Non Member Articles (Free)

Why Day Traders Fail

Success is impossible without failure!

Few succeed without previous failures!

If you have been around trading very long, I am certain that you have heard the statistics regarding the failure rate of new traders.  Most figures say that about 90% of all traders fail and give up within the first 12 months, but I think the number is probably higher than that in the end.  Today we are going to talk about why day traders fail and how not to be on the wrong side of those statistics.

There are many reasons why day traders fail, but the most important reason in my opinion is unrealistic expectations. Most newcomers view trading as a get rich quick plan.  An easy way to make their riches while doing nothing more than pushing a few buttons on a computer.  Unfortunately, that one thought process leads more traders to failure than any other. Trading is not a get rich quick scheme!  It is a job and a profession like any other, and you can not reach the pinnacle of success in day trading any easier than you can become a doctor, lawyer, airline pilot or professional athlete.

While all of those professions pay well, none of them are easy to break into without years of hard work and dedication.  Most require a large amount of schooling, and even for the athletes, who are often born with their gift of athleticism, they still have to put in countless hours of practice to hone their skill and move to the top of their game.  All well paying professions take many years of hard work, dedication and sacrifice, and trading is not any different.  A medical doctor spends a minimum of 10 to 12 years in school learning alone, and a lawyer must have 6 to 8 years of school, but then must study even more to pass a state bar test before they can even practice for pay.

Understand that if you want to be a day trader, you are going to have to spend many hours on a simulator practicing and getting real time experience watching prices print to a chart in real time.  Then, you are going to have to spend even more time studying those charts and your daily simulated trading results.  Trading alone and watching charts print does not really make you a better trader.  What makes traders better is the study of their trading and their charts.  Studying patterns and learning how price action really works and what is really taking place on the chart.

The supposed random walk theory has some validity, but it is a weak one at best.  Once you learn to understand price action and how it works, you will soon realize that prices are not really all that random after all and that you can indeed predict where prices are going in the short term with a great deal of accuracy.  This is really the key to success, and no indicator or computer program can tell you anything more or even as much as the ability to understand and read a price chart.  If you are searching for the holy grail, then stop wasting your time and money and learn to read a chart and you will find what you are are searching for when it comes to trading success.

Another reason most traders fail is because of the lack of information that is available to them.  The majority of what you will read and learn about trading is all completely wrong.  While most trading information is simply incorrect, it is not because people are intentionally trying to mislead you. Like anything in life, there are always a few shysters out there that have only one goal in life and that is to separate you from your hard earned money and put it into their own personal wallet.  Most however see a need and they are attempting to fill it with what they think is good information.  They just do not know any better themselves, so they continue the cycle of bad information.

It is truly amazing how many books and courses are out there that are based on accepted trading strategies that are just wrong and that simply do not work in the end.  However, because it is so widely accepted as the standard, this information becomes ingrained as the holy grail in trading, when in the end, it is not worth the paper it is printed on or the video it is recorded on.  Stop searching for the holy grail and start studying your charts and you are on the right track and it will not cost you a fortune to learn either.  Yes, it is a long journey, but the rewards are great for those that are dedicated and persevere through the ups and downs of learning to become a profitable day trader.

Another unrealistic trading expectation is that you can take a course, read a book or manual on trading, and be ready to trade live afterwards.  This is the quickest way to end your new career, because I can assure you that you will be separated from your hard earned trading capital very quickly if you attempt this feat.  I do not care what your IQ is, what your education level is or even if you have a photographic memory, you will fail if you go live before you truly understand how prices work and if you start before you have a great deal of real time experience simply watching charts print.

Think about it in these terms.  No matter how educated or smart you might be, do you really think you can read a book and step into the cockpit of a helicopter tomorrow and then fly it safely?  Add to this fact that other people on the ground and in faster planes than you are trying to shoot you out of the sky as you are just trying to get airborne.  How long do you think you would last if you could even get off the ground at all?  Not long, and your trading life will be just as difficult and just a short if you attempt to trade before you get training and create some skills at it.  No matter how many times I say this, people still do not get it or listen.  You will not hear this in most trading circles, because most of them want to sell you something, and when they tell you the real story, you are less likely to buy their goods.

