Info!! Why Together With Then Many Traders Lose

Here are a few observations on why too thus many traders fail.  It's non because of psychology:

1)  The bulk of traders cry upward directionally, too they cry upward linearly.  That has them trading momentum too that has them trading trends.  Even the traders who expect for reversals expect for momentum too trend, simply inwards a unlike direction.

2)  Market behaviour tin survive described every bit a combination of cyclical too linear (trend) components over whatever item fourth dimension frame.  As markets decease to a greater extent than crowded, cyclical components dominate over time, reducing the Sharpe ratio of those markets.

3)  Traders neglect because they are thinking inwards direct lines when they should survive thinking inwards cycles.  They cry upward of cycles every bit sources of choppiness too noise, non every bit sources of signals that are unlike from linear, trending ones.

4)  Any marketplace position cycle consists of mean-reverting behaviour at cycle peaks too troughs too trending behaviour betwixt peaks too troughs.  This ensures that whatever unmarried approach to trading markets (looking for trend/momentum; looking for reversal/mean reversion) volition pull downward substantially over many cycles.

5)  When the footing was establish to survive circular too non flat, that opened the door to exploration too evolution of novel lands.  When markets are viewed every bit cyclical too non linear, that opens the door to promising trading strategies.

6)  Influenza A virus subtype H5N1 smashing bargain of the emotional frustration too disruption of trading that traders consider is the trial of trying to agree markets into a preferred framework, rather than discovering the framework that best describes marketplace position behavior.  

7)  Becoming to a greater extent than disciplined inwards applying inappropriate models to markets leads to greater consistency inwards losing.  If a ladder is leaning against the incorrect building, becoming a amend climber won't teach you lot to your destination.

In short, traders lose, non because they're bad at the game, but because they are playing the incorrect game.

Further Reading:  Finding Opportunity inwards Cycles
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