Why Most Traders Fail and How You Can Avoid it

Alright.

This might not win me any friends, but it has to be said.

The reason you’re still not a profitable trader is probably because…

You “play with indicators without knowing what it means

Here’s the truth:

Indicators are a derivative of price.

This means the values on your indicator are “created” by applying a mathematical formula from the price on your charts.

You’re probably wondering:

“What’s the problem?”

It’s this…

Indicators are “manipulated” to form bullish or bearish signals.

Let me ask you…

Have you noticed that your RSI indicator shows a bearish signal, but your MACD shows a bullish signal — at the same time?

So, which indicator do you trust?

Well, you’re stuck because now you have conflicting signals.

So, what’s my point?

Stop toying with indicators, it doesn’t give you an objective view of the markets.

Without an objective view of the markets, you can’t make the right trading decisions.

Without the right trading decisions, you’ll find yourself losing consistently in the markets.

Now, don’t get me wrong.

I’m not saying indicators are useless. But they shouldn’t be the basis of your analysis.

You rely on fundamentals to make your trading decisions

Here’s a fact:

The market can go up on bearish news and it can go down on bullish news.

And often, by the time the news is out… it’s probably “too late” to enter.

Now you might be thinking:

“You should combine both fundamental and technical analysis.”

Okay.

But what if your technical is bullish and fundamental is bearish.

Now you’re stuck, AGAIN.

So, what now?

Well, here’s a secret for you…

Often, when the fundamentals are bullish, it would be reflected in the price.

This means the market is in an uptrend when the fundamentals are bullish (and in a downtrend when the fundamentals are bearish).

Here’ an example: EUR/USD is in a downtrend before the ECB cuts interest rate

So, what’s the takeaway?

If you can follow price, then you can “throw” fundamentals away.

But wait.

It doesn’t mean you’ll never be wrong — far from it.

But when you’re wrong, you have your stops in place to cut your loss.

How about if you rely on fundamentals?

Well… by the time the “bad news” is out, the market had collapsed and you’d lost a huge chunk of capital.

So here’s the deal:

If fundamentals can’t accurately predict what the markets will do and it’s a horrible risk management tool, then what use is it?

You rely on signal service without knowing what goes on behind the scenes. Here’s the truth…

Now here are 3 reasons why I don’t believe in signal service and I never will…

1. 99.9% of these systems don’t work at all

Here’s the deal…

The “amazing” results you see from these signals are curve fitted.

This means it finds the best parameters to fit the historical data so you get a nice looking equity curve.

Now, it looks good on hindsight.

But a disaster when applied to the real world of trading.

2. The market is always changing

Now… perhaps you might be lucky enough to chance upon a system that works.

But here’s the thing:

The markets are always changing.

It moves from a low volatility to high volatility, from range market to trending market, and etc.

So…

Your system might work for a while.

But when market conditions change, it’s game over.

3. You’re not in control of your own trading

Now when these systems fail, it’s easy to point the blame at others.

And it’s the last thing you want to do because…

If you blame others, it means you’re not taking 100% responsibility.

If you don’t take 100% responsibility, you are giving up your power to change.

If you give up the power to change, you’ll never improve for the better.

So the bottom line is this…

Trading indicators, fundamentals news, and signal services will not make you a consistently profitable trader.

And in my next post, I’ll reveal a solution that will melt these issues away.

But for now, here’s what I’d like to know…

What’s the #1 thing holding you back from successful trading?

Leave a comment below and share your thoughts with me.

  • Capital. I always put in 100$ and loose. I normaly byy but it seems the market always takes me out first then go up…i struggle to enter at the right time and exit.

    • Powell I don’t know if you are a newbie but I am and I did start my account with 200 $ and added 200 more and then lost almost everything down to 45 dollar . I had the same problem you have and since then I have been very careful with my risk management and been trading very small lot size . I have lots of room before I get stoped out or play on my play . I have been building up my account to 60 $as of now . So I don’t k ow if this was help ful but you need to control your lot size and not think of in dollar amount but try to get consistency pips

      • I agreed with ur statements bro.. Initially my motivation is on dollar, so my lot size no balance with capital. After a few losses (thousand USD) i started change to get consistent pips. MM will definitely effects your emotion, so with proper lots size, u will enjoy the trading. #justmy2cent

          • One idea is to enter your trade with a stop entry order and let the market come to you at an area such as a retracment area. If you miss the trade so. E it. If you are right, you have risked less capital and have bigger profits. Don’t get the fear of missing out and over trade.

