Why Most DayTraders Fail

A Secret Revealed: Why Most DayTraders Fail
Floyd Snyder

http://www.TraderAide.com

The following perspective on day trading comes from my many years of experience of active day trading or being the moderator of one of the largest day trading chat rooms on the Internet.

One of the biggest problems I find with inexperienced traders (and even some experienced ones) has nothing to do with the high tech systems or the brokerage they are using.

It has to do with not having a stock trading plan. A good trading plan should go a long way in the direction of solving the problems mentioned above.

Ted Williams was once asked how he hit the baseball so much better then everyone else. He claimed he had no idea and that he just went upward to the plate and swung at the ball. There's only been one Ted Williams and as great as he was at hitting a baseball, I don't hope he might have made a great daytrader with that approach. Most great hitters have an idea what they are going to do every time they step upward to the plate. Players have a requirement to know exactly what they expect every time they enter a deal.

Everyone should begin with a basic security trading plan and use it. As the old saying goes, "Plan your work and work your plan". However, you also have to be ready to be flexible. That has to be part of our planning. And if all else fails, you to learn to survive!" Players that are not able to make adjustments, improvise and survive should experience their own Heartbreak Ridge. That may be one way to hold a start and a bit of experience, and it can be a part of a much bigger overall plan. But it cannot start and end there. You've to learn to deal on ones own so you don't accidentally follow someone off a cliff. You've to know who to follow and who not to follow.

When I was share trading I made a lot of good deals knowing who to follow and who not to follow. Yet, in the long run, I do not believe you can make a living doing that. The biggest problem in following more trading masters is being too far behind the deal because you are "following" and not leading. I imagine each and every financier has to become the very best dealer he can possibly be, on his own. He needs to get there as fast as he can. Following more experienced players can be a means to this end and can help get you started, but it cannot be the end. This takes planning. You have to decide if you want to try to make a career outside of stock trading, or just be a part time player. Once you've decided this you can make different decisions such as how much cash you will like to make at either full time or part time stock trading. Our money goals have to be realistic. They can't just be, "I want to make as much cash as I can". These basic decisions can determine the time and greenbacks you might have to commit. If it is as detailed as I expect it should be, you ought to know how many deals per day and how much return per deal you can have to average. Of course, these things can have to be developed over time and incremented to our plan as you go and as you gain more knowledge.


This article courtesy of http://www.traders101.com

Here's another one on the same topic. I especially liked the 5 suggestions that will make you a better trader [emphasis added]. Some may think the suggestions are a bit nebulous but I think it highlights that there is no one ABC path to formulaic success. And EFTTalk helps each of us to decide what our own method for success is. :)

Essential Steps to Trading Success

By Ray Barros | April 17, 2009
"I was going to complete my views on a ‘measure of contraction' that I started yesterday. But this issue of Denise Shull's (http://traderpsyches.com/) newsletter was one I wanted to share with you. She gives excellent advice.
Her site for all her letters is: http://community.icontact.com/search...n=all&age=week
A trader can read dozens of books and add scores of indicators to their charts. Some easily spend upwards of $20,000 or more buying indicators or courses yet still they are basically break-even (or worse) at the end of the month.
Why do only 5% of the traders who day-trade end up successful?
Two reasons -
#1) Many just want an indicator that is going to reveal the market to them and it is too competitive for that to work.
#2) The vast majority don't approach the challenge in a way that will work. To a large degree, this isn't the trader's fault because most do what they have been taught by scores of "experts".
Here is what will work. Guaranteed.
1. Never forget that the only thing you want to do is predict that others will buy higher or sell lower in your timeframe.
2. Settle on a strategy (and set of tactics) that suits your personality and thinking patterns.
3. Plan to use your judgment in the midst of making decision and entering trades! You are not a robot and you will never become one. Your brain is going to kick-in with its built-in facility for decision making in uncertain situations. In other words, you won't be able to stop it from making judgments and compelling you to act so... work with it.
4. Learn to optimize that judgment through simplicity, practice, keeping records and knowing your feelings and emotions.
5. Manage your Psychological Capital (Mental Energy) more carefully than you manage your trades.
The money will follow. Your brain will work, your pattern recognition will work and your plan (a realistic one) will indeed be realized."

http://www.greenfaucet.com/blogs-spe...5#article-7319

Lady

As a broker, I see 9 out of 10 "day-traders" in futures fail. Most of these people come into the commodities market after they have played with stocks for awhile looking to hit home-runs in the market everyday.

They come in not properly educated. They do not understand the leverage involved in futures trading, the volatility of low-no volume markets, and most importantly, they do not understand that for the most part, the market does not fluctuate rapidly when news is released....most of the time that news is already factored into the current price because speculators trade on it in advance.

As said before, make sure to have a trading plan. Utilize stops, trailing stops, and different risk management positions.

And also, learn proper trend analysis. Learn how to identify both short-term and long-term price floors and ceiling, monitor the price breaking through either side, and begin to graph out a possible fresh trend.

Sorry if this was a little unorganized....:bigsmile: