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Why 90% of Traders Lose Money

There’s fear in the air but luckily I’m accustomed to the smell, in fact, I kind of like it.

QQQ’s has currently reached a drawdown of 27% from highs.

Compared to a low of 31% in the Covid crash, 23% in the 2018 crash, 48% in the 2008 crash. No matter what you think you know about current economic factors, this is a considerable move.

At the time of writing this I’ve never seen so many people turn bearish nor have I ever seen so many people blow up. It’s absolutely astounding to me the sheer number of people who no longer have an account.

The Gang has also seen a max exit, from 370 members in November 2021, only 147 remain.

People are fed up, they’ve been beaten down the last few months and for the majority of retail traders they’ve lost everything. For those who have money left they’ve simply lost hope and determination.

Everybody wants to “Live the dream” but almost nobody is prepared to do what it takes. It’s a natural defensive tactic and second nature to avoid pain. The market has the ability to create psychological pain and anxiety like most have never witnessed.

The majority of the population does not have the will power to drink 2 litres of water a day to prevent dehydration or exercise 30 minutes a day to combat obesity and health issues. Which is why you should not be surprised that most do not have what it takes to stick to a trading plan, put in the work and bring in £10,000’s/week.

The average data stipulates that 90% of traders and investors lose money over time. Meaning they are unprofitable.

When we was at highs in November 2022 I was heavily questioned for dumping almost all my long term, at a time when everybody was screaming “HODL”. Fast forward to today and I have almost everybody laughing or questioning why I’m starting to buy everything when we have much further to fall.

I am no genius, very far from it, however I understand that if 90% of people are wrong then I must not let the masses get into my head, nor should you.

During the covid sell off I witnessed a lot of people freak the fuck out and convince themselves this was the end. Another 10-15 year bear market was ahead. Many got liquidated and most were left with nothing but hatred for the market. When we eventually bounced almost every good trader I knew made at least 1,000% account gains. Life changing sums of money. By the time the market had recovered the covid flush in September 2020; most who sold at the bottom were calling a top and began shorting. I remember this time so well, twitter was fucking mental and people were shorting everything in sight. SPY then ran another 30% and many growth names another 100%. Destroying literally every short position. After this event, the entire market flipped long and everybody was BUY, BUY, BUY.

Fast forward to 2021 and the market was on fire, we witnessed the largest influx of retail traders we’ve ever seen. Euphoria was at extreme levels, a time when WSB controlled anything and everything it touched; short funds started blowing up left, right and centre. The main consensus then was SPY to 6,900.

During this time everybody I knew wished they’d started during COVID, a pullback that was only 4% more than todays. Yes you read that right, 4%.

Today those same people are presented with similar conditions to Covid-19. When the entire world shut down and nobody knew whether this 30% pullback was just the beginning. A time where “This crash is different because the world has never been shut down before”.

So where are their buy orders? Why are they not loading the fuck up? Why are they not selling belongings to buy stocks?

Instead what’s happening is exactly what happens on every single crash. The 90%, well, they give up. They throw in the towel and dive back into the depths of their normal life, the one they so desperately wanted to improve. Meanwhile the 10% who make money buy everything knowing full well it may not be the bottom.

In regards to swing trading we witnessed exactly the same thing. Everybody was screaming and shouting about how much money they would have made during covid. “The greatest bull markets arise from bear markets” Where are they now? They’ve given up.

What will eventually happen is the market will bounce, us swing traders will make exponential gains once again and our long term accounts will flourish. Once we recover and start pushing for new highs people will become bitter. They will begin to short stocks going up, blow up, gather more cash and flip long. Once this happens we will sell everything to them and light up a cuban. Rinse and Repeat.

Technical:

SPY and QQQs pulled into a major region yesterday, with some large caps like TSLA flushing 10%, crypto 20-30% and indexes putting in their 6th red week in a row. The likelihood of even just a relief bounce is incredibly high. This means there should be plenty of set ups just around the corner.

If we could hold and bounce of this region it’s game on for EPs/Breakouts. If we head lower avoid any breakouts until we base somewhere.