Are You a Gambler?

[carcanaques 10]

Gamblers Anonymous offers the following questions to anyone who may have a gambling problem. These questions are provided to help the individual decide if he or she is a compulsive gambler and wants to stop gambling. Substitute the words trading or trade for gambling or gamble.

 

Did you ever lose time from work or school due to gambling?

Has gambling ever made your home life unhappy?

Did gambling affect your reputation?

Have you ever felt remorse after gambling?

Did you ever gamble to get money with which to pay debts or otherwise solve financial difficulties?

Did gambling cause a decrease in your ambition or efficiency?

After losing did you feel you must return as soon as possible and win back your losses?

After a win did you have a strong urge to return and win more?

Did you often gamble until your last dollar was gone?

Did you ever borrow to finance your gambling?

Have you ever sold anything to finance gambling?

Were you reluctant to use "gambling money" for normal expenditures?

Did gambling make you careless of the welfare of yourself or your family?

Did you ever gamble longer than you had planned?

Have you ever gambled to escape worry or trouble?

Have you ever committed, or considered committing, an illegal act to finance gambling?

Did gambling cause you to have difficulty in sleeping?

Do arguments, disappointments or frustrations create within you an urge to gamble?

Did you ever have an urge to celebrate any good fortune by a few hours of gambling?

Have you ever considered self destruction or suicide as a result of your gambling?

 

Most compulsive gamblers will answer yes to at least seven of these questions.

[brownsfan019 17]

Car - your posts seem awfully familiar to some posts I've seen at elitetrader. I think this post was verbatim from a thread.

 

I'll be upfront - so far, your posts are rocking the boat. That's not a bad thing in and of itself, as I have done that myself, but just keep that in mind. Referring to trading as correlated to gamblers anonymous is a stretch if trading is your livelihood. For some, myself included, this is how we pay the bills and create wealth for ourselves and families. So, am I 'addicted' to trading, I'm sure many would say yes. And that's fine with me b/c in order for me to be at the top of my game (and you must be when trading), I need to be 'addicted' to the markets.

 

I would also argue that the more 'addicted' the trader is, the greater the success. I realize that's debatable, but I will take the trader that studies before and after the markets, studies and documents over the weekend and busts their ass during the day over the guy that just casually goes at it. Even though the casual guy is not 'addicted', I think his potential for success would be next to 0.

 

So, is it good to be 'addicted' to your 'job' as a trader? I would say yes, esp in the beginning. Anyone that goes into this thinking they will just conquer it with casual work hours is sorely mistaken. If it takes being an 'addict' to get there, so be it.

[carcanaques 10]

The information comes from GA.

 

Don't get me wrong, I'm not saying trading is gambling for everyone, but clearly it is for many people who have the propensity to destroy themselves. I thought the post was helpful and if it doesn't relate to you, terrific, but it may be a wake up call to others who aren't enjoying the success you are. You also sound a bit defensive, and I think you took the message out of context.

 

It's no different than a don't drive and drink ad--if it doesn't apply you ignore it, but if it does, heed the warning and get help before it's too late.

[carcanaques 10]

But let me be clear. It is a well known fact that 90% of ALL traders lose money and I guess the universe of members here are no different than the norm. A few of them who may be chasing a dream of a trading career and blowing out accounts could have other underlying psychological issues they may not be aware of. So if this posts help anyone who thinks they may have a problem, then it has value and I hope they take action to improve their lives.

[brownsfan019 17]

But let me be clear. It is a well known fact that 90% of ALL traders lose money

 

And has this fact EVER been substantiated by anyone other than vendors selling the grail? And has this fact EVER been broken down by years of trading, size of account, etc.?

 

My point is that a $5000 account for a newbie will probably 'fail'. A $10,000 account for someone that thinks they can just wing it will probably 'fail'.

 

There's a distinction to be made by those that treat this like a real business and those that just wing it.

 

And if the 'well known fact' could be substantiated and broken down by types of traders, I think the numbers would tell the REAL story. But since this 'almost all traders fail' has been created by vendors and now a part of every day trading, most believe this unproven myth.

 

Who knows, it could be that 98% of all traders (wannabes and biz owners) fail or it could be that those that actually treat this like a business fail 25% of the time. If there's anything out there suggesting otherwise, I have yet to see it.