        • Looking at the price action of SPX currently with 2 big red candles followed by a doji, am I correct to read that there is more downside to the SPX? The doji seems to indicate that the downside has subsided.

  • It seems that whenever I manage to get a strategy to work maybe one or two days later the strategy stops working so I have to go back to the drawing board and start all over again its a vicious circle and very time consuming I need a strategy that works consistently.Thanks Phil

  • thanks Rayner i have been focusing so much on the entries for so long,finally starting to realize that managing and protecting capital is the main focus.thank you for your training.

  • Hey Rayner,

    I usually make money but could make more. The most difficult thing is sticking to the plan and both enter and exit on my indicators. Fear and doubt stops me and often see the market run up without me after not entering when I should.

    Second is FOMO, I’ve jumped in too late on an opportunity I knew I missed because I sat through the entry and then taken a loss. This leaves me doubting myself and made it harder to follow good intel on entry points.

    I think I need to mature as a trader, trust my judgement which I think is pretty sound and go through the learning curve like everyone else. I view the first year of trading as going to College and getting a certificate, focus on the learning.

  • Greed is my biggest enemy. Most of my winning trades are cut short after going hugely in my intended direction as I keep raising the targets. Thus my winners become small and losses are the way they are, hence overall I stay on losing side even after getting entry and initial target correct most of the times. 🙁

  • I’m using a grid type algorithm to trade 28 pairs, on price and fundamentals alone. I can take profit on Demo but the draw down and margin required is very high and on a real account I wont have sufficient funds after a few weeks if I start off with a $2000 deposit per account.

  • Hey Rayner,
    You are always a resource to me. I have a lot from you which made me understood a lot things that even paid tuition do not offer you. I am very grateful.
    However , Rayner, i have been trading with the trend but when in profits and wants to keep riding the trend so that when there an opportunity to trail the stop loss, that would be done,most often that opportunity doesn’t present itself , the market turns against me, consume my profits and hit my stop loss.
    There are a times I see it eating the profit back bit by bit but I still hold thinking that is a retracement or pullback as no markets keeps moving without corrective move. I sometimes get it right but most often I get my profits consumed by the market.
    I sometimes begin to wonder whether I should be taking my profits so quickly when in profits or not.
    Help me out Rayner.

    • That’s the nature of trailing your stops. It will eat your open profits. But there are times the trend keeps running and you end up catching a huge move.

      No way to predict when that will happen that’s why you keep executing your trades over and over again.

  • Hey RAYNER,

    ALL YOU SAID IS TRUE .. SOME TIMES IT IS NEWS… SOME TIMES TECHNICALS…. ANOTHER TIME FUNDAMENTALS…. MOSTLY A COCKTAIL OF ABOVE ALL..

    i almost stopped TRADING …

    My HOPE is getting CONFIDANCE.. After seeing your FREE BOOKS & E- MAILS..

    WAITING TO HEAR FROM YOU.

  • Timeframe. Due to small capital, I tend to trade 1 hour (as daily chart has larger stoploss). Yet, it is much easier for my stoploss being hit and then market continue running in my intended direction.

    • Hi Albert, today I’ve stopped all system and “secrets”. To my understanding, the so-called Sifu make more money from conducting classes than trading/investment in the market. To me I don’t mind paying the so-called Sifu double or triple the course fee money (but only after I make money from the market and use this money to pay for his course fee). So far none dare to stay foward and accept this term.

      • Well said!
        All teachers should SHOW at least one year of continuous trading account to prove that they can trade. It’s very easy to talk about all this trading wisdom, but it is a different thing to do it successfully.

        Would anybody let a builder build him a house, who can’t show any house he built before?

        Jack Swagger had all the knowledge, could he trade? NO!
        Mark Douglas knew all about trading psychology, could he use it and trade for a living? NO!

        You know that consistently making 20% a year on average to trade for a living needs $350,000 in your account?
        $350,000 x 20% = $70,000 – TAX = $50,000 that’s not much in the western world.
        Who has that much spare cash to trade, doesn’t need to trade!

