Only 10% of traders earn
It is far from a secret that more than 90% of all traders – speculators in the market at best do not succeed , and at worst suffer crushing losses. However , in other market ( be it the stock exchange or for example , bitcoin trading) the situation is not much different from market . what is the reason for such a disappointing state of affairs?
Well, first of all, it should be said that thanks to the development of modern information technologies (Internet, mobile communications …), trading has become available to almost everyone. This led to an influx of a large number of non-professional participants (or simply amateurs) enthusiastically pouring their money, playing in seasoned traders.
The number of professional traders, of course, is also growing, but the share of amateurs in the total number of players in the financial markets is undoubtedly very large and its growth is much greater than the increase in the share of professionals. It is worth noting that I call professional traders not only traders representing banks, investment funds, etc., but also those traders whose main source of income is a stable income from trading.
So, successful trading is the lot of professionals making up about 10% (or even less) of the total number of players in the financial markets. And the lot of the remaining 90%, sadly for them, is to be “cash cows”. You don’t have to be seven inches in the forehead to understand the fact that everyone cannot win. In order for some to receive money, others must lose this money. And the more amateurs there are on the market, the bigger the jackpot is taken by professional players. It’s simple.
So how do you stop being a “cash cow” and get into that 10%, this cohort of successful, consistently earning traders? It is not so easy, but it is not at all as difficult as many people think. In one article, of course, you cannot teach stable, successful trading, but that is not the purpose of the article. For an in-depth study of the issue, I recommend that you dive deeper into the materials of this site (which, in fact, was created for this, to teach people how to successfully trade), but you can start with these materials:
* Exchange: where to start?
* Is it possible to learn how to trade on your own
* How to start trading from scratch. Step by step action plan
What is an integrated approach of successful trading
Now I want to talk about one important component of successful trading. This component is an integrated approach to trading. I realized the importance of this approach from my own mistakes, and this understanding became one of the key points in my development as a professional trader.
So what is an integrated approach to successful trading?
Initially, an integrated approach assumes a broader view of the trading process than most non-professional amateur traders see it. Many people, having read the works on technical analysis , peer into the price chart until they have a sharp eye, trying to discern characteristic patterns or divergence of the price and the indicator in it. Other traders who prefer fundamental analysis wait for the release of important financial news, and then try to link with the current one and predict the future price movement on its basis. Someone is looking for fractals, guessing on the coffee grounds, reading by the stars, but you never know …
The danger of such a one-sided approach is that if a person is looking for certain signs (be it the figures of technical analysis , or the corresponding position of the stars in the sky), then he will definitely find them (and even where they are not really there).
Let’s consider an example of one trade of a trader, a fan of technical analysis. Suppose a trader, scrolling through the charts of various currency pairs, has found an “inverted head and shoulders” pattern on one of them. He was looking for a pattern, and he found it, he knows that this pattern speaks of a high probability of a price reversal upward, and therefore without thinking twice opens a long position. After some time, the position brings a loss, closing by stop loss (the trader is not a complete amateur and still places stop loss orders ).
Why was the trade a loss? Maybe because the trader did not take into account the fact that five minutes after he opened a position there was a planned release of important economic news that strongly influenced the price? Maybe the trader, carried away by the figure he found, just did not look at the charts with a large timeframe , the figures on which indicate the reverse price movement? Or maybe the found figure, upon repeated closer examination, turned out to be a completely different figure, opposite in meaning? Maybe the trader did not take into account the level of price volatility and it overtook the stop loss? But you never know what. The bottom line is that a one-sided approach is error-prone. And to make the right balanced decision, you need to look at the problem from different points of view – an integrated approach.
It is, of course, impossible to take into account everything, but this is not required (although one of the axioms of technical analysis says that the price chart takes into account everything). There is no need to try to grasp the immensity, I am only talking about the fact that before making a decision it is worth looking at the issue from several angles, this will always help to clarify the situation and, as a result, to protect you from mistakes.