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Traders are many success using a variety of trading methods. However, there is a much larger number of traders who fail to produce consistent profits in the markets. I would estimate the percentage of successful traders about the same as in other professions such as theater, music, sports, etc. Many are called but few are chosen. Over the years I have formed some opinions on why trading is so difficult for so many. Most traders that I meet are smart. They have been successful in other careers. They are usually hard workers and devoted much time and energy to their trade. Yet most of these traders move from one method to another without ever finding something that works for them.

In the region where I live, I try to attend as groups of negotiation and many meetings as I can find. Trading can be a solitary activity where you trade your own account. It is important to maintain human contact. This face to face contact and not communicating only on Twitter. A negotiating group I belonged to several years seems to be a laboratory watch traders who travel on roads without end. I tried to draw some conclusions why these traders are always in the wrong direction in terms of their methodology.

When an operator first decides to trade for a living, the operator must go through a process of personal discovery to find a methodology that fits their personality. It is quite normal to try many different approaches to find what works. We could decide that the fit would be very short term, day trading. However, once the activity is put into practice with real money trader may decide that stress and fatigue to watch the computer screen all day is simply not worth the candle in Despite how much this approach can produce. Another trader might decide to hold spread option for a month is the ideal approach, but the lack of activity in May cause this operator to be less attentive to his business and get distracted by other activities and bored negotiation. So find what works best is to try different approaches. What seems right may not be once the methodology used.

But why traders are so many developments in methodologies every few months? Whenever I attend the monthly meeting of my local group, I think they have all found a new chat room or guru to follow. I hear stories about how the new guru has finally answered. I hear how the guru called the next days market direction well and has done every day this month. Really? I heard that the latest guru also known as the market turns perfectly. If the previous guru was so good, why everybody is now following the new guru, which now makes mention of the previous guru-of-the-month? There seems to be a need and a real desire to know there is someone out there with the answers to these traders are looking for. They think that someone who is successful in negotiating will be kind enough to give them a cost-effective, whether gratis or for a small fee. They are led to believe that the guru of the negotiation is in fact his success or his own money. But are they? Most of these people do not work in real price, while teaching or running a chat room. They will lead you to believe they are trading successfully for real money. Many have never been successful. And if these people are actually the money they claim in their own accounts, why would they charge a fee to run a chat room and teach their method in a business school with the added work and responsibility. Would not their profits from trading by far eclipse the relatively small fee, they could receive from charging for their services? And if their advice or methodology were up to their claims, would not the word out and Internet traffic to the sites become insurmountable? Would be no hedge funds billions of dollars want to know these secrets which are beyond the search for their own teams? I think these people in search of an answer do not ask themselves these questions. If they ask these questions they may be placed so as to find answers to their business problems they do not want to face the harsh truth that they may not be on track.

Is there a common denominator with most approaches available that will most likely be a stalemate for the merchant? Any approach that attempts to predict the future direction of the market not market-generated information is doomed to failure, in my opinion. I’ll explain.

Several meetings, there is an operator introduces an approach which has tried to extrapolate the future direction of market to find similar models currently under development and to compare those models that were developed more or less 70 years . This operator has acted like it was a new approach. Authors of the letter of contract and technical analysts have made this type of comparison since the early markets. It never worked. You can take the form of the current market price and try to superimpose data on past and you will find many types and similar patterns over the last hundred years or more. But to assume that the outcome of this pattern can not be determined is just beyond sense. What interest would there be in the form of list price, now than 70 years, or even six months ago. If by chance there was a similar result, it is purely random chance. It would be easier and faster to flip a single coin.

Another flavor of the month, which was everyone was excited with the moon and tidal cycles to predict where the market should go. I did not devote much time to discredit that. Elliot wave is another approach that, in my opinion is a complete waste of time. The theory of Elliott wave is in fact correct to describe and explain the psychology of mass merchants. It may explain a motion pulse in the direction of the trend, and then explain the logic of the reaction against a trend. Past data Ellioticians most would agree with an analysis, or the head wave. However, if you put a hundred Elliot wave “experts” in a room with a card and asked them where the market is headed, you’ll get a hundred different answers and probably three hundred counts of substitution. It is totally useless to try to predict the future. The problem, as with the cycles of the moon and overlaying the previous data is that the trader tries to tell the market where it should go rather than listening market and audience where the market wants to go.

Fibonacci analysis is another dead end, in my opinion. Fibonacci was very popular when Elliot Wave being the first has been reintroduced in the late 1970s to mid 1980s. It currently seems to be a renewed interest, as well as techniques such as patterns Gartley Butterfly and warmed some other techniques long forgotten classic. Again, these techniques attempt to tell the market where it should go. A Fibonacci retracement or extension is assumed that the market is expected to stop or go to a certain price because of some numerical relations that defines the natural spirals of a shell or the relationship between the navel on the human body. Pure silliness. Sometimes these numbers get hit with precision and turn the market for specific numbers of Fibonacci. I am descended from a horizontal line on a card at random and hit the random number with the same frequency as the one on my tool Fibonacci retracement. Many experts Fibonacci gather many points of start and stop on the card there will be many lines. Many also include numbers in the main Fibonacci numbers. Consequently there are so many lines across the map that one of them is bound to be struck. The only issue I found a useful tool Fibonacci retracement found on most mapping software is the level of 50% retracement. And 50% is not really a Fibonacci number. But it is tracing the most commonly used by most analysts as a guide. It is probably useful because many of the watch and the price runs at this point become self-fulfilling.

