviors translate into profit. Keeping your behavior within this narrow range of profitable behavior is super hard.

Think of throwing a dart, 90% people will never hit the bulls eye, copying the loser or doing the opposite of the loser won't help!

-----------
but in a way you can win by doing the opposite of losers, the trick is not do the opposite of buy/sell but do the opposite of their behavior.
eg: losers don't manage the risk well, you do the opposite
losers don't have emotional discipline, you do the opposite... etc. etc.
if you succeed in the above things probably you are sitting on a big pile of money!

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  #32 (permalink)
Trading for Fun
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Big Mike View Post
Good thread idea!

[Trader 1]
- Goes long @ 1102.50 on ES.
- Closes long @ 1098.75 on ES for a 2.25 point loss.
- Goes short @ 1099.00 on ES.
- Closes short @ 1104.00 on ES for a 5 point loss.

[Trader 2 - opposite]
- Goes short @ 1102.50 on ES.
- Closes short @ 1098.75 on ES for a 2.25 point gain.
- Goes long @ 1099.00 on ES.
- Closes long @ 1104.00 on ES for a 5 point gain.

It is important to minimize or eliminate the spread, or results will skewed. Remember, if you trade 5 times a day, that's 100 times a month and if you pay the ask (which you would need to do, to be certain to get a fill) that's $1,250 just in slippage on the ES.

The losing trader would need to lose more than their commission costs, too. In above example of 100 trades a month, commission is roughly $500 so he would need to lose more than $500 for opposite-trader to actually have a net gain.


Was pondering your idea here. If one was able to eliminate the spread factor, this idea would have a far greater chance of working.

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  #33 (permalink)
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rocktrader View Post


-----------
the trick is not do the opposite of buy/sell but do the opposite of their behavior.
eg: losers don't manage the risk well, you do the opposite
losers don't have emotional discipline, you do the opposite... etc. etc.
if you succeed in the above things probably you are sitting on a big pile of money!

Losers don't have a trading plan.

Losers don't have the discipline to follow their plan.

Losers don't take their losses quickly.

Losers are more concerned about being right than making money.

Losers can always find a way to rationalize why they stay in a trade they know they shouldn't.

Losers operate out of Fear.


Winners do the opposite.

It is hard to find the Truth when you start your search with a preconceived notion of what the Truth will be.
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  #34 (permalink)
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fading a loser will work only if he is a consistent loser; but, you never know that for sure. he may be a temporary loser and his method may reverse soon. the other important point is that most traders that got ruined were probably not consistent losers but just unfortunate victims of bad risk and money management, or were not able to overcome commission cost and slippage.

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  #35 (permalink)
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tigertrader View Post
fading a loser will work only if he is a consistent loser; but, you never know that for sure. he may be a temporary loser and his method may reverse soon. the other important point is that most traders that got ruined were probably not consistent losers but just unfortunate victims of bad risk and money management, or were not able to overcome commission cost and slippage.

Most lose because they don't keep their losses small and take their profits too quickly. Even if they were to trade their set ups in the opposite direction the fear of taking a loss and the fear of losing what they have gained will result in the same outcome. Until a trader overcomes his Fears and accepts the risk involved he will continue to experience the same end result.

It is hard to find the Truth when you start your search with a preconceived notion of what the Truth will be.
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  #36 (permalink)
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chrisflow View Post
Some thoughts:

1] Poll: DO you believe that trading the exact opposite way they are trading would turn the 90% losing traders into winners? ie instead of going long, short, and vice-versa.

2] Would it seem that the best way to trade would be to share real time executions (with bad, or really bad traders) and simply do the opposite of them? Seems a great way to make money! Could put an ad out: "I'll pay you $200 a week just to know what you're doing (as long as you can prove you've been losing money)." That'd be a great investment. You pay people to give you terrible advice and you simply do the opposite.

(Obviously, you can't use your own trading to "do the opposite" - as that is inherently flawed and hopelessly biased.)

3] Or.. if 90% of traders are losing money, could one simply trade opposite of the most commonly misused indicators, and rake in the cash?

4] And finally.. if say we did trade against the predictions of common indicators - and that still did not produce winning trades.. then what does that tell you about indicators?

I would say that the best way for you to satisfy yourself regarding this issue is to do the "random line experiment" or "coin flip experiment". Believe me, at one point in time, I was also seriously considering this 'strategy' in my trading.

So the premise:

Let's face it, most traders are just making random trades based on oscillators and magical levels. Hence why 90% of traders fail.

To the experiment goes something like this

Part 1:
Either make random levels on a chart go long when market is above and coming into it, go short when then market is below and coming up into it. OR, flip a good ol coin, heads go long, tails go short.

Part 2:

Implement strict money management rules to every trade you enter (e.g. 2 contracts with initial 12 tic stop and a first target of 6 tics, second target of 20 tics. and then move stop to -6 once first target is hit. You can also try doing it with a all in all out strategy say 2 contracts with 8 tic stop and 8 tic target.).

Do this over a decent size sample may 100 trades, and look at the results in a trade analyzer.

You will be quite surprised with the results

Cheers,
Kelvin

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  #37 (permalink)
Market Wizard
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tigertrader View Post
fading a loser will work only if he is a consistent loser; but, you never know that for sure. he may be a temporary loser and his method may reverse soon. the other important point is that most traders that got ruined were probably not consistent losers but just unfortunate victims of bad risk and money management, or were not able to overcome commission cost and slippage.

There is another practical problem considering the individual loser ...

Some years ago, some fellow traders and I had an uncanny Elliot Wave oracle.
When this guy put up larger positions, you could bet the farm on the contrary.
Consequentially - but unfortunately for us - our oracle went belly up.
We actually put up (to a certain extent: self-serving) support for him.
Only after that he realized what he did - and left trading.

So I can tell you: It's really hard to find and keep a loser on a consistent "hot streak".

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  #38 (permalink)
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deaddog View Post
Most lose because they don't keep their losses small and take their profits too quickly. Even if they were to trade their set ups in the opposite direction the fear of taking a loss and the fear of losing what they have gained will result in the same outcome. Until a trader overcomes his Fears and accepts the risk involved he will continue to experience the same end result.

The question that becomes really important is how does one define "FEAR". My thought would be anything that does not produce life....

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  #39 (permalink)
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sledmt View Post
The question that becomes really important is how does one define "FEAR". My thought would be anything that does not produce life....

When you close your position, ask yourself "Why did I do that?"
If the answer starts with "I was afraid that -----." You are operating out of fear.
Once you overcome your fears and accept the risk involved trading becomes easy.
The hard part is determining what it is that you are afraid of.

It is hard to find the Truth when you start your search with a preconceived notion of what the Truth will be.
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  #40 (permalink)
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if even you do the opposite you will be among those 90% . because market is in range bound at least in 80 % of time

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