95% of Traders Lose: Is this Stat Misleading?

[Hlm 10]

By knowing that the FED would CUT 75 basis points I had an edge. Look at the movements after the CUT !

 

The Charts did not show it !

 

...

 

Again NO CHARTS gave a hint to that change again in direction !

Again, I hate that this is getting off topic, but if you are NOT strictly a technical trader how can you say that the charts did not show it? I must be missing something. :hmmmm: That's like a dentist telling a brain surgeon how not to do a procedure.

 

I always get a kick out of people who use absolutes when dealing with things that "can't be done". Ignorant/Arrogant ground to walk on unless one has an underlying scheme to use such emotionally driven language.

 

Why can't people spend more time specifically explaining how they do it versus telling others how it can't be done. Am I the only one that finds that concept as common sense?

[Joseph Connors 10]

Again, I hate that this is getting off topic, but if you are NOT strictly a technical trader how can you say that the charts did not show it? I must be missing something. :hmmmm: That's like a dentist telling a brain surgeon how not to do a procedure.

 

I always get a kick out of people who use absolutes when dealing with things that "can't be done". Ignorant/Arrogant ground to walk on unless one has an underlying scheme to use such emotionally driven language.

 

Why can't people spend more time specifically explaining how they do it versus telling others how it can't be done. Am I the only one that finds that concept as common sense?

 

 

 

I agree entirely! Lets try to be more specific and less emotional. With trading, as with most things in life, there is more than one way to do things.

[sep34 10]

The 95% stat may be a solemn warning, but it also may be innappropriately discouraging. It seems that, according to the statistics, if you become a trader you have roughly the same chances of success as if you start a small business in general. That's actually encouraging news to me.

 

A while back I was talking to a Friend that is Real Estate Broker, I told him about the failure rate in trading and he said " well thats very similar to the failure rate that the national real estate agency puts out every year."

 

I agree with your statement very much. I believe that statement to be unrealistcally discouraging and not accurate. but its a good ego rub for those who are consitantly profitable.

 

yes trading successfuly (profitably) is not an easy business, anyone whose ever traded real money knows that in their heart.

 

However, the same is true with any other business. To be succesful in any business/endeavor is not an easy task and trading is not any different.

That said, I will admit that trading as a business has some unique challanges that may set it apart from most general businesses. Unless you have the luxury of being taken in by a veteran trader for several years...then you will most likely have a different view point and most retail traders don't have that luxury.

 

 

 

 

Regards..

[darthtrader3.0beta 10]

I agree with your statement very much. I believe that statement to be unrealistcally discouraging and not accurate. but its a good ego rub for those who are consitantly profitable.

 

I don't think its discouraging at all, people just come to this game with the wrong mindset. Even on message boards and that, people will post you need 6 months or whatever to learn...give me a break. Its like saying in the last 6 months you fixed your furnance and installed an air conditioner so why not try starting your own heating and air conditioning business. Starting out its even worse than that though, more like you changed a light bulb and now feel ready to start your own business as an electrician.

All these small business fail and people usually start a business in something they know alot about. If you don't take the time to learn your craft, sharpen your tools, learn to keep the books, have enough capital to get going then you should expect to fail, at any business.

[jonbig04 10]

I think that, for a variety of reasons, most people go about trading with much less preparation than they would for most other businesses. For example, trading seems easier because there is no physical work involved. Also, the money we do make (and lose) happens very quickly, sometimes in minutes or seconds. No physical activity + small time frames triggers something in peoples minds and makes them think this is easier than other businesses. This deception MAKES trading difficult. Also, in trading your biggest hurdle is yourself. We have to look within and truly modify our behavior to be successful, even after we have put in the work to create a plan. The fact that the single biggest factor in whether you will succeed or as a trader or not is intangible makes it pretty tough. So in a roundabout way, yes I believe trading is more difficult than running an antique store.

 

The fact is that if trading wasn't difficult, we wouldnt have the opportunity to make millions in a single day.

[Hlm 10]

Exactly, low barriers of entry with the ability to get wiped out quickly. Those that are not serious and prepared are quickly removed from the scene but are still counted in the percentage.