 

In my years trading, I've learned a few things and one of them is that numbers can easily be manipulated to suit your agenda. Unless YOU perform the analysis, or it's being done by an unbiased 3rd party, take it for what it's worth. It's like the drug trials that show a certain drug helps with weight loss and it turns out that the maker of the drug funded the multi-million dollar study. I wonder how that study will turn out... Or how about that many of the muscle magazines out there are actually run and operated by the supplement companies. I wonder why there's so many ads and articles about how great those supplements are... You see where this is going. When trading VENDORS have created this scare tactic of failure, it serves their agenda perfectly.

 

The best example I have is that while I was a stockbroker, we had brokers broken down into 4 segments. And we tracked this way b/c IT MADE SENSE. Segment 1 was the newbies. We knew that at least 80% of them would fail within 12 mo's. As you can imagine, the further up the segment scale you went, the more likely you would make it as a broker. Actually, by segment 3 it was a matter of how much $$$ you would make.

 

Trading is no different - every trader can be broken down into segments based on profitability. Let's say segment 1 is those that net out less than $50k per year. Well, I would guess that a good portion of Segment 1's fail. Is it fair to group segment 2's, 3's and 4's with the segment 1's? Of course not. But, as soon as you break traders out based on profitability (like a real business would), those numbers do not suit the vendors as much anymore. Vendors prey on new people and selling the grail. As long as they have you believe that most fail, that just helps them sell their product to you.

 

As a new person to trading car, you need to realize this. It's similar to sports betting - I'm sure you've seen plenty of junk services out there selling the 'best picks' and you just sit there and laugh b/c you know what they are actually selling. And you see their marketing ploys as well - best picks in all of 2006, big weekend this weekend, etc. Again, preying on people like me that know nothing about betting, but interested in it. Trading is no different. This 'fact' that you quoted has never been proven by anyone. It's simply a marketing ploy that has worked beyond belief. It's like Nike - Just Do It. Trading - 98% fail, so buy my product that will make you part of the 2%!

[aiki14 10]

And has this fact EVER been substantiated by anyone other than vendors selling the grail? And has this fact EVER been broken down by years of trading, size of account, etc.?

 

My point is that a $5000 account for a newbie will probably 'fail'. A $10,000 account for someone that thinks they can just wing it will probably 'fail'.

 

There's a distinction to be made by those that treat this like a real business and those that just wing it.

 

And if the 'well known fact' could be substantiated and broken down by types of traders, I think the numbers would tell the REAL story. But since this 'almost all traders fail' has been created by vendors and now a part of every day trading, most believe this unproven myth.

 

Who knows, it could be that 98% of all traders (wannabes and biz owners) fail or it could be that those that actually treat this like a business fail 25% of the time. If there's anything out there suggesting otherwise, I have yet to see it.

 

In my years trading, I've learned a few things and one of them is that numbers can easily be manipulated to suit your agenda. Unless YOU perform the analysis, or it's being done by an unbiased 3rd party, take it for what it's worth. It's like the drug trials that show a certain drug helps with weight loss and it turns out that the maker of the drug funded the multi-million dollar study. I wonder how that study will turn out... Or how about that many of the muscle magazines out there are actually run and operated by the supplement companies. I wonder why there's so many ads and articles about how great those supplements are... You see where this is going. When trading VENDORS have created this scare tactic of failure, it serves their agenda perfectly.

 

The best example I have is that while I was a stockbroker, we had brokers broken down into 4 segments. And we tracked this way b/c IT MADE SENSE. Segment 1 was the newbies. We knew that at least 80% of them would fail within 12 mo's. As you can imagine, the further up the segment scale you went, the more likely you would make it as a broker. Actually, by segment 3 it was a matter of how much $$$ you would make.

 

Trading is no different - every trader can be broken down into segments based on profitability. Let's say segment 1 is those that net out less than $50k per year. Well, I would guess that a good portion of Segment 1's fail. Is it fair to group segment 2's, 3's and 4's with the segment 1's? Of course not. But, as soon as you break traders out based on profitability (like a real business would), those numbers do not suit the vendors as much anymore. Vendors prey on new people and selling the grail. As long as they have you believe that most fail, that just helps them sell their product to you.

 

As a new person to trading car, you need to realize this. It's similar to sports betting - I'm sure you've seen plenty of junk services out there selling the 'best picks' and you just sit there and laugh b/c you know what they are actually selling. And you see their marketing ploys as well - best picks in all of 2006, big weekend this weekend, etc. Again, preying on people like me that know nothing about betting, but interested in it. Trading is no different. This 'fact' that you quoted has never been proven by anyone. It's simply a marketing ploy that has worked beyond belief. It's like Nike - Just Do It. Trading - 98% fail, so buy my product that will make you part of the 2%!

