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Why Knowledgeable Traders Lose MoneyI've been trading for 20+ years and I believe I have almost seen it all. I've had big winning trades, and huge losses. Some of my biggest wins came when I was a beginner aka fomo trader, and my biggest losses came when I become more knowledgeable of the market. My most consistent trading came in my latter years when I gained experience and felt real pain, and I would like to share what I observed. I believe most retail traders naturally follow the same path if they stay solvent and interested enough to stick through it. 1. Beginner trader (1st year trading) : These traders generally tend to be profitable. You can call it beginners luck, but it's what gets most people to learn more about trading and put them into the 2nd class of traders (knowledgeable traders), which are the losers in the market. You can recognize a beginner trader as they believe in generalities. Those who believe "stonks only go up bro", yes they likely outperform you. It's only a matter of time before they don't, but this is where they get their confidence to invest more. 2. Knowledgeable trader : I believe most Tradingview users fall into this category. They likely had some great luck starting out by fomoing into a stock that was in an uptrend which made them want to learn more about trading, and with this newfound knowledge and tools like Tradingview they can't figure out why they are consistently losing money. They theorize in the back of their mind that the more they learned, the more they lost, and they are correct, but it's hard to accept this realization. The frustration they feel only leads to further losses which results from deleting stop losses because they're sick of losing. These are traders who upgraded their account to margin trading and they now have the awesome ability to short stocks. They imagine catching the top of a trending market and riding it all the way down. It's a fantasy I believe we all shared at one point. Instead of trading with the trend, they trade in the direction of their emotions, namely disbelief. They believe stocks are too oversold or overbought, and they look for setups to match their bias. In general, they are against the long term trend which makes their amazing setups likely to fail. When they're stuck in a trade, they resort to media and other traders to give them hope that the market will go their way. In general, the media is only adding to the traders disbelief and giving them false hope. Most traders fit into this category, and they are part of the reason for these extreme trends. They consistently get squeezed by going against the market, adding fuel to the trend. High frequency traders / institutions make a killing running these traders out of the market, while the beginner traders enjoy the gains from their fomo trades which are generally aligned with the trend of the market. 3. Experienced trader : These are traders who have been trading for 4 or more years and have stayed solvent enough to make it through phase #2. They have likely lost a lot of money trying to catch reversals and they has since realized most money is to be made in the middle by trading with the long term trend within the context of larger patterns. They also know how to take a stop loss and see it as an opportunity for a new trade. They realize they are wrong at least 40% of the time and they are at peace with it. They still get frustrated when a trade doesn't go their way, but they know this is a game of risk and reward, it's not about fortune telling. They know they will generally feel more pain if they don't take their stop, and while they may delete their stop in their weakest moments, the largest majority of the time they take the stop or exit with a loss before the loss becomes greater. The hardest part is knowing it's okay to be wrong, and it's okay be to be stopped out 4 or 5 times in a row and not be a failure. They see themselves as risk managers, not traders. They know there is no such thing as oversold or overbought, and have likely removed stoch and RSI indicators as they cause fomo to bet against a trend. They know nothing is oversold or overbought unless price reaches an area of extreme on a higher time frame chart or price is contained inside of a large well defined pattern that at least appears on an hourly chart that spans for days if not weeks. This analysis will likely not help anyone as emotions overpower logic 20:1. Most traders need to feel enough pain before they transition from phase 2 to phase 3, it's not something that can be taught. They need the financial and emotional scars. They need the natural feeling of pain in the moment they feel they might delete their stop loss or bet against a trend when the price is not at strong resistance / support in a longer term pattern. In general human behavior, most people have a plan but the plan is usually thrown out the window in the moment a decision has to be made. The purpose of this analysis is just to let you know that it's okay to be in the middle, and if you can at least have the control to trade with smaller amounts when you're in phase 2, you'll one day likely make it to phase 3. This analysis wont make anyone transition from a phase 2 to a phase 3 trader, I mainly wanted to make it clear that your emotions will likely continue to rule your trading, even in phase 3, the big difference is that you'll naturally feel pain before you make a mistake a phase 2 trader will make. Embrace your scars and the journey ahead.
CME_MINI:NQM2020Education
by ttrending
51
Update - My post April 2, 2020, "Bitcoin & Big Oil" Update - My post April 2, 2020, "Bitcoin & Big Oil" . First point of interest - Using MACD of USOIL (WTI) point before precipitous decline. See what happened when bitcoin closed month end above $365 NOV 2015 and thereafter. Notice in each case c.55% drop before rise. Bitcoin has yet to close out month above $9084.7. Second point of interest - Monthly Dollar Index if close below 98.82 (Mid point of volatility Mar 2020) see what happened to SPX when closed below 95.48 (Mid point of volatility Aug 2015) March 2016. NOT ADVICE. DYOR.