        Nail Fuller says he has 20,000 students all paid $275 for his course, that’s
        = $5,500,000 ($5.5 Million)! He never showed his account, only writes trading wisdom articles…
        That’s how you make money with trading, from what you can live on!

  • (1) The price hit my stop loss (80%) more often than meeting my TP, although my 3R (risk/rewards-ratio) is set 1:1.5.
    (2) Until today, I am yet to witness (with my own eye) the so-called sifu conducting “live-trading” and make money; apart from those sifu who only offer very superfical “theoritical” course.

    • Have you considered executing 100 trades consistently, then review and find out why most are hitting your stops?

      Live trading might make sense for short-term trading. But for traders who adopt swing or position trades, it’s meaningless as the setups don’t present every day.

  • The biggest thing holding me back is 2nd guessing my entries and risk management. But I have adjusted somethings to fix my risk. Entries are a work in progress.

  • I can’t really pin point what’s holding me to become profitable. Am using 200 EMA to identify the trend and 50 EMA for suitable entry areas like you’ve taught us from your videos but every time I make my analysis according to my moving averages and looking at the current swings from higher time frames it seem like though i hit profit at first but I always end up in the negatives. What could be my problem?

  • Hey Rayner,

    Thanks again for your valued input and you provide a lot of clarity and insight.

    Can you clarify what you mean by indicators are manipulated?

    I will reference several tools to make a decision on a particular trade such as three moving averages, Stochastic RSI, Established lines of support and resistance and occasionally the MAC D. By manipulation do you suggest these tools are weighted in some fashion?

    Best regards,
    Tushar

  • My big problem is that. I don’t trust my Entry when there is a setup i begin to doubt and finally don’t enter the trade.

  • Hi I think knowing my entries and finding something that will indicate a good trade setup is what’s holding me back from successfully profiting

  • Discipline is my biggest problem. I am learning to have patience and this is really making a positive difference. I have missed so many losing trades simply by waiting for price to come to my area of value. Identifying the reversal is still a bit tricky… I think i will go review that lesson now. Thanks Rayner for all your help.

  • Hey Hey my friend.

    What holds me back its a lack of doscipline more expecial patience.

    I am now working on it and i came to realise that #Trend following is the best.
    I have been strugling with Exit and Entry point too but since i have decided on which strategy suits my trading style i am geting comfortable on it.

    All Thanks to you #Rayner for your hard work and taking care of us.

  • hey rayner.i am in tanzania(afRICA) i am really in to trading.i surely belive in price action,volumes,support,resistance.as the basic tools for any technical trader.i would want to have some guidance to sharpen my skills.

  • emotional, less time , jumping from strategy to strategy , try 100 trade with this strategy …ohh does not work, …ohh next ………….so on, even i joined Rayner training ,….. less time to practice..

    Emotional + less time = EA …… i learned mql, bought software for programing my ideas ….still trying, when i will give up ………….. do know
    10000 $ already are gone

  • Hey Rayner
    Almost all what my colleagues have written apply to me; not quite knowing when to enter and exit trades, i watch my profit being wiped out in a bid to hold my position and ride the trend. Not sticking to one strategy, not setting stop loss at times , and it just seems like the market never pings my profit targets but its so quick to move towards my stop loss, as a result i end up taking it out , but again its very risky to trade without SL.
    Am just confused by many things on the market, even what i thought i knew is just confusing me now.

  • Good read.

    I don’t use indicators at all. I just found them too frustrating.

    My trading has improved after I stop using them.

    Thank you Rayner for all the help.

  • Dear Rayner,
    I am An year and half old trade learner.
    After learning many thing from your posts and after applying it watching its outcome, I feel its too early to fit my trade learnings in successful or unsuccessful bucket. ; although I am yet to regain my intraday investments/capital. Having said that at present Here are few complex to judge items for me in real time market:
    1) Reversals: I am unable to judge it . Because when i try riding winner reversals step me out.
    Similarly, when I trade seeing trend reversed in actual it doesnt.

    2) Which setups not to trade in short / day time frame.
    Which setup not to take in swing/ position trades.

    3) Trading range bound market / identifying which side trend can be when in low volatality or range bound.