[zdo 20]

Yes, this stat is misleading

 

 

 

... and, independently btw, it is also inaccurate

78.6 % of traders lose

 

Happy Holidays all

[sep34 10]

Wow a million in a single day...that makes my daily profit goal really small.:missy:

 

Just pulling your leg.

 

This year was extrem volatility, great for trading, yet exhausting. will get some needed rest durring the holidays.

 

 

 

Happy Holidays to all.....

[EsotericRule 10]

I won't be cheeky here, but as few understand what a 'market' is...many fail within it.

 

There are many proxies for reality, and few can even properly navigate the real thing.:doh:

[SpearPointTrader 10]

I have not read this whole thread, so forgive me if I am redundant.

 

I feel the 95% number is probably accurate if you count everybody who ever enters the markets.

 

However, if you limit your sample to just professional traders, who have made a career out of trading, my guess is that very few lose on a regular basis. It's thier JOB to win.

 

We have a huge trading industry. It's so huge, that it is very difficult to comprehend. If the pros were not winning most of the time, the trading industry simply would not exist.

 

You could look at it in the context of professional fighting (MMA/Boxing/Kick Boxing etc...)

 

In the lower ranks, ALL lower level fighter lose on a regular basis. By the mid level ranks, they start wining much more often. The high level guys win more often, than not. The elite win most of the time.

 

Trading is the same way. The goal is to always be working to advance to the next higher division.

 

What league are you in?

[Warren Forex 10]

I have not read this whole thread, so forgive me if I am redundant.

 

I feel the 95% number is probably accurate if you count everybody who ever enters the markets.

 

However, if you limit your sample to just professional traders, who have made a career out of trading, my guess is that very few lose on a regular basis. It's thier JOB to win.

 

We have a huge trading industry. It's so huge, that it is very difficult to comprehend. If the pros were not winning most of the time, the trading industry simply would not exist.

 

You could look at it in the context of professional fighting (MMA/Boxing/Kick Boxing etc...)

 

In the lower ranks, ALL lower level fighter lose on a regular basis. By the mid level ranks, they start wining much more often. The high level guys win more often, than not. The elite win most of the time.

 

Trading is the same way. The goal is to always be working to advance to the next higher division.

 

What league are you in?

 

I had posted that almost three years ago. I would say that the number is pretty close to the truth.

 

Most forex trader's including many of the professionals are technical traders. I would guess that of all forex trader's professional or retail that at least 75% of them trade using either technicals or price action.

 

I have been trading real funds now since March 9, 2006 and I have come to the following conclusions.

 

Whether you are a technical trader or a fundamental trader or a EA trader or a combination of them all unless you have the discipline and the pyshological makeup you will be a losing forex trader.

 

A winning forex trader first and foremost needs discipline and contol of your greed, your fears and most important of all your EGO.

 

The market is always right period until it is not. The PERCEPTION is always the REALITY until it is not.

 

A fundamental trader with a risk management plan along with a trade plan understanding human nature and with an excellent grasp of the fundamentals has a good chance to win in forex.

 

I have invested 5 years of my life to learn my trade which I love. I spend many hours doing research. I have set hours to trade in and I understand price action and know when each asset class such as gold, oil, currencies, US bonds change values how it will affect the other asset class that I mainly trade. EUR/USD is my key currency that I trade. I win over 80% of all my trades and my goal each month is to earn a minimum of 10% net a month. I am sure my trading style would not work for at least 75% of all traders who think that they can win in forex without investing time and energy and especially only trading by the technicals which change like night and day especially in these volatile times. Good Trading ALL !!!

[SpearPointTrader 10]

I had posted that almost three years ago. I would say that the number is pretty close to the truth.

 

Most forex trader's including many of the professionals are technical traders. I would guess that of all forex trader's professional or retail that at least 75% of them trade using either technicals or price action.

 

I have been trading real funds now since March 9, 2006 and I have come to the following conclusions.

 

Whether you are a technical trader or a fundamental trader or a EA trader or a combination of them all unless you have the discipline and the pyshological makeup you will be a losing forex trader.

 

A winning forex trader first and foremost needs discipline and contol of your greed, your fears and most important of all your EGO.

 

The market is always right period until it is not. The PERCEPTION is always the REALITY until it is not.

