blindfingers

Thanks Jackb for your apologetic response. It shows a lot of class. I appreciate that you too are interested in this topic and have spent considerable time researching the issue. Undoubtedly, you certainly have some insight into this question. I, on the other hand, have never researched it or even raised it prior to this posting. I have, however, heard it said again and again and I tend to be a bit suspicious. Mind you, if someone told me that only 5% of casino players make money, I'd doubt that it could actually be that high! Since I don't think that I fall into the ranks of those who are within the 90th percentile or above, maybe I should throw in the towel while I'm still ahead. Thanks pricetrader99 for the article Chances of Trading Success. At this moment, I'm at a computer that won't open the page for me so I'll have to wait to read it but look forward to doing so.

Apologies to you Jack. Perhaps I've overreacted. I guess it's just a bit annoying to be told by someone what it is I think when they actually don't know why I say what I do. Far be it from me to use this board as a platform for bantering. Take care. Trade well.

Jack, you seem a little stuck on yourself. Unfortunately, you just don't get it. Your aspersions actually cast doubt on the validity of your own claims. Given what you've said, you give reason for the reader to think you may be lying too. You certainly know quite a bit about it. Nevertheless, if what you tell us about your trading success is true, it offers hope to most anyone because if you can make money despite your failure to grasp what is being said, the rest of us stand a better-than-average chance!

Thanks for your post Jackb. Hopefully, I can provide some insight into the purpose of this discussion. Please remember that it is qualitative, not quantitative. To say the data of Steve's group does not add "anything" is a bit too exclusive but I think I know what you are trying to say. I would agree that the sample size is too small to draw a conclusion but regardless, it still provides additional information. Unless Steve is lying, and that's quite doubtful, then his contribution adds significance to the discussion. I think you perceive that I have a preconceived bias. Not exactly. I initially posed the question because I have observed a marked incongruity when the statement that "90% of traders never make a dime' is compared to the number of people who claim they are successful traders. And therein lies the contradiction. In statistical analysis,the null hypothesis can never be disproven, only rejected. That means it can NEVER be PROVEN that 90% of traders do or do not profit! However, with good quantitative analysis, statistical significance can be shown and in so doing, we get insight into what MAY be true. Further research is NEVER conclusive. This is a discussion; not a study. At best, we can only get a hunch of what may or may not be. What we are doing here is only an armchair consideration of the question, however, one need not be a statistician to notice that, in general, more than 5 - 10% of traders claim they are winning the game. In effect, Steve has done exactly what he said he was going to do - provide some balance. So what then should one think? Well, perhaps there are many traders who are not actually making money but who claim they are OR perhaps there are more than 5 - 10% who are winners in this game. (I realize some people will lie about their results but I hope they are few in number.) Though I have raised the question, I am well aware that there cannot be a conclusive answer. Thanks for your input and trade well!

Thank you Steve46 for your relevant comments. Though you don't say how many are in your small class, it is very encouraging to note that all but one are experiencing profitability. That's a good percentage and it does bring some balance into this discussion. I concur with Tradewinds; it's a good thing you do. Sharing what you know with others and teaching them too how to profit as traders will ultimately help to erode the idea that trading is primarily for losers.

Carcanaques, I think you know what you're talking about. Your numbers are very realistic. Thanks for an honest portrayal. You say you know you'll win 55% - 57% of the time. It's tends to be easy to assess the degree of BS spoken by sports bettors when you look at their claims of percentage of wins. You tell the truth and I take your post very seriously. Furthermore, though it doesn't seem to me by the focus of most of the posts here that the respondents have much interest in sportsbetting, I would say that anyone who does, should take heed to your post. Thanks. I will.

I certainly do recognize that as gambling goes, most professional gamblers make their money at the sportsbook (or poker table) but personally, sports betting for me is simply a form of entertainment. I do not aspire to making a living as a sport bettor. Trading, however, is a serious business and an investment vehicle. Once a year, at the beginning of football season, I contribute $300 to a sportsbook account and have my fun with it. Since I don't smoke or drink and don't even care for movies, this is my sole form of entertainment and it offers the long shot possibility of making a few dollars for a brief while. (Though I have had my moments of temporary success, I NEVER manage to keep a bankroll for more than six months before losing it all.) Once the money is gone, I'm done till the next season. That said, I have learned a few things from sportsbetting that I apply to trading. First and foremost, strict money management is of paramount importance. It is certainly easier said than done, however, failure to do so is a formula for eventual defeat. Moreover, you can be good at money management but if your handicapping skills leave something to be desired, success will elude you. One difference I see between these two skills is that in sportsbetting, though there is no such thing as a sure bet, some match-ups are so lopsided that they are fairly easy to perdict but even if you can easily identify the winner, it's too obvious and the payout is minimal. In trading, however, putting your money on the side of an obvious winner can be quite lucrative indeed. If you are a sports bettor who makes a good living betting on sports, I commend you and admire you and wish I could be like you! Nothing could be more fun but I'm just not that good at it and I know it. But that's not my feeling as a trader and find winning far easier than with the sportsbook. As a sports bettor, I have often felt the return for time invested is not significant. That has not been the case, however, as a trader. For that reason, I regularly put a serious, disciplined effort into learning more about trading and, to date, my efforts are well rewarded.