There is no holy grail in day trading!  There is no short cut to learning how to day trade!  Day trading is a skill that requires the ability to read a price chart quickly and accurately.  This is a skill that is not learned quickly or easily, even by very smart people.  The skills that lead to success in reading a price chart go against common sense really, so even a lot of common sense and practicality will not help you to become a profitable day trader.  In fact, I would argue that good common sense actually works against your success!  You might have heard the comments that being a contrarian actually works to your advantage in trading, and there is a lot of truth in that statement.  It does not necessarily work in the ways you might think, but there is indeed a great deal of truth in the fact that you must think like a contrarian when it comes to reading a price chart.

In summarizing why day traders fail, it all boils down to unrealistic expectations.  This is a skill that must be learned, and it is one of the most difficult skills one can master.  It is not a get rich quick scheme, and if you think it is and approach it as such, I can all but assure your failure.  This is a job, just like any other job, although a difficult job to learn, so plan to pay your dues in time and effort. Stop jumping from one strategy to the next, and concentrate on only one thing, learning to read and understand price movements as they print in real time to a chart, because that is the only way to master this profession and make it as a day trader.

Before you can start to find success as a day trader, you must truly understand why day traders fail. I have spelled it out for you in plain English right here in this article and I have given you the holy grail that most every trader is searching to find.  It is up to you and you alone as to what you do with this information going forward!

6 comments - What do you think?

Mid Day Chart 2-27-2015

While I see a clear two tiered channel working lower, it is so flat that it is more like a range type day than a trend day really at this point in time.  The bias is slightly down, but on range days, you can play both sides of the range if you get good set ups near the highs and lows of the main support and resistance areas.

Just be sure to draw your shorter term trend lines and channels, as they help tremendously if you can find them consistently and read them properly.

Mack's Mid Day ES Chart for 2-27-2015.

Mack’s Mid Day ES Chart for 2-27-2015.

2 comments - What do you think?

No Mid Day Chart on 1-19-2015

I forgot to mention that Monday was a trading holiday in the US, and I no longer trade those shortened days any more, so no mid day chart and no chart lesson either.  We will be back on Tuesday with our normal mid day chart and afternoon chart lesson.

Enjoy the day off if you plan to take it!

Mack

Be the first to comment - What do you think?

Great Day Trades In 2015

Great Day Trading in 2015!

Great Day Trading in 2015!

I just wanted to wish everyone a happy new year and the best of success in 2015.  As you will always here me say, day trading is a very small club when it comes to success, but not for the reasons that most people think.  Most think it can not be done and that only a select few who “know how it is rigged” actually make any money as a day trader.  I used to feel that way as well, but I stuck with it and finally learned the language of the chart and how to understand what prices are doing.  If you can get to that point, you can do this, so here is to great day trades in 2015!

What most new traders, and even many old time traders, fail to realize is that the way you get better at day trading is through hard work, and I do not mean by trading all day every day and getting beat up and losing all of your trading capital.  That will not make you a better trader in any way in my humble opinion.  That will only separate you from your hard earned money and lead you to give up long before you have even begin to get a real understanding of what the markets are doing when prices are bouncing up and down on a chart.

The way you get better at this is through simulated trading, without using your real trading capital, and then studying your trades and your chart at the end of the day.  Studying them diligently, trying to learn or understand why a trade worked or why it did not work.  There are reasons you were wrong, and normally you just read the chart wrong, but often you may have just been tricked, because that is what the markets movers try and do.  They try and trick you into entering in the wrong direction, and then reversing prices quickly. These are some of the best trading opportunities though, and we call them traps, because that is what they consist of mainly.  Trapped traders that have to exit when they realize that they were wrong, and all of the exiting traders push the market quickly when their exit orders all start getting executed.

Simulated trading with NinjaTrader has come a long way form the old days.  It works exactly like the live market does, so it is not a bit different than live trading now.  Other than the fact that you are not trading with real capital, it is exactly the same since you are trading live data and the orders all work exactly the same as when they are live.  Other than that fact that you are trading with monopoly money, it is the very same thing as live trading, so if you can eventually be successful on the simulator, there is no reason you can not be successful trading live.  If you can trade on the simulator successfully, you just have to train your mind to do the very same things trading live and you can be a successful day trader.

No, it is not easy to do.  As I stated, it takes hard work and a lot of invested time.  This business pays better than being a doctor or a lawyer in most cases, so do not expect that you can just walk in and start making money.  It takes years to become successful as a doctor or a lawyer and learning to day trade is no different.  It usually takes years of hard work and study, so be prepared for that.  There are no short cuts, no holy grails, and the markets are not rigged either.  What happens is what the markets do, and that is prices move around.  That is all we need to make money, is movement and the ability to understand what prices are doing and where they are likely headed in the short term.