 

A fundamental trader with a risk management plan along with a trade plan understanding human nature and with an excellent grasp of the fundamentals has a good chance to win in forex.

 

I have invested 5 years of my life to learn my trade which I love. I spend many hours doing research. I have set hours to trade in and I understand price action and know when each asset class such as gold, oil, currencies, US bonds change values how it will affect the other asset class that I mainly trade. EUR/USD is my key currency that I trade. I win over 80% of all my trades and my goal each month is to earn a minimum of 10% net a month. I am sure my trading style would not work for at least 75% of all traders who think that they can win in forex without investing time and energy and especially only trading by the technicals which change like night and day especially in these volatile times. Good Trading ALL !!!

 

Like you, I have dedicated a substantial amount of time developing my skills. I am always looking to further improve as well. Right now, I predominantly work on Futures trading.

 

However, pure technical trading is pretty much the same, across the board. For example, in the system I am reviewing now, the 2 main indicators generally always do the same things when the market starts to move into a new trend. Which market I am looking at seems to be irrelevant.

 

We will see if this works in the long run applied to the Forex as well. So far it is though.

 

 

You are right on the money about the psychology part. That is a much bigger aspect than is overtly visible. Trading is one of the few things that is totally counter intuitive. A healthy detachment, and almost *Not* caring seems to find the greatest success. Saying "F it" and blowing off the day to go sailing is often more productive than putting your nose to the grind stone.

[Warren Forex 10]

Like you, I have dedicated a substantial amount of time developing my skills. I am always looking to further improve as well. Right now, I predominantly work on Futures trading.

 

However, pure technical trading is pretty much the same, across the board. For example, in the system I am reviewing now, the 2 main indicators generally always do the same things when the market starts to move into a new trend. Which market I am looking at seems to be irrelevant.

 

We will see if this works in the long run applied to the Forex as well. So far it is though.

 

 

You are right on the money about the psychology part. That is a much bigger aspect than is overtly visible. Trading is one of the few things that is totally counter intuitive. A healthy detachment, and almost *Not* caring seems to find the greatest success. Saying "F it" and blowing off the day to go sailing is often more productive than putting your nose to the grind stone.

 

 

I sincerely wish you the best and I hope you have much fun and make much money. If you are interested I can post some links for you that will probably compliment your futures trading. What futures do you trade ? I consider myself highly knowledeable in Gold and Silver though it does make crazy moves because of interventions in the paper market.

 

Try reading Jim Sinclair's Mineset daily for very good insight into the real news not the CNBC spin news.

 

Snippet: From October 8

 

Jim Sinclair’s Commentary

 

Globalism has its downside. This is quite true.

 

Major U.S. Banks At Risk If European Debt Crisis Spreads

 

If European politicians are unable to contain their sovereign debt problems, Wall Street could be on the brink of another financial crisis, according to economists.

 

Although U.S. banks have limited their direct exposure to Greece, they have loaned hundreds of billions of dollars to European banks and governments that may not be able to pay them back, according to the Bank for International Settlements. If some European governments and banks are forced to default on at least part of their debt, American banks could lose a significant amount of money on that account alone.

 

The resulting panic from investors could compound the losses. Short-term borrowing costs would spike, bank stock prices would plummet and investors could demand their money from banks, several economists say. In a repeat of the liquidity crisis of 2008, some U.S. banks could run out of the money necessary to fund their day-to-day operations.

 

"We’ve seen this already," said Jay Bryson, global economist at Wells Fargo Securities. "Some sort of financial crisis in Europe would be enough to finally push the United States economy back into a recession."

 

Some predict that a European financial crisis would spread quickly to U.S. shores. The pain would not come directly from government defaults; U.S. banks have loaned just $36.2 billion to the five European governments that are in danger of defaulting: Greece, Ireland, Portugal, Spain and Italy. But U.S. banks have also loaned $60.6 billion to banks in those five countries, and $275.8 billion to banks in Germany and France, according to data from the Bank for International Settlements.

 

A string of sovereign debt defaults would endanger the survival of major European banks, including those in France and Germany, which hold a large amount of troubled sovereign debt on their books, some economists note. According to Bryson, French banks’ exposure to the five European countries that are in danger of defaulting amounts to 25 percent of France’s gross domestic product, and the exposure of German banks to those countries is worth 15 percent of Germany’s total output.

 

More…

.

 

Thanks for your reply.

[SpearPointTrader 10]

Well, I can trade any commodity, index or financial that has a margin under 10k. However, I tend to stick with the hard commodities, Grains, meats, Softs, Metals and Energies.

 

If I don't have the margin to trade a market, I generally paper trade it anyway, if the technical set up is good.

 

I have been reviewing the system from Facts Trading for the last few months. Although it is for Futures, it seems to work for everything.

[TimRacette 11]

The average failure rate of a trader is 3 months. I'm just speculating here, but I would wager that for those who make it past the first 3 months, 50% fail in the next 3 months, 50% in the next 3, leaving 25% of the traders left (who made it past the first 3 months).

 

As for the % of traders who make it past the 1 year mark, it's probably somewhere around 10%, the reason - trading is 90% psychological.

[Warren Forex 10]

The average failure rate of a trader is 3 months. I'm just speculating here, but I would wager that for those who make it past the first 3 months, 50% fail in the next 3 months, 50% in the next 3, leaving 25% of the traders left (who made it past the first 3 months).

 

As for the % of traders who make it past the 1 year mark, it's probably somewhere around 10%, the reason - trading is 90% psychological.

 

I started trading via Demo accounts of $50,000 US during September 2003. During March 2006 I started trading real funds. 5 Years later I still trade and on a scale of 1 to 100 I would give myself a 60 starting in 2006. Today I would give myself a 90 with my average ROI about 10% a month.

 

Trading is about 75% psychological and maybe more. However unless you have superior Risk Management skills in these markets you will lose. I guess that does tie into your 90% psychological.

 

Nice to see your post.

[SpearPointTrader 10]

I can agree 100% on the psychological part.

[MightyMouse 12]

I started trading via Demo accounts of $50,000 US during September 2003. During March 2006 I started trading real funds. 5 Years later I still trade and on a scale of 1 to 100 I would give myself a 60 starting in 2006. Today I would give myself a 90 with my average ROI about 10% a month.

 

Trading is about 75% psychological and maybe more. However unless you have superior Risk Management skills in these markets you will lose. I guess that does tie into your 90% psychological.

 

Nice to see your post.

 

you give yourself a 90 with a monthly roi of 10%? You should give yourself a 200.

[TheNegotiator 13]

Why should the estimate that trading is 90% psychological correlate in any way to the estimate that 10% of new traders make it past a year? Surely it's possible that less than 10% of people have the pyschological ability to make it past year 1, year 2, year 3 or whatever.

[zdo 20]

TN,

 

you give yourself a 90 with a monthly roi of 10%? You should give yourself a 200.

 

as a performance worker who grades self by how many ticks I took from the number of ticks available, I can totally relate to how he could ‘only’ give himself a 90 with a monthly roi of 10%... even in the few months where I’ve had way way over 10% roi I never rated myself higher than a 93

 

Stable 97+ is my goal - which would consistently include attaining the potential of both stupendously high financial returns and flow / ‘effortless’ high performance

 

 

Why should the estimate that trading is 90% psychological correlate in any way to the estimate that 10% of new traders make it past a year? Surely it's possible that less than 10% of people have the pyschological ability to make it past year 1, year 2, year 3 or whatever.

 

Negotiator, could you clarify / restate / expand on that please? I don’t quite understand what you’re saying… Thanks.

[TheNegotiator 13]

zdo,

 

I think what Tim was saying, unless I'm very much mistaken, is that because trading is supposedly 90% psychology, only 10% of people will make it past year 1. I am saying that I don't agree that the percentage of people making it past year 1 directly correlates to how pscychological trading is. It's like saying that 90% of becoming a pro athlete is psychological, so 10% of people who try will still be trying or have made it after year 1. It just doesn't make sense. Maybe I misinterpreted the point.

[zdo 20]

Thanks. That clears it up for me.

Will await Tim's interpretation... because he is onto something --- whether we're getting the 'stats' right or not

 

:haha: "...half the game is 90% mental..." yogi beri

[TimRacette 11]

zