eh, It all depends on who we are talking about after all
"The average trader does not, in fact, make money in the market and there are stats in the industry that reveal how rare sustained success truly is. When you do find a trader who is successful and who can sustain that success across multiple years and market conditions, that's never an average trader. It's generally someone who has placed quite a bit of time and effort into learning and understanding market patterns." Brett Steenbarger, Ph.D.
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The best odds in a casino are playing the DON'T PASS LINE in Craps. Around 49% win ratio. You can pull your bet after the COME OUT roll if it lands on "thrower" advantaged numbers too, and play odds on your bet to get closer to 50%. If you've ever payed this way, it is super boring. You can also have terrible rolls and suffer a lot of losses in a row before a win.
I would say this is similar to following a system for every trade you take. Difference being that you can't have big wins on the craps table and small losses, like you can in trading. So the house will win.
Poker on the other hand requires some psychological elements and also a lot of small losses, similar to discretionary trading.
Either way in trading your making a bet, in gambling your making a bet. The key is small losses, big wins and lots of time at the table.
Don't be the guy who's five drinks in and decides to martingale out of a hole, you'll be singing Stealy Dan all the way home.
The following user says Thank You to mainstream for this post:
So...if this statement is true, then there should be NO profitable traders out there. Since we can never have an edge in the markets because there are no rules (or we don't know what the rules are), we can't formulate a winning strategy.
So, is it true that there are no profitable traders?
Not knowing the rules does not imply that the odds are always against you. As an analogy, you could win chess matches without ever fully knowing specific rules such as castling and en passant!
The problem with the psychology that a lot of people have is that they want to form winning strategies. And by this, they imagine it to be strategies with profits, more winners, larger winners etc. There are two behavioral biases here which make them doomed to fail:
(1) There is no such thing that equates "profit" to "winning". "Winning" is a bad word to use. Profit comes from collecting risk premium. If you don't know who's conceding risk premium and who is paying risk premium, then there is a good chance you are the one who is conceding risk premium, and make an excellent counterparty for others to exploit.
(2) This mindset makes them seek strategies with positive skew in the loss distribution. This is like driving with one eye closed.
True. It doesn't imply that they are ALWAYS against you. It does imply that they are against you the majority of times. Which means that since you don't know the rules, you don't have an edge. Sometimes the odds will be in your favor, but not many.
Your point on risk premium is correct. A HUGE part of developing an edge in the Markets is Risk Management.
The odds can't be simultaneously against the favor of everyone at the same time. An extreme scenario makes this obvious: if I had 400 million euros to spare, I could just buy the heck out of a single stock. This would be good for everyone besides me. And it so happens that I actually do know a real story where my friend received a market-not-held order for 400 million euros of a single position (and he had to explain kindly to the client that he would just be moving the market against himself).
Actually I've found it depends on the sex you are talking to and/or marital status/financial commitments etc. If you talk to the guys they find it glamorous and want to quit their mundane day jobs and start trading.
If you talk to married women you can tell they visibly don't like it probably because either a) their husband has lost a chunk of their money in the stock market before or b) they are worried their husbands will quit their day jobs and secure income and start trading.
Possibly married men want excitement and married women want security....
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Not Paige but very very few. As mentioned earlier many retail traders grossly overestimate their trading abilities and misunderstand their psychological makeup to handle the stresses. If the brokers published trader statistics I'm sure it would be grim reading...
I see you trade the NQ. If you are scalping the NQ take this for what it's worth but your odds of success are dramatically reduced. See here.
My point is that there ARE profitable traders. Meaning you can find an edge in the Markets. Discipline and money management are the key!! Why people aren't profitable is exactly the same as why most people who go on diets don't lose weight or do but gain it back. It's discipline. In trading, it means always following your trading plan and staying strong during draw downs. In dieting, it means not cheating during the holidays