Wall Street Scalper EXPOSES: Why 90% of Traders Lose Money (and How the 10% REALLY Win)

If you lost a lot of money at the crypto markets, at the stock markets or in the future markets. Listen today because I will explain you what is the reason behind. Today I sit together with my friend Serge Hoffman, our ex Wall street scalper, and we will explain you very deep why more than 90% of traders lose their money. I think this story will be very interesting for you. I'm Tom Fraud and I'm the coach and trainee of Patrick Nil, the two time trading championships leader in the Forex division. And I think it will be a goal for you to understand everything of it. Very deep Listen today, a warm welcome from the studio in Larnaca at Trade the Traders. Today my dear friend and partner Sergey Hoffman is here as my guest. Today we're talking about why 90% of all traders actually lose their money. In fact, 90% lose 90% of their assets within 90 days. That's the so called rule. And unfortunately there's a lot of truth to it. And today I'd like to talk with you about how it even happens that people always blow their money. And has something like that ever happened to you?

No, never?

Never. And I can tell you, yes, unfortunately something like that has happened to me. And no, it doesn't have to happen to everyone, because there are all these great myths out there. You know them too. Every good trader has to have blown up an account and so on. That's absolute nonsense. The best trader I've ever met never blew up an account. But you also always have to look a little at where you come from. And if you come from a normal family background, where money and wealth were never present, then it's harder to handle finances in the beginning, especially when you suddenly start earning a lot of money. But enough about me. Dear Serge, what do you think about this? Why do 90% of traders lose their money in the capital markets? Is it because of the institutional players? Or is it simply that traders are too clueless, unstructured, undisciplined? What are your thoughts on this?

Yeah, well, let me put it this way. I'll start with why this is the case. For most people, it already begins with mental strength. They're just not mentally prepared to really be involved in everything that's going on. Trading isn't one of the easiest businesses, so you really need a certain level of mental toughness.

And do you have this kind of mental strength?

Not always, but very often. But there are, for example, good exercises that I personally use for myself. These are basically breathing exercises. There are some that help me mentally prepare A bit. Then what is also the most important factor, to a certain extent, is discipline. So without discipline in this business, you're almost lost. Actually, you are lost. That's why you need a certain level of discipline for all of this. And yes, the most important thing, and for me, this is the be all and end all. The most important thing for me is the routine. Because you have to create a certain routine for yourself. You have to treat the whole thing like a business and not like some kind of casino game.

So you would say that first you need to have a clear head, be focused, disciplined. And now we also need a bit of practical know how that actually works. And I can say very clearly that back then, 12 or 13 years ago, you gave me a lot of tools that made me aware of how things really work, why technical structures and strategies work. And that's also a component, at least for me, where I can say today, if I understand why a stop loss is actually triggered and that a stop loss is set so that the opposite of what I actually intend should happen, it doesn't feel bad anymore because it's an insurance.

No, that's part of it too. So you'll never be able to avoid taking a stop loss now and then, or you'll never be able to avoid having bad days. And accordingly, you should have the knowledge that there will be times or phases when things just go badly. This is also connected to mental strength. So you don't start telling yourself that you're bad at this or you can't do it or whatever. I see this so often when I talk to people. They say things are going so badly for me, sometimes I think I can't do anything, and so on and so forth. But there is a good solution for how to handle all of this a bit better. Then I just ask one thing. Have you written all of this down? All the trades, all the phases, yes or no. And most of the time, like 99% of the people out there say no, I don't keep a journal.

Is that laziness or ignorance?

Partly laziness, but also partly ignorance. Though the biggest percentage is definitely laziness. Honestly, I have to admit, I don't keep one anymore either. I mean, at the start I kept a journal too. I should show a photo sometime. I still have a box with a stack of notepads about this. Honestly, a huge pile where I wrote everything down by hand. These days it's even easier. There's so much software out there now that tracks everything for you. You just have to make a few Clicks. And yet people still aren't willing to do even that. That's also one of the reasons why so many people fail in the markets, because they simply don't have the discipline to write things down, to keep a journal, to record all their emotions and everything else. So that's also an important point. How did I feel today? How was it that day? How was it that day? How are things in the markets? Was it this or that? Which market actually suits me? And you have to figure that out over time. And that's where the discipline comes in, to write all of this down accordingly.

