11. Why Most Traders Lose Money
“Cut your losses short and let your profits run.”
—Trading adage
Nothing is more central to trading than the question: Who makes money and from whom? Trading profits are not equally distributed across markets. Rather, they are usually concentrated in the hands of a few. Many large investment banks have relatively few days when they lose money from trading. The Financial Times reported on March 2, 2011 the experience for 2010:
“...Goldman’s traders had 25 money losing days...JPMorgan [had] ... its only eight losing days coming in the first quarter. Morgan Stanley had 38 losing days in 2010...”1
The lopsided number of winning days experienced by the trading desks of major investment and commercial banks is not unusual. ...
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