 

Great post, I too would like to see how the 90% statistic bears out in reality. I trade full time and do not see it as gambling, but it is clear from the posts on this and other forums that there is a significant group of "traders" who fall into this category.

I think one thing that differentiates one from the other is the Trader educates himself in order to minimize risk and is usually looking for a consistant, moderate return, while the gambler is looking for a quick large return.

[Reaver 10]

And has this fact EVER been substantiated by anyone other than vendors selling the grail? And has this fact EVER been broken down by years of trading, size of account, etc.?

 

My point is that a $5000 account for a newbie will probably 'fail'. A $10,000 account for someone that thinks they can just wing it will probably 'fail'.

 

There's a distinction to be made by those that treat this like a real business and those that just wing it.

 

And if the 'well known fact' could be substantiated and broken down by types of traders, I think the numbers would tell the REAL story. But since this 'almost all traders fail' has been created by vendors and now a part of every day trading, most believe this unproven myth.

 

Who knows, it could be that 98% of all traders (wannabes and biz owners) fail or it could be that those that actually treat this like a business fail 25% of the time. If there's anything out there suggesting otherwise, I have yet to see it.

 

In my years trading, I've learned a few things and one of them is that numbers can easily be manipulated to suit your agenda. Unless YOU perform the analysis, or it's being done by an unbiased 3rd party, take it for what it's worth. It's like the drug trials that show a certain drug helps with weight loss and it turns out that the maker of the drug funded the multi-million dollar study. I wonder how that study will turn out... Or how about that many of the muscle magazines out there are actually run and operated by the supplement companies. I wonder why there's so many ads and articles about how great those supplements are... You see where this is going. When trading VENDORS have created this scare tactic of failure, it serves their agenda perfectly.

 

The best example I have is that while I was a stockbroker, we had brokers broken down into 4 segments. And we tracked this way b/c IT MADE SENSE. Segment 1 was the newbies. We knew that at least 80% of them would fail within 12 mo's. As you can imagine, the further up the segment scale you went, the more likely you would make it as a broker. Actually, by segment 3 it was a matter of how much $$$ you would make.

 

Trading is no different - every trader can be broken down into segments based on profitability. Let's say segment 1 is those that net out less than $50k per year. Well, I would guess that a good portion of Segment 1's fail. Is it fair to group segment 2's, 3's and 4's with the segment 1's? Of course not. But, as soon as you break traders out based on profitability (like a real business would), those numbers do not suit the vendors as much anymore. Vendors prey on new people and selling the grail. As long as they have you believe that most fail, that just helps them sell their product to you.

 

As a new person to trading car, you need to realize this. It's similar to sports betting - I'm sure you've seen plenty of junk services out there selling the 'best picks' and you just sit there and laugh b/c you know what they are actually selling. And you see their marketing ploys as well - best picks in all of 2006, big weekend this weekend, etc. Again, preying on people like me that know nothing about betting, but interested in it. Trading is no different. This 'fact' that you quoted has never been proven by anyone. It's simply a marketing ploy that has worked beyond belief. It's like Nike - Just Do It. Trading - 98% fail, so buy my product that will make you part of the 2%!

 

Great post Brownsfan, funny thing is I was thinking about that statistic for trading failure the other day as I was playing poker.

 

I jumped online after playing for less than one full day and was placing consistently in the top 5-10 out of 50+ people.....of course it was play money, and of course I am sure a lot of the people playing were beginners or weak players...but then again, so was I and had probably been playing less time than them....I think just going in there with a trader's attitude and playing the probabilities was responsible for the high rankings I was getting.

 

Of course, as the stakes get higher, etc then things will be a little different, but you have to remember this was literally my first day playing...I didn't even know how to play at all at the beginning of the day. I can see tons of potential.

 

Once again, the key was to treat it like a business. It seems cliche, but it is true...so many people fail to do this, or make ignorant decision because they want to win it all up front. My approach in poker is to let Natural Selection run its course...and help out when I see a good chance to attack.

 

Point is- approaching anything, whether trading or poker, is 90% about the attitude and having the backbone to treat it as a probabilities based business. Technique serves to improve this, but as I saw with my own eyes being a totally raw beginner......starting with the right attitude can give you a huge advantage.