So you would say that in a trading journal? Yes, I deliberately call it a journal. You shouldn't just record all the key figures from the day, but you also need to diversify, track different strategies individually and track how you feel about them.

That's important. Yes.

And in the end, through all these evaluations, you figure out for yourself what you're actually best at. Or you use a trader DNA and just start with what in all likelihood is the path that will surely lead you to your goal. You just mentioned a box. I used to have a box too. And do you know what was inside?

What?

Keyboards.

Oh, I had some too. Yeah, I had them as well. I didn't have boxes of keyboards. But honestly, no joke at the beginning, I always bought cheap keyboards after a while because the good gaming keyboards were just too expensive for me at the time. So, yeah, there's emotion involved. You really pound on the keyboard. In my last webinar, I also told people that sometimes you should just let your anger out and even curse at the market a bit.

It's the market's fault, right? When you.

When you mess up, not necessarily the market, but you can still curse at it. Personally, that's just my way of dealing with the markets. When things go badly and all that. I like to talk to the markets. Yeah, that's.

It's really cool when you're sitting in the office with Serge and you notice he starts talking. He starts having a conversation. Not with you, but with the markets. But then I always know exactly. Now it's time for a breathing exercise.

For example, or something like that, you know, it's so important, as I said. And like I said, I also smashed a keyboard at the beginning because that's just part of life. The markets. For me, this is just my personal opinion. The markets are nothing more than a reflection of other people out there. All the emotions, all the movement. Even though nowadays a lot of it is algorithmic and happens quickly, somehow the machines were taught this. And in a certain way, they also follow certain rules, so to speak, and you get to know them. I mean, if you've been in it for a while, you start to recognize what they pay attention to and so on. And accordingly, you know what's happening. And when things go wrong, it's not always the strategy or your fault. Sometimes it's just the market. Sometimes the others are simply better. So as a guideline, don't think you're always good, that you already know everything and can do everything. Because if you get into that mindset, you'll end up in a phase where the market brings you back down to earth and shows you that you're not as good. Because not the godfather of trading, but just one of many. So always remember out there, there's always someone better than you. And that's why you should always stay up to date, always be active in the market, always keep that routine, Never give up, and never stop thinking there's something new to learn. The markets are dynamic. Today things go well, Tomorrow they go badly. It's not always the strategy. Sometimes it's just that the market conditions have changed a bit and some new factors have come in and you have to, for example, adapt and adjust. It's an ongoing process.

But let's talk about another topic. Why do 90% of traders lose their money? What I always see is that they look at indicators. Sometimes it looks like there are ichimoku clouds overlaid with some kind of MACD constructions, plus some RSIs, and the whole thing looks like a piece of art. And then they want to tell me that they trade with that, even though all of it really only relates to the past.

Exactly, yeah.

How do you see it? What do you think about indicators, let's call them trading strategies based solely on indicators. Do you think you can make money with that?

Make money so just based on indicators? Definitely not. At least not on their own. As a support. If you know how the market works and what's really going on behind the scenes, then it could be helpful. But to rely completely on indicators and say, yeah, now the ichimoku cloud is in outside, so it's time to go long. Or something like that. That if it were really that easy to just take an indicator and it gives you a nice red, blue or green arrow for buying and selling. Then when I look outside, I'd be thinking, damn, who's building our roads? Who's building our houses? Because apparently everyone could just make money so easily with indicators on the stock market. Then in quotes, I have Nothing against these people, but there would be no construction workers because everyone would just be sitting there clicking, oh, red, sell green, buy, honey, we're going on vacation.