TVC:USOILEducation
by Felix000
Still think USO is a great way to invest in Oil?An Interactive Broker trader with a $77,000 account thought he would outsmart every institution and every big Oil trader, the result? A $9 million loss. Well done. IB normally doesn't take beginners, you need 2 years experience to trade FX with them (haven't checked futures so I don't know what the rule is for those), and the min account size is 10,000. This day trader (go figure) thought he was smarter than every one, and he went all in, he bet the farm. This alone is stupid, but he went all in without doing his research! Probably a "technical analyst". Weird, I thought magical esoteric TA told you everything you need to know, that everything was built in the chart and info not in the chart was useless noise. Didn't his magical TA tools tell him it would go negative? Well actually if he looked at the ATR / implied volatility he would have seen.... Even I, that has negative balance protection and guaranteed stops, went on the CME site to check announcements. They don't exactly talk about negative prices nor clearly about limit up limit down, but here, with Oil massive volatility, they did confirm that yes indeed they were prepared for negative prices. Thomas Peterffy (the hungarian market billionaire that is not George Soros) said 5 days wasn't enough for IB to update their platform and that's obviously true. Now maybe they should have warned people with messages on the interface, e-mails, maybe set some hard limit to what their clients can do. Maybe they should have had code ready at all time in case this happens. Maybe they share the fault, maybe not. But anyway, being a customer friendly broker, they absorbed losses over 100 million. Meanwhile I did my research, I shorted June contract and made money, and I'm fighting with my shady broker to withdraw some of my gains... They have been condemned by the french regulators years ago for shady business practices go figure, but every retail broker has! And the vast majority of their clients are retail. I'm waiting and waiting and waiting... I have resisted insulting them or calling the regulator for now. The only other broker to give me a hard time was Kraken. They mention anti laundering laws and more, and I understand, but why be so unclear, and ask for documents 5 times rather than all at once, and why ask for the same documents several time, and why be so difficult, only when someone made money? Short Bitcoin on Kraken which was clearly very pro bull, short Oil on *** which had a massive number of retail short sellers (they were on the June contract thought), and then it's an issue. Never had a single problem buying Bitcoin and sending it to a wallet, never a problem when losing money, extreme ease to deposit and start paying commissions, without any warning "getting it out will be very hard". "It's quick instant easy" ye sure, no it's not. The fund running USO clearly said it was a tool for short term bets. It's not made for massive hoardes of dumb money to buy and hold. They have spread over several months to be more nimble, ye looks like its working great! I heard reverse splits were a good sign, that it was smart to invest in a stock after it made a reverse split. Once again, retail that never in their lives made money consistently, thought they knew better than every one else, and that they would get rich quick. Once again, I warned people with what little visibility I had. Once again I was right and retail is getting wiped out. Bagholders are going to argue, they are going to say "just wait", and any spike up will be their celebration and "told you so" "this is it". Same old story. They'll keep arguing, they'll keep bagholding, they'll keep losing. Dumb money at its finest: never understand when you lost. You can never tell them "told you so" because in their mind it's always just a matter of time. When it gets delisted they'll have no choice but to understand they lost, and still then they'll go full lawsuit and dream of getting their money back. How long for this? 5 years? 10 years? Apple Sapphire screen bagholders as I posted recently have gotten like 4% of their money back on average. An average smart (average of the ones in the top) investor or speculator in 10 years will be up 15% compounded, so +300% (turn the total into 400%), and dumb bagholders that wanted to get rich quick "15% a year looool that's pathetic" will be spending their time in courts and dreaming of getting 4% back (turn the total into 4%). Delusion at its finest. There is no free lunch... If Oil was priced at $0.01 there was a very good reason for it. Oil traders weren't just selling at this price because "emotions" "rsi very oversold". It's so risible that some complete noobs that don't understand anything they are doing thought they are just so much smarter than the market, and that whales were just "being emotional" and selling a barrel of Oil at $5, $3, etc just because they were "scaaaaared". Homer Simpson really thought "Aha! Whales are selling Oil at $1 a barrel but they are scared. I, Homer J Simpson, know something they don't! Oil is worth more. I am a visionary!" It's like when Homer went hunting for a Turkey, he just put a nice plate down with rice and other food in, then shouted "Come on Turkey come join your friends" and pointed the gun towards the plate with a big smile on his face, fully convinced a Turkey would jump in his plate. I thought the Simpsons were ridiculous and overly exagerated when I was a kid. How wrong I was. My broker lets me set an order to short USO. Oh my, I sure know what I'm going to do! 2 possibilities actually. The Difference Between Stupidity and Genius Is That Genius Has Its Limits.
NYMEX:CL1!Education
by MrRenev
8
CRUDE OIL (WTI) STRUCTURE ANALYSIS hey guys, crude keeps growing steadily! the price has easily gone through 18.5 - 20.5 resistance and now it turned to support. our next key daily resistance is 28.6 - 30.6 zone. look for a reversal formation within this area to short. in case of a further bullish continuation, the second resistance will be 34.0 - 36.0 area. if this zone will be reached, the previously mentioned resistance will turn to support as well. the safest trading is always done on key levels. so pay attention to the price action when any of the key zones are reached. good luck!
FX:USOILEducation
by VasilyTrader
24