95% of Traders Lose: Is this Stat Misleading?

[95% of Traders Lose: Is this Stat Misleading?]

Your post is excellent and well written. I have been trading/investing for over 10 years and can't agree with you more on everything you shared.

 

A discussion of this nature could probably go on forever without achieving a useful result. At the end of the day, I doubt any of us would have a good factual handle on the real percentage of successful versus unsuccessful nor am I at all sure that comparing trading to other forms of endeavor has any particularly useful application toward arriving at the answer.

 

Most all professions demand their pound of flesh. It has always been so and shall always be that way. Some people perhaps more easily adapt and feel at home in the markets but I think we can all rest assured that percentage is mighty darn small.

 

Let's assume for a moment that the real number (including all who try to whatever degree, which is as it should be measured across all endeavors) is in fact 95% failures, or even 98% failues if you wish. What does that really mean to a particular individual? It means nothing more nor less than what that individual's personality and mindset take it to mean. To some it will be an exciting challenge, wherein they have decided they shall be in that 2% to 5% number "no matter what it takes". To others, those figures will cloud their feelings, emotions and judgement and perhaps cause them to take actions in their trading which match up with the projected casualty rates. There is just no telling.

 

Soultrader hit upon an extremely important issue and that was learning and knowing yourself. It has been suggested by some of the best traders in the business that you are the holy grail for which you are searching and that it has very little to do with trading method or technique. I assure you that after all this time, there is very little new under the sun with regard to methods and strategies in trading and that almost everything has been tried hundreds or even thousands of times before.

 

Just as in other areas of life, you can take the proverbial two friends of reasonably equal intelligence, age, backgrounds, educations, beginning capital, etc. and put them both to the same task or career and have one succeed brilliantly and the other fail miserably. What made the difference?

 

Some will say it was their beliefs. Others will say it was that one had persistence and commitment and the other did not. Still others will say it was their actions or lack thereof that made the major difference. I would say that it is a combination of all the above combined with a passion or ardent interest for the career or endeavor being pursued. That brings us right back to the phrase of "no matter what it takes" or in essence "doing" whatever it takes to succeed. A large part of that is belief but belief is lost without passion and applied action.

 

I am not sure that it is truly important to know the specific surveyed percentages of faiure. In any field of demanding endeavor where the stakes are high (in both risk and reward) there are those precious few who are naturals and their success often defies explanation. However, for the rest of us it comes down to committing to do whatever it takes and then doing it over and over without giving up.

 

Most people give up quite easily and of course usually defend their poor results by blaming some outside party or when all else fails.. blaming the well known "statistics "of the industry, whether they be real or just legend. They quickly point to how it was clear the odds were totally against them from the very start and thus it should be no surprise they couldn't quite make it.

 

What is the real truth? Well, I won't claim any special access to knowing that, but my suspicions are that most people simply found reasons to give up. Whether those reasons were money, family or health related, matters little. What I suspect really matters at the end of the day, is not the statistics or power curve of success versus failure in what you attempt to do, but probably your own passion and commitment to somehow stick it out (come Hell or high water, as my father was fond of saying) no matter what hurdles you come across, until you have achieved what you set out to do.

 

In trading, my own personal beliefs tell me that it is more about conquering yourself and controlling your trading behaviors as you continue to learn about the markets, the particular instruments you trade and about the emotions of those involved that serve to drive price across the playing field. I think most people trade a long time (or at least as long as their captial holds out) before realizing that no matter what strategy or technique they use, they are not going to materially warp the probabilities in their favor and they finally realize it is really a game of controlling the size of your losses and taking trades only when you truly believe you have an edge that suggests there is a high probability that those trades will run in your favor.

 

In the final analysis, I say forget about the statistics of the industry. Forget about the search for the holy grail of methods or strategies (that includes fancy software with blinking lights and pretty colors,) and decide once and for all to commit yourself entirely to finding and developing a tiny "edge" in your method of play and then just keep coming up to bat day in and day out, often enough to let the odds work out in your favor.

 

Will that provide the answer to what percentage of people fail in this industry? No it won't, but I assure you it probably will put you on the right side of that percentage and after all, isn't that what really matters?

 

Happy Trading