Maybe just a quick story on the side about this. I once met a truly brilliant programmer who now works with amazing algorithms. He really, believe me, backtested every indicator you can possibly imagine over many, many decades. No, he did robustness tests, so it was even more in depth. And he made it very clear there is nothing that works consistently over time that's important. And for me, that's the essence of why 90% of people lose. They think far too complicated. Let's get back to the keyboards. Sometimes you should just hit yourself on the head with them so you can return to simplicity and adapt and understand the systematics of supply and demand for yourself. I know what that's like. I used to often go against the moving train too. The market is too high, it has to fall. Now, I think we both know that feeling. Then you just end up falling flat on your face. Yes. And once you've truly internalized that this whole system is really just about supply and demand, and that you need tools to clearly show you where the top and bottom are, whether that's footprint charts, market profiling and context, or whatever else. In the end, it doesn't really matter. First you have to understand the rules themselves and then you have to structure the rules in a way that you can actually work with them. What would you say if people are very patient? Would you recommend your order flow scalping, which you learned back in America to them? Or what advice would you give to people who are very patient, who are very patient?

They should rather have strategies that require patience, not ones where, let's say, they have to react very quickly and impulsively. In that case, I would recommend something more long term. Generally speaking, even in trading, you should think long term at first, not focus on the short term. It's not about gambling, but rather about building a foundation for long term success, not chasing short term hype. And for people who are more patient, I would of course advise them to develop or use strategies that are more relaxed, where they don't have to react quickly, where they don't have to think, oh, something's changing now I have to do this or that. That kind of approach wouldn't work as well for them. For those who are, let's say, more temperamental or who have adhd, for example, like you. Well, sometimes I'm not even sure if I have it, but then they can just react more quickly so they can adapt their thinking more quickly. So that's really how it is. You can, or rather you have to, in certain phases, like for example, real in quotation marks, real scalping. Well, for me you have to distinguish what is scalping, what is fast trading and what isn't. Scalping for me is when you focus directly on the market. Meaning, for example, you look at the order books where you follow the whole game of supply and demand in real time. And then for every movement, every action, there's a reaction and you respond to that. But then there's also what is called scalping, where you scalp movements on a five minute chart. That for me is already. You could also call that day trading. At least that's how I see it. So I would say for people who are a bit calmer, I recommend more relaxed strategies where they do day trading in a more long term way, for example through swing trading or something similar. But those who are more fidgety, who can't wait, they can also use certain faster strategies because that's where they feel comfortable. For example, we have a good participant. I'm not going to say his name, but greetings if he's listening. He keeps sending me charts with so many arrows in and out and he likes that. And he says that's where he feels comfortable. He noticed that, he realized that he prefers this fast paced game over the slower one. And you just have to figure that out for yourself. And as I said, if you're the calm type, I would prefer the calmer strategies. And if you say, oh man, I'm impatient, I really want to trade, I want to do something, then you can also go for scalping.

But let's talk about strategies. 90% of traders lose because they use the wrong strategy for themselves. We agree on that, right? Then many use strategies that aren't based on supply and demand, but on some nonsense from the past. So that's also bad. Discipline, as we discussed at the beginning, is absolutely essential. What would you say is the perfect routine that someone should follow during the day to be a successful day trader? Let's say a day trader who likes to trade with the trend and do breakouts. What sequence should they follow throughout the day? How would you say it's possible to establish the profession of trading as a solid tool and foundation so that it actually works?

It all starts with, as I said, routine, with preparation, whether you prepare in the morning or in the evening. I'm the type who prefers to work more when it's dark than during the day. So I, for example, like to prepare for the day. In the evening, I do my daily analysis. Then where I get ready and think about what could happen in the coming days. So you already make a plan for what might happen the next day, and you also think about strategies accordingly. Then in the morning, I get up and have my normal routine. Brushing my teeth, drinking coffee and tidying up. I also like to tidy up in the morning. Then you sit down at the computer, focus on the markets, build your analysis, see how you can confirm it. And after that, it's just about choosing the right strategy and then patiently, really patiently waiting for it to set up, and then you let it run. And yes, that's how I think the right process should look. The second option is if you're a beginner and don't really know which direction you should go or what type you are, like for example, your trader DNA, then you should first figure out what kind of trader you are, what you're suited for, and then build all your strategies on that and in a way, see which direction things are heading for you.