If you learn to understand price movements and what the chart is telling you, then you can learn to predict, with a very high probability, where prices are going, at least in the short term.  That ability can make you very successful financially, but do not expect it to come quickly or easily.  You must be dedicated and you must pay your dues in time, frustrations and simply staying focused and not giving up or rushing to trade live with your real funds.  Day trading is not a get rich quick program.  If you approach it like most with aspirations of getting rich quickly, I guarantee that you will fail.

Approach this like a job and a career, and plan to get your education first, which is like getting any other professional education.  It will take time, hard work, dedication and a great deal of experience!  If you approach this profession in this manner, your odds of success will improve tremendously.  Most importantly, you will at least save yourself some money by understanding how greatly the odds are stacked against you if you don’t understand what is going on and what you are truly up against.

Trading without knowledge and experience is like stepping into the batter’s box against the best major league pitchers today and expecting to be successful.  Understand, you might get lucky and get the bat on the ball occasionally, but you will not be successful long term.  No, you will have to practice and work hard to improve your skills!  Most of us would never even touch the ball, not even in 100 swings, this I can guarantee you.  Trading works the same way.  It is not easy and it is not something you can do without knowledge of the game and experience playing it.  Actually, a “lot” of experience playing it.  Why do you think most major league players go through the minors first?  Because they need experience playing with the best players and they need to practice and hone their skills!  They also need coaching, because if you are practicing the wrong things, you are just wasting your time, and most new traders are doing just that, practicing the wrong things and in the wrong way!

If you read what we share on this website, you will at least be getting the proper coaching, so then it is only up to you to put in the hard work studying, practicing and honing your skills the way we coach them to be done.  You have the proper coaching and information right here in front of you, so only you control your destiny from here.

If you need to do so, read this post a few times over until it makes sense, because you will not hear this message in most trading circles.  Most will lead you to believe that the markets have a great secret, and that they have that secret and will sell it to you for a large amount of money.  Do not believe it, because it is not true and there is no holy grail or secret sauce that anyone can give or sell you that will suddenly make you successful as a day trader.  You simply need to get started learning the proper information and then plan to spend a great deal of time studying your charts every single day, and sim trading as much as possible and as often as possible.  Most importantly, study your charts at the end of each day diligently.  Do not put them down until you understand everything you did right, and everything you did wrong that day.

If you approach this with that process and plan to do it for a very long time without giving up and without jumping in live with your real funds too soon, you might just be one of the 5% to 10% of traders that actually make it in this business!

Happy New Year and great day trades in 2015 to all of you!

9 comments - What do you think?

CME Certification and New Data Charges

Everyone has probably now received an email about CME charges and certification.  It is legitimate and it is not broker specific, so no matter who you use as your broker, you will be required to certify yourself and choose your group exchanges that you wish to receive live data.  For $5.00 per month, you can trade all of the Equity Indices, Currencies, Meats and Softs, so $5 per month should cover most all of the best futures markets.  If you trade two exchanges, it’s $10 per month, and if you trade more than two, just choose the bundled package and that gives you all four CME exchanges for $15.

I do not know how this will effect trial accounts that are free, but I’m guessing you will continue to be able to trial those at no cost, but this could be different from broker to broker, so you will just have to ask the broker of your choice.

Nothing else changes in regards to our trading fees per RT with AMP, it’s just that your account will now be charged the additional CME fee once per month.

A copy of the letter is going out that is below.  If you haven’t received one, you should contact AMP, as you only have until the 30th of December to certify your trading status.

Happy New Year!

Mack

————————————————————

Action Required by December 30th, 2014

Dear Customers,

Effective January 1st, 2015, all users of real-time market data from CME Group exchanges (CME, CBOT, NYMEX, COMEX) will be required to pay market data fees. As an AMP Clearing client, you can now customize your market data subscriptions to avoid any unnecessary fees from the CME.

The majority of AMP Clearing clients qualifies as a “Non-Professional” and can select from one of the following market data subscription options:

  1. Enable data for each of the CME Group exchanges you would like to receive at a significantly reduced fee of $5/month per exchange.
  2. Enable a market data bundle which includes all four exchanges for only $15/month.
  3. Deactivate all CME Group exchange market data for your account to avoid a CME Group data fee.