    4) Last but most important When to enter or exit position trades. Whether its in profit or if its in loss.
    P.S: Thanks for all your videos posts and interesting way to explain logically trading concepts and setups. It indeed helps.

  • Hey hey hey…
    1) For me it’s madnesss (so I call t)…i can clearly identify reversal patterns on chart but still insist on trend continuation!!!!
    2) Capital…i have day job so have to trade on 4h or daily but my capital is less than 100$
    3) trading journal…i’m really lazy to do journal (before n after) and I’ve missed lots of opportunity…short term solution was to cut down pairs to only 7

  • Hello Rayner,

    I have been following you for a while now and really love your instructions ,lessons,experiences you shared.I started trading Forex this year precisely since March.My challenge is HOW TO LOG OUT MY TRADING ACCOUNT IN MT4 PLATFORM TO AVOID BLOWING UP MY ACCOUNT WHEN AM NOT ONLINE?

  • The number 1 things that holding me back for a trade is fear due to the money I lost in a bad trade I made. Not all the time of course because those bad trades I analyzed were trades when I was led by not good enough pre-analysis before I set the trade. Second point that I made losses was me being lead by a bit of FOMO.
    Cheers Jan

  • I have been keeping records well on my demo trading but on live trading I’m always late for a position and I enter without recording and too analysation…

  • Greed is one of my biggest enemies – I target $250/day and when I reach that target I am thinking I can make more and then bang … I crash out.
    Also some times look at the trend and dive straight in with a buy or sell order without doing due diligence and working out where to place stop losses, before I know it I have lost out, and then trying to chase my losses and end up losing more.

  • I started trading in September 2018 and I have had 3 losses and more winning trades because I take heed to discipline even when my mind tell me to use “wrong lot sizes even when I am sure the trade will be a winning trade, I still stick to the right lot size and never risk more than 1% of my account per trade. i am learning compounding my account gradually.

    Thanks you your profitable trading tips, Rayner

  • 1-Ignoring price action and rate of change of volume
    2- Entering/exiting trades only on buying/selling signals generated by technical indicators

  • I believe that I need a better understanding to analyze the market to know the right time when to enter into a trade and good money management.

  • I can’t work out a strategy/list to follow consistently because there’s too much info out there and a lot of it is conflicting so I’m stuck on a demo account trying to find a medium term strategy to follow whilst having to work full time.

  • The answer is you need to have more money in the account.

    This is a business NOT a gambling game.

    With the new ESMA rules over here in Europe ,the margin needed is MASSIVE

    Eg..prior to July 2018 you needed £300 margin for £10 a point….now you need £3000 !! thats 10 times more money in your account.

    This rule has stopped all the gamblers with £1k to £5K as the margin will take up their accounts.

    But getting back to this topic …

    The answer is DIVIDE your total Balance in your account by 100.
    This means you have 100 deals to make you an OVERALL profit using Rayners example method of 1% stop loss and take profit 1.5% and upwards. so if you get stopped out 50 % of the time the other 50 % makes you a profit of 1.5 % and UPWARDS changing your stops as the price goes higher on a wining deal.

    As Rayner says ….Fundamentals are NEVER judged so much on Indicators

    I feel you need to have around 30K to 50k in your account to make a living .

    Hope this helps.

  • I come across many issues, but my #1 is surely the lack of time.
    I work crazy shifts and travel a lot, which means that I don’t have enough time to follow markets/trade properly.
    This is why I have been trying to apply longer term strategies, but so far I am down around %30 for the year.
    I am thinking about closing every position and “clearing” all my strategies and start from scratch again, but will it work?
    #2 is the lack of a guide/coach. I have been following several traders, but right now I’d say there are so many different opinions and strategies that I say to myself “why do I do, where do I start?”

  • i watched all your videos and read your books. i also have a sescribtion web that i pay. when i am watching videos or reading books i really understand very well but when i am alone i cand decide when to enter and to enter the market.