Also, there are many efforts by many of these gurus to draw conclusions from straight lines drawn from distant points on the list until the current prices. First, markets are fractal in nature. Merely to draw a straight line on a graph, is like trying to draw a map of a coastal area using a straight line. It can not be done. There is a sense of movement up and down market. If one understands the concept of rejection and acceptance of prices around previous pivot, or point swing, trend is easier to comprendre.Parfois a major trend line will act as support or resistance for a time only because so many people are looking. But the market structure based on what the market is in communication makes it much more important. Sometimes straight lines, as in the triangle, will be invited to provide meaningful signals, but most often a closer examination points are a real Swing much more reliable guide. Straight lines are not in contact with all important swing points. Any attempt to impose a series of fractal data of a linear series is related to the topic later.

Classic price patterns such as head and shoulders model, are another area where the operator tries to tell the market where it must go, regardless of where the real market does go. As the wave Elliot, the head-and-shoulders pattern, and three players-to-a-top, may explain the psychology of investors very well, but again declined. Many great heights and depths occur after these models are trained. In fact, if you look at the graphics enough price these trends seem to jump off the page with the key turning points. The problem is that there are many more of these figures formed in patterns that do not run on prices in the other direction. When analyzing historical data on maps, it is amazing how the human eye will pass over in silence the many reasons more grounded and are attracted to the models of success. The merchant trusts. The reality happen quickly. Again, like other methods, the models are based on the assumption that a particular form of historical data will affect the future direction of prices. It simply is not. Any outcome is pure chance, or at best self-fulfilling. You can not tell the market where it should go based on random patterns in the past, no matter how well categorized and documented they are.

Another area that can lead to frustration for the beginning trader is convinced that a mechanical trading system can work. To my knowledge there has not yet developed a mechanical system with success. If a mechanical system actually worked the system would soon own the entire market would self-destruct at some point. Countless hours of programming on the main frame computers using advance methods have failed to transform a system that stood the test of time. The problem is that most of these curve-use system installing new ways of extrapolating from past data, either using price patterns or indicators, and assuming that will be some sort of tell the future. The curve fitting may work for a short period, but market developments, as they always do, the system will be more in tune with the markets. All these systems fail. Trying to find a system that works is trivial, and the operator will lose a lot of time in this research. This time would be better spent learning about the functioning of the market and learn to read what the market is trying to communicate.

To summarize the common denominator that I find that lead operators on a road without end are a market-based approaches that attempt to tell the market where it should go. Most of these approaches are based on information not directly generated by the actual price action. Of course, a trend line or Fibonacci level is influenced by the price because it is drawn on the price of the same data. But it looks to the past. This is to assume that something of the past based on a relationship without their number or a drawing of lots will cause or influence to buy or sell in the future. It is not a reliable enough for consistent profits for the trader. In fact, a coin toss has a better chance of predicting the future than any of the methods mentioned above. The best mechanical systems have approximately 30% of winning trades, which is less than 50% a coin flip will occur.

If you’ve read this far, you might conclude that it is impossible to trade successfully, and there is not a useful approach to trading. It is true that the vast majority of those who try negotiation fails. Most roads remain deadlocked on the gurus and approaches that have no logical sense.

I suggest concentrating on two things. First, the money management is probably the most important element in a successful trading plan. It is not as interesting as learning and analysis of trend indicators. But with proper management of money, we could take a measure of the approach of negotiating perfect, even the lottery and have an equal chance of making a profit over time. Even players with success at odds terrible can win if they employ strict financial management. It should be first on the list of techniques to master if one wants to have a long career, but this is generally not an element of the plan transaction is disregarded.

The next thing I suggest is to learn the principles of market generated information. The profile of the market is a logical place to start. By learning the market profile we learn the bidding process on all contracts traded in all time frames. It is a study to learn the language of the contract. Most traders are too busy trying to interpret Elliott Waves and Fibonacci retracement, and therefore they do not listen to what the market is trying to communicate. The market is concerned about the here and now as he tries to interpret the future. He does not care about straight line through prices six months ago. Often, the graph represents the market profile confused and turned traders away. The graphic is not as important as learning the concept. You can still use bar charts and moving averages and other indicators as a guide. But knowing what the market is trying to accomplish by moving up and down in what appears to be a random fashion can make a difference in how an operator displays a graph. It is well worth the time to learn what this technology is all about, whatever the type of chart uses an operator. In fact, the concept behind the market profile has been developed to simulate the mental processes of a trader in the pit. The purchase and sale and price movements appear random are meaningful, but most traders do not pay attention.

To negotiate successfully is very difficult. The learning curve can be very long. The learning curve for the Market Profile approach can be quite long and difficult. Few things in life that are worth coming easily. I gave a presentation of three hours the profile market a few months ago for the local trade group. To my knowledge, no one in attendance is the application of any of the principles discussed. Some people came to me in future meetings and said the conference was interesting, but it was just too much work to learn this method. They prefer to stick to what the group is jumping from one guru to another in search of a simple method that will give specific trades and winning. Good luck to them. Unfortunately, they provide benefits to those who understand the markets.