Recycling of Market Participants (Part 2)

Today I continue with a July 2015 thread about relative quiet in the forum.

On Jul 14, 2015, at 12:51 am (PDT) . Posted by CM:

I went back to the States for a couple of months for our annual fishing trip and to help my brother-in-law put up hay for his horses for the winter… When I return to a normal life in a few weeks I will be able to start posting again. My portfolio is currently flat, because of depressed stock prices, but the option trades are positive. Yes, trading plan is working…


I felt inspired to refresh the thread over two years later.

On Sep 26, 2017, at 4:08 am (PDT) . Posted by Mark:

I’m here with one follow-up post because I think many of you are missing the point. Please feel free to disagree; my words are hardly set in stone.

Over the years, I have found traders to be a very fickle lot. The oft-quoted statistic that 90% fail within five [1-2?] years supports this. I don’t know who [if?] did the original study but it is consistent with what I’ve seen of human nature from attending trading groups. Ego fulfillment means bragging when correct and/or making money. And Mr. Market lets us do that—sometimes with gradual profits over a long period of time. At some point he gets crabby and catastrophic losses await for many who have become smug and started to trade position sizes that are too large.

These washouts are when the fickle traders disappear. First they feel stress and lose sleep. Then they are forced out at big losses feeling lucky [hopefully] to have escaped with something. After a period of reflection, they finally walk away—head down and tail between their legs—possibly never to talk about or discuss this with anybody. After the grieving is complete they pull themselves up by the bootstraps and move onto the next big thing.

On multiple occasions I have seen people present impressive performance records punctuated by pauses during sudden market pullbacks/corrections. How lucky they were to have been vacationing at the worst times! I wouldn’t call any particular individual a blatant liar but they certainly are out there.

I think a good strategy meets profit goals within risk tolerance levels net losses—and there will always be losses! Anyone presenting a large sample size of trades without losses is a liar and someone to avoid because that is not reality.


The takeaway here is nothing new: THERE WILL ALWAYS BE LOSSES! As a trader I need to accept this before I begin the journey and strive to always size my positions accordingly. Failure to do this can potentially end my trading career, which on a larger scale, results in the recycling of market participants.