[carcanaques 10]

I don't know how that 90% figure came to be conventional wisdom but I recall reading it in a few books on trading that were not published or authored by people who sell trading systems and the like so what would they have to gain? And of course it's not in any broker's interest to publish a number like that (they already hate those disclaimers) because that might scare even more new folks from taking the plunge. But if you have a great relationship with a broker, he might agree after having a couple of drinks :martini:

[BlowFish 10]

Not sure how your customers where made up Brown (investor trader whatever) but I think the widely quoted figure (which seems to vary from 80% to 95%) comes from brokerages who find that xx% of there actively accounts get run dry/ closed/ go dormant whatever.

 

80%+ of small business' fail in there first year is that relevant?

[carcanaques 10]

80%+ of small business' fail in there first year is that relevant?

I think so. The odds of success are overwhelmingly against new businesses regardless if it a bagel store or a day trader. So, if one fails at trading, he shouldn't be too hard on himself.

[brownsfan019 17]

Not sure how your customers where made up Brown (investor trader whatever) but I think the widely quoted figure (which seems to vary from 80% to 95%) comes from brokerages who find that xx% of there actively accounts get run dry/ closed/ go dormant whatever.

 

80%+ of small business' fail in there first year is that relevant?

 

Once again, how the metrics are being built is being overlooked.

 

While many new businesses fail in year #1 (and are documented by the US small biz administration), how many are successful after year 1? How about year 2? and 3?

 

And where is this information published by brokerage firms? If this was in fact true, why would they publish it as car said? Point is there's never been anything published from a verifiable, reputable source.

 

The point is and is being missed here is that you cannot lump all traders into ONE statistic and call this unverifiable statistic as relevant! Especially when the cost of admission is literally $2500. You can open an account today for $2500. How can you possibly assume that the person that opens a $2500 account to 'see how it goes' is the same as a person that has a $50k account and has taken a business ownership position?

 

That's like me saying that 95% of all traders that use VSA fail.

 

Anyone care to dispute that?

 

I have nothing to back that up, but sounds about right to me.

 

 

Same thing here. No verifiable statistics to support this notion and even if this was in fact truth, you cannot lump all traders into ONE metric.

 

Are there any other stat's lovers here? Anyone?

 

While the numbers do not lie, how they are constructed can easily be...

 

And if you do not analyze your numbers as well as what is spoon fed out there, I highly suggest you get off that train. Not only should you challenge all metrics and stats provided to you, you should have stats of your own personal trading. Again, something that separates the biz owner vs. the hopeful.

 

I'm actually shocked a few here would just buy into this notion just b/c... a book writer trying to sell books said this? OK, great, prove it. A brokerage firm said this? First, why would they? Second, where is this info?

 

As soon as some reading this learn to think outside the box and not buy into what the vendors are selling you, the sooner you can reach the next 'segment' of trading.

 

And if you honestly believe this statistic, then the last thing on Earth you should do is TRADE. Why would you knowingly go into a biz where the success rate is so pathetically low? If you believe this 'fact' car, don't bother trading. You've already set yourself up with a perfect excuse for why you couldn't cut it. You can just tell people '98% fail and I was just part of that statistic' or 'the markets are obviously against me since 98% fail, so I am going to move onto something else' or 'if the markets weren't rigged against the little guy, I know I would make money'...

[Reaver 10]

Word homes. Word.

[Reaver 10]

The way I see it....since we are on the subject of gambling and playing probailities..why the hell would you bother trading against 90-95% odds?

 

I agree with you Brownsfan....if I believed that 95% of traders failed....that would be some horrble odds to be playing...not a good start for a trader;)

 

I think that 95% of people who don't treat it as a business fail...that is to be expected...just like any other punter....but out of those that are intelligent and genuinely have discipline and a drive for excellence...no, I believe that many more than 5-10% of those individuals succeed.

[aiki14 10]

I think that 95% of people who don't treat it as a business fail...that is to be expected...just like any other punter....but out of those that are intelligent and genuinely have discipline and a drive for excellence...no, I believe that many more than 5-10% of those individuals succeed.

 

I have to agree with you, I also believe if you are disciplined and intelligent in your methodology you CAN prosper as a trader. But I also believe if you are not you WILL fail. Can one get lucky? Sure, but consistant prosperity requires consistant discipline. I believe that to be an axiom.