I agree Jackb that probability can be "clumped". Years ago, I had the unusual experience of picking 19 of 20 winners in hockey. It seemd to defy the law of probability BUT, as fate would have it, I couldn't find a winner in the next 20 games!! In fact, I am well aware that someone can believe their analysis is correct and their trading decision is right when, in fact, it is sheer happenchance that they have been on the winning side and given enough time, there will be an eventual backlash to theit faulty logic. Still, I remain suspicious of the "90% or 95% of traders are losers". It just seems to be statistically skewed. If I accept the statement, then of the 14 contributors to this thread, at best, only 1 of 10 are actually winners and at worst, 1 in 20 are succeeding. In fact, maybe all of us are ultimately losers and the 5%er hasn't even spoken yet! Though I don't think anyone has specifically stated that they are making or losing money, as I read the posts, the gist I'm getting is that several of you are profiting traders. It's illogical to think that this is a gathering of the elite where only winners are posting. Your contributions support my suspicion. The winning percentage is higher than 5-10%.

Thanks to all of you for your input. I would like to think that more than 10% are profiting from their trading and yet, I am well aware of the fact that casinos are built on the profits of people who have an overall losing percentage and still come back to do it again. It just seems mindboggling to me that the likelihood of success as a trader is no better than 10% or as JEH says, closer to 5%. Though not terribly scientific, I tend to adhere to the 20/80 rule for explaining many, many things in life. Applied to trading, it might suggest that 80% of the money is made by 20% of the traders. I have to think that in a business that is steeped in statistical analysis, there must be many studies done at the university level that shed some light on the actual success to failure ratio and the reasons why. One day, when I have some time, I may search this out further. Right now, I probably need to keep honing my own trading skills. Fajarmulya, I think you identify several primary factors responsible for so much failure. Undercapitalization and poor money management, unrealistic expectations (greed), and a poor understanding of how the market works in the first place. Thanks for your statement of characteristics of a successful trader. I think you are "on the money". Good luck everyone. If it is only 5%, then let's be that 5%!!

Again, I know I'm making money and I'm just not that clever when compared to the general population. Consequently, I'm suspicious that this "90% rule" is simply a generalization that sounds quite foreboding. If this statistic IS true, then I would say this to all you traders out there, newbies and otherwise, get out NOW because apparently 9 out of 10 of you are simply brands for the burning!! But I doubt it. I've taken a few courses at the post-secondary level and I have NEVER seen a 90% failure rate in ANY class no matter how difficult the course may have been and I've taken my share of tough stuff. So newbies, DON'T DESPAIR. The truth is, you too can be successful at trading. Some people in the arena of traders would like you to believe they are very exclusive and they know what you never can, but know this: In order to be successful, you will have to commit to a disciplined study program. No, it isn't easy but it's doable and if you're up to the challenge, you WILL win! Have no delusions - WALL ST. CHARGES TUITION. You will have losses but keep learning. Remember - ANYTHING you do a lot of in life, you will start to get the hang of. Trading is no exception. Practice, practice, practice. And never quit. You're quite likely better than they would like you to believe.

Hello Tradewinds, Thank you for your post. I see that you too state that the chances of success are less than 10%. Would you possibly be able to support this statement with some seminal works of statistical analyses that substantiate this common claim within the industry?

90% OF TRADERS NEVER MAKE A DIME! I have read this "90%" comment for a long time now and frankly, I am not sure I believe it. I'm suspicious that it isn't statistically sound. I have been trading for four years now and until lately, have beaten the S & P consistently each year with a per annum gain of just under 9%. This year has not been so profitable; I've made several mistakes in my options trades BUT I'm still ahead of the game. And, I am CERTAINLY not the smartest guy in town. Frankly, I'm suspicious this comment is steeped by trading educators trying to sell their wares and think if they can convince you that you don't stand a snowball's chance in hell without them, you'll spend your dollars on their system. Don't misunderstand. I believe in education. I even think there is value in certain educational programs offered though I'm quite sure that much of what one needs to know is very available for less than you might think. I just question the statistical significance of the "90% are losers" comments that are so frequently read in the sales letters I receive in my emails from the pitch monkeys. So, my questions to you, the reader, is this: 1) Are you making money or losing money? 2)How long have you been trading?