Yeah, yeah, I see it the same way. First of all, that's important. But what would you say about calling it a day? There are also traders who actually do call it a day. Not that many, though. I also know some who can work around the clock. But, for example, I really love having an end to my workday. How do you deal with your time off after a crappy day? Let's say you had a day where a lot went differently than you planned. The dynamics were bad. Maybe Trump got involved again and dropped some news and it was just a mess. What do you do at the end of a day like that?

The most important thing, and this is my tip for you, especially if you're in a relationship, is don't take it out on your family or anyone else. That's a really important point. Honestly, I'm being real with you here. We're telling you how it really is. In the beginning, for me, it was like this. You always think you know everything, and when something goes wrong, it's never your fault. It's always someone else's fault. So you end up taking your frustration out on others. You basically dump it all on them. But what I've learned for myself is when I have a bad day, first, I try to calm down. Most of the time, I do some kind of sport. I like to go for a run. So I really tire myself out, and that helps me relax a bit. Second, what you should do, and I don't do this as often as I should, but it's important is to just open up your journal again, analyze your trades and take a look at what happened. Because sometimes, honestly, you didn't do anything wrong. The market was just stronger. Or like I said, maybe Trump tweeted something and it messed everything up. So you can calm yourself down by looking at it that way. Otherwise there are a lot of techniques. Meditation, for example.

I say, yeah, just meditate and relax.

Exactly. And that's something you can do as well. You just have to find a way for yourself to calm down.

It's like in trading, you really have to find a way that suits you. For example, I can say that if I've had a bad day, I think about what I can do for myself to feel better. Because a bad day is really nothing terrible. It's simply the result of the mechanisms not working so well today. Provided, and this is crucial, and this brings us back to the 90%. You had the discipline to accept your stops, and at the end of the day, as a day trader, you're out of the market. I can tell you there were times when I would watch my losing trades for a long time and they would eat me up. But they didn't just eat me up financially, they drained me energetically. Above all, today I do the following. After a bad day, when things haven't gone well, I reward myself for having been disciplined. Fortunately, I don't have to reward myself that often. Maybe I should reward myself more often, just have more of those days. No, I'm just kidding. Of course I do something nice for myself because I've always stayed true to my discipline. And that's very important too. So don't punish yourselves for having stop losses. Stop losses are your insurance. Just like a regular business owner might have a car breakdown or spill some paint. For us, it's the stop loss that's just part of it. It's completely normal. And you need to program that into your subconscious. Stop losses aren't mistakes. They're not something bad. They're insurance. And once you see it that way, you'll feel much better about it. One of the main reasons why most people lose a lot of money. And yes, I've done that too. And yes, it was really painful. What I thought was cool was your story just now. Don't take it out on your family. I agree with you 100% on that. I don't do that either. Sometimes it's just important for the family to understand, especially for the wife or the other way around, for the husband, that when you need some Time for yourself. You have to take it in order to regain your strength and be able to move forward neutrally the next day, day. And then communication becomes the problem. Either communication with the market or communication with your environment. And unfortunately not many people are really good at that either.

Exactly. And that's really something. You have to make a part of your routine. You have to look at it in your life or your business. You have to see trading a bit like a business, at least to some extent. Sometimes you might also have other businesses on the side, depending on what you want to do. Day trading, investing or whatever else. But it's really important to have this routine and also to coordinate with your family, friends, partner or whoever so that you set fixed times for yourself. For example, that's what I did when I worked from home. I always said from this time to that time, this is the door and it's closed. Just remember, I'm at home, but I'm not actually there. And that's something that needs to be made clear to the outside world as well. That's also a problem where the whole thing fails because the external environment is where traders fail. Since it could happen that, for example, your girlfriend says, hey, I need to go shopping now, or we need to go shopping or this or that. And of course that stresses you out internally. And then you get into a conflict and start making mistakes. And that's just how it goes. That's why you should really establish a routine for yourself. Time, time, time. If you have another business on the side, then during this time slot you don't have a business. You focus only on trading and that way you create routine certainty and, and thus you develop discipline. And because of that it's simple. If you hit a stop loss, you just have to accept it. You didn't do anything wrong in that process.