[carcanaques 10]

With all due respect to brownsfan and Reaver, I think there's more here than you are addressing. And I also think you guys are digging in your heels because you're not in the losing category and feel as though you want to defend your turf. It's absurd that anyone who writes a book on trading is going to titled it "Don't Even Think About Trading Because The Odds Are Enormously Against You." On the contrary, the vast majority of trading books hold out the carrot that anyone can turn $10k into big money by pitching "proprietary" indicators, war stories from very well publicized traders like Paul Tudor Jones, George Soros, and so on. People aren't interested in buying books that go against their egos and inflated self beliefs, I think.

 

In fact, most people who embark on a trading career are very intelligent people who were successful in the prior occupations--doctors, lawyers, engineers etc., and think they can simply apply those traits to trading and bingo, the money flows in. And that is the rub. THE PEOPLE WHO ARE GETTING INTO THIS BUSINESS WERE IN THE TOP 10% OF THEIR FIELD AND SO THEY WERE VERY CONFIDENT THINKING THEY WOULD ALSO BE IN THE TOP 10% OF PROFITABLE TRADERS. It's not like they said, "damn the odds are stacked against me, so why should I bother?" On the contrary, they believe that all they need is a good computer, a few seminars, books, trading software program and the big money will roll in.

 

All of these people are aware of the 90-10 "rule" and it doesn't faze them one iota. They believe if they apply the same traits that made them successful--hard work, experience, and perseverance--they will not make the mistakes of other who have failed. And despite all the testimonials that there is no Holy Grail, new traders think they are smarter and with enough tweaking, they will find it. In short, what makes them fail is their own EGO and false beliefs about the market.

 

More to follow.......

[Reaver 10]

With all due respect to brownsfan and Reaver, I think there's more here than you are addressing. And I also think you guys are digging in your heels because you're not in the losing category and feel as though you want to defend your turf. It's absurd that anyone who writes a book on trading is going to titled it "Don't Even Think About Trading Because The Odds Are Enormously Against You." On the contrary, the vast majority of trading books hold out the carrot that anyone can turn $10k into big money by pitching "proprietary" indicators, war stories from very well publicized traders like Paul Tudor Jones, George Soros, and so on. People aren't interested in buying books that go against their egos and inflated self beliefs, I think.

 

In fact, most people who embark on a trading career are very intelligent people who were successful in the prior occupations--doctors, lawyers, engineers etc., and think they can simply apply those traits to trading and bingo, the money flows in. And that is the rub. THE PEOPLE WHO ARE GETTING INTO THIS BUSINESS WERE IN THE TOP 10% OF THEIR FIELD AND SO THEY WERE VERY CONFIDENT THINKING THEY WOULD ALSO BE IN THE TOP 10% OF PROFITABLE TRADERS. It's not like they said, "damn the odds are stacked against me, so why should I bother?" On the contrary, they believe that all they need is a good computer, a few seminars, books, trading software program and the big money will roll in.

 

All of these people are aware of the 90-10 "rule" and it doesn't faze them one iota. They believe if they apply the same traits that made them successful--hard work, experience, and perseverance--they will not make the mistakes of other who have failed. And despite all the testimonials that there is no Holy Grail, new traders think they are smarter and with enough tweaking, they will find it. In short, what makes them fail is their own EGO and false beliefs about the market.

 

More to follow.......

 

I see your point in that respect. They basically think that just because they are good at what they do, then they are on fire no matter what they do...Kind of like me saying that just because I'm a good trader, then I could also just take couple piano lessons, grab a book or two, and then drop by Carnegie Hall to make a few performances while sitting back waiting for the fame and recording contracts to roll in? Am I tracking here?

 

 

 

I agree with you there, I was viewing it only from the perspective of someone who is making this their prime focus in life.....

[carcanaques 10]

Well, you exaggerated in your analogy, but yes you got it.

[jperl 11]

I love this quote about trading. Don't know where I saw it, but I think there is some truth in it for newbies, no matter how big your account is.

 

"Want to get to $1 million in 12 months as a trader. It's easy. Just start with $2 million."

[Reaver 10]

Well, you exaggerated in your analogy, but yes you got it.

 

 

whatever you say, TJ Hooker

[Nick1984 10]

Who's TJ Hooker? LoL Ignorant post for the day award goes to me!

[Minetoo 10]

Okay, we are circling the block on this one. Regarding success/failure rate I strongly urge everyone to study Vilfredo Pareto. His work is frequently referred to as a 'principle'. Franky, I believe what he posits is closer to a law of nature.

The fundamental difference between most gambling (ie: casino house games) and trading is that failure is a mathematical certainty in a casino (given a large enough sample period). Whereas, with tremendous study and effort one can attain an edge in trading that put the odds of success in your favor.