  • Hey Rayner. You rightly pointed oit the things
    Indicators and other things does make a successful trader. I have been trading from last 5 years. Though i make money may be in 3-4 months, 5 month is loosing month for me and my account back to zero. Though I’m not very much in loss. I’M not successful as well. I follow your blogs and it makes a complete sense to me. So guide us further on this

  • Hi, I read your book and I’m trend trading for the last three weeks. Time frames are H4 and D1. For me it’s impossible to watch my trades the whole day so I use SL (€ 6.00) and TP (€ 18.00). It’s pretty difficult to set and forget and not to close a trade (100 pips). I’m working on my attitude! Regards from The Netherlands.

  • One of my major challenge is entering a trade at the right time and also trusting my analysis, sometimes, I analyse trades just looking at a chat I see a lot but once am about to enter I end up doing a different thing and then I get stopped out.

  • i think price action has to be the first thing to watch, you should use indicators as a confirming tool for what you see on price action.

  • Good morning Rayner, I just watched your video about Why most traders fail and how can you avoid it, and I include myself in all this, I’ve been learning about the markets for three years and how to get them, I’ve taken courses of all kinds and even last six months I have been able to find a consistency, at least I do not lose my capital. As you say probe hundreds of indicators “Miraculous” and negative results, for a few months I have been following all the videos and notes that you publish and I have understood many things, I only use three stockings now 21Ema, 55Ema and 200 Simple, I draw my trend lines dynamics and I support myself in a Macd (12,26,9) and a Stichastico (20,1,1), it has improved my operative a lot but in many occasions the operations are gone. I’m leaving the entry points, I leave when it should not be, in order series of details I’m trying to correct, I use Graph D to see the trend and movement of the last days, and 4H to enter the operation and sometimes 1H .
    After this long description, which advises me, work D and 4H or 4H and 1H.
    see you and thank you for your teachings

  • Thanks for the valuable information rayner

    since i am a new comer i strongly believe one need to – rather myself to learn the basics clearly

    and with confidence i can achieve but i really need to gets lessons from u experts to be realy successsful

    hope i am right

  • I always buy at highs and sell at lows. It reverses and stops me out and then goes in the direction I traded for! It’s insane and I can’t figure this out. What I am starting to see in my analysis is to take a position at equilibrium, with a momentum bias, meaning when price is and equilibrium, take a position in the direction of where momentum came from. Anyway, I still need a lot of help.

  • I enjoyed your last post on consistently profitable traders, it has helped me see more clearly. The spreadsheet is a bonus, took a while but it came together.
    You are 100% right about the amount of work involved in keeping records, bloody hours!
    This mornings post was interesting, at present I am having a breather, I went to the gym, had placed about 12 trades beforehand, up to now have 12 win 5 loss. After reading this mornings post, I can see the point of indicator information verses price action very distinct animals.
    Prior to reading the article, I was “Chasing pips” after the action had died down, now the balance has suffered. So another lesson learned
    Keep the good work coming Rayner, I have a feeling that even I can be a consitant trader.
    Cheers Mate, Warwick.

  • Let me guess you will say that one must use “price action” setups? right? I am personally a fan of using indicators as that’s the closest thing to being objective one can get. Ofcourse you have to be careful and just use 1 indicator from any category. Using 2 oscillators is not going to get you anywhere.

    On the other hand, price action setups can be very subjective. There are more than 1 way to draw a trendline and you can’t say one is wrong and other is right.

    Then again, whatever works for one…

    • Hi try this its worked for me for a while now I like indicators too I have looked at a lot of different indicators over a long period of time and find this works well.Put bollingers bands on your platform then stochastics settings are all standard no changes needed and this is the important part WHEN THE PRICE [candles ] BREAK THROUGH THE TOP OR LOWER BOLLINGER BAND AND THE RED DOTTED AND THE BLUE LINE IN THE STOCHASTIC ARE IN THE OVERBOUGHT OR OVERSOLD AREAS WAIT UNTIL THE BLUE LINE CROSSES OVER THE DOTTED RED LINE THEN PUT THE TRADE ON IN THAT DIRECTION OF THE BLUE LINE IN OTHER WORDS IF THE BLUE LINE IS HEADING UP TRADE UP IF ITS HEADING DOWN THEN TRADE DOWN ONLY AFTER IT CROSSES THE RED DOTTED LINE .ANY PROBLEM EMAIL ME .