So you would also say that distraction is a big issue for traders. Yes. Just imagine as a trader, you are completely self reliant and responsible for everything yourself. You can't blame anyone else. You always have to look at yourself. And of course the risk of distraction is very high. That means really maintaining your focus and concentrating on what's at hand isn't always so easy, especially nowadays. Then you have Instagram, YouTube and all that nonsense that distracts you. And that's why it might also be a good idea to set up a trading PC where nothing else runs except trading and get yourself a clock and say, okay, for the next two and a half hours, my focus is entirely on trading and that's my work. Because if you treat trading as just a passion or something you do on the side, it will always be difficult to make real progress with it. Just yesterday I had a phone call with someone who told me, yeah, I've been really lucky this year and all my trades are still running. I said, well, then maybe you should really think about whether it's time to take some profits. Yeah, but they could keep running. I said, alright, then let them run. Because that's always what retail investors do when things crash and everyone's scared. They sell at the bottom and when the markets are at the top, they just let things run. And that's probably another habit you really need to get rid of.

Exactly.

Yeah. I think we've now been able to identify a few core issues for ourselves. Why 90% of traders fail. No journaling, no routine, no discipline, no real tools that are actually effective. And to answer all of that again in one sentence, no routine. What routine would you give people in one sentence?

A routine in one sentence.

That's difficult because you need a process.

Write down your process. So, discipline in one sentence. What's the most important thing?

Focus.

Focus on just implementing a variety of different things and actually doing them. Okay. Is there anything else you would say is absolutely essential in one sentence?

Yes, it also belongs to the routine. Yes, it's consistency. Doing the whole thing every day, every day, every day. Always doing the same thing, so to speak.

I'd like to add one more sentence to all of this and that is a deep understanding of what I do. Then the whole thing feels much better. That means to really penetrate and understand what I do in depth. Then you feel better. I know that myself too. I sit in front of the screen and just change numbers. At the end of the day, maybe I've made a lot of money. Yes, I've traded some things, but does that make me happy? Sometimes that's not the case. And then I ask myself, is there a deeper meaning behind it? Yes. And then I do something nice with the money or with the money I've deposited. I used to always tell my kids that the CD ROM drive, which still existed back then, I put money in it in the morning, then I close it, and if I've worked well, more comes out. And if I've done a lousy job, I open it and it's gone.

I have something different. Let me tell you a story about my son. Well, I don't know if I am allowed to tell it, but it wasn't that bad. My son was still little. And at school the teachers would Always ask what the parents do for a living. And my little boy would always say, yeah, my dad sits in front of the computer and presses buttons. And then money always comes out, Always money. And yeah, it was kind of weird because people wondered what I was actually doing with the money from the computer. Many thought I was gambling or something like that. It was pretty bad. But yeah, that's just one of those stories.

But that's exactly the reason why with trade the traders, we want to go public and have the profession of trader recognized as such. I don't really know how to put it, but we simply want this wonderful profession of trading to be established as a legitimate career in our society. Unfortunately, that's still far too rare in German speaking countries. And yes, I think today we've learned why 90% of traders fail. I hope you enjoyed it. I think we had a bit of fun together again. Maybe you have a final sentence from your side that we can also broadcast.

Okay, then I would say reward yourself sometimes, even when you have good profits, even when you lose, but especially when you have good profits, you should definitely treat yourself and enjoy something. Some people buy cars, some buy watches, some go on vacation, but reward yourselves. But one thing, what I personally like to do, definitely get yourself something symbolic when you've really made good money. Something that reminds you every day, like a gift to yourself. Put it somewhere or always keep it with you. And if you're ever feeling down, take it out. And remember, you're not always to blame. Sometimes there are just people out there who are simply better than you. And that's just part of it.

Serge, thank you very much. I enjoyed it, it was fun. And I want to say thank you for listening and see you very soon. And if you ever have a topic that you think is interesting for us, let us know and we'll be happy to talk about it. Thank you very much for listening. Thank you.

Goodbye.