To ensure your account is updated, all self-certifications and market data subscription requests must be received by Tuesday, December 30th, 2014. Due to the required processing time, submissions received following this date may not be applied to your account in advance of the January CME Group billing cycle.

Submit your CME Non-Professional Certification

4 comments - What do you think?

Happy New Year

I just wanted to make everyone aware that I am on vacation through the end of the year.  Several of you have asked about mid day charts and chart lessons, so I wanted to make sure that everyone knew why they were not coming out.  I will be back on January 5th and doing our normal mid day chart and afternoon chart lesson on YouTube again at that time.

I hope everyone has a Merry Christmas and a happy new year!

Mack

10 comments - What do you think?

Mid Day Chart 12-11-2014

As expected, the recent correction set up a great buying opportunity.  Every time we have a multiple day sell off, once price find support, the market tends to rocket higher once again.  The ES is up over 20 points in just a couple of hours this morning.

Prices are in a clear and steady up trend for now and the bias is certainly up for now.  This is a big move, so prices could find resistance soon, but it also would not surprise me to see this rally rest for a bit and then continue higher once again.  You can not trade with that mentality though, so follow the price action and take what it will give you, because it can change on a dime!

Mack's Mid Day ES Chart for 12-14-2014.

Mack’s Mid Day ES Chart for 12-14-2014.

5 comments - What do you think?

Mid Day Chart 11-21-2014

The market rallied all night only to begin selling off at the open of the regular session around 8:30 AM CST.  It could be another range type day, but I would be open to a larger channel of some type forming.  If prices start trending higher again, watch for a possible measured move up from the low of the correction price.

Mack's Mid Day Chart for 11-21-2014.

Mack’s Mid Day Chart for 11-21-2014.

3 comments - What do you think?

Note From Mack And Family

I continue to be in awe at the outpouring of love and sympathy in this time of loss for me and my family.  I just wanted to thank each of you for the emails, comments and encouragement in this difficult time for me.  I know that the prayers are working, because I can feel myself getting stronger each day.  While I will always miss my dad, I am starting to heal now and my plan is to be back on Monday Nov 3rd.

My birthday is coming up on Nov. 1st, so that is going to be a tricky day for me I am sure, but at this point, I feel like I will be ready to start trading again on Monday.  If something changes, I will be sure to let everyone know, but for now, I plan to be back to my normal schedule on Monday November 3rd.

I might have already said this, so if I did, I apologize.  However, I think it’s important that I share this with you!  If you have loved ones, tell them how much you love them and never take them for granted, because life can surprise us.  Enjoy your loved ones and tell them how you feel about them every time you see them, because tomorrow is never promised to any of us.

On behalf of myself and my family, we thank each of your for your kind words and your prayers.  They are greatly appreciated.

Mack

12 comments - What do you think?

Update From Mack

I wanted to update everyone on my status this morning.  I am not ready to return to work just yet, and I am way behind on emails as well, so I apologize.  I was very close to my father and his death was unexpected, as he was very healthy for an 80 year old man, so this is a difficult loss for me.  To top this off, my wife has lost two sisters to cancer in the past 3 years, and my father passed on her birthday not 30 minutes from leaving her birthday dinner, so both my wife and my mother are taking it extremely hard as well, so please keep myself and my family in your thoughts and prayers during this difficult time in our lives.

I have had coffee with my father every morning for the past 6 years before coming to the office, and today was my first day to go to the local coffee house where we meet each weekday morning.  It was difficult to say the least, but I am healing and may even trade some later in the week if I am not still so emotional.  At the very least, I will return to a normal schedule next Monday, or at least that is my plan for now.  If I am feeling stable enough, I may even try and trade later this week, but I am just not sure at this point, as you can not be distracted when you are trading, and you certainly can not trade if you are emotional, which I still am at this point.

I can not thank each of you enough for the comments, emails, notes and all of the outpouring of sympathy over the past few days.  It means more to me than you will ever know and I thank each of you for taking the time to tell me you care.  It has helped get me through this to be honest, so I am grateful for the opportunity to have such friends and I hope that somehow I have touched your lives in a special way, just as my dad has touched mine.

God bless and thanks to each of you!

Mack

18 comments - What do you think?

« Previous PageNext Page »