      • OPS FORGOT TO MENTION I USE TIME TO TRADE NO STOP LOSS OR TAKE PROFIT BUT YOU ONLY LOSE THE AMOUNT YOU PUT ON THE TRADE SAY YOU TRADE TEN DOLLARS WHICH IS THE MINIMUM YOU ONLY LOOSE TEN DOLLARS GO TO HIGHLOW BINARY THEY ARE AUSSIE THEY ARE SAFE WHEN YOU START ONLY USE THE ONE MINUTE TRADE HAVE A LOOK YOU WILL SEE WHAT I MEAN IF YOU TRADE TEN YOU GAIN 8 WHICH MAKES IT 18 FOR THE WIN

  • i had an interesting thought.
    1). test with small amount, a “consistent” strategy/methodology that will yield “consistent result”; whether the result is win or lose does not matter,
    2). compare or match your result with some trader (say in tradingview) who yield consistent result; categorize such as dollar pair or cross-pair or metal, or engergy etc.
    3). if the result is inclined to…40~60% bracket…. you need to change the strategy/method; but if it’s incline to 20%~30% or 70%~80%; then, you can trade along or opposite of your original methodology.
    *CONSISTENCY and PROBABILITY are the keywords

  • Hello
    My problem is
    I trade with the trend direction and i lose
    I allways chech the trend direction before trading i use 50 ema and 200 ma .for example . All 50 and 200 ma showing downtrend and the trend direction it show downtrend but when i enter the trade the trend become more uptrend and less downternd although i have check the higher time frame .. am using 15 and i check higher time frame 30 and 1 hour or 4
    Could you plz tell when the downtrend is trying to convert to upternd , is it when the trend direction close or near to the one of the MAs 50 or 200 or any..
    Just tell us when to stop trading with the trend direction
    Thank you alot Rayner Teo

  • Thanks You Rayner for your effort in helping us become better traders.
    Currently my problem is consistency and i will put all my effort to a consistent trader.

  • Hey Rayner, have traded mkts with gut feelings and tips provided by friends and analysts, have lost all in past.
    Since , last three months I started learning technical analysis and have started applying the learning on real trades, have made few bucks here and there but again lost it. I also know why I lost it, because I didn’t strictly follow the process of my trading setups and also didn’t manage my emotional outbursts .
    My biggest mistakes are two
    1) Unable to take out hefty profits, which I always settle for less profit and more losses. Even in good trades I ended up taking only 10% rest profits gone.
    2) Emotional and revenge trading is poorly managed.

  • Is that true that Stop Loss readily applied in the system are mendatorily haunted and those are in mind are not.

    In the letter case it becomes very risky.

  • Pulling the trigger. I see a potential entry, but I also see where the market could reverse. As a result I see money being lost. So I take a wait and see approach. And before I know it, as I cannot always see the market (life or work interfere) and when I get back to it, I’m too late, or it’s has gone against what I thought it would do. My mind Is conflicted.

  • Hi Rayner,
    first of all i would like to thank you for all the knowledge you share.
    i am following your videos and posts. For me the thing is stooping me to be good trader is mentor, the one to whom i can share my daily flaws and strategies. Rest is taken care by you through videos and the strategies i am using.

    Hey! Rayner, please suggest me some good books that can help me to understand market, its emotions & one for technical analysis.

    in your book, you have Suggested -The Art & Science of technical Analysis, should i go for it or something else, as beginner.

  • Interesting article.

    Firstly, i usually get confused when i encounter contracting/indecisive/small body candle sticks and i end up making a wrong decision. What is your advice.

    Secondly, What is your view on economic indicators because i do believe that these economic indicators (some specific ones necessary for FX) trigger fundamental decisions and price direction.

    Thirdly, I miss out on candle stick patterns on SR levels. I miss out on entries (pull backs, break outs and fake outs). How can i avoid this or rather should i continue with the flow and exit at the next significant level.
    *Best timing.

    • 1. Pay attention to the move before the indecision period. The market is likely to continue the preceding move.

      2. I don’t look at it.

      3. Missing trades is part and parcel of trading. You can’t catch them all (unlike pokemon).

  • Hi Rayner,
    I’m sure indicators have a place in trading. So when do you use indicators ? And what indicators to be used under what conditions ?

  • There are literally thousands of indicators. The banks know everyone uses the RSI and MACD and all those other common ones. Search for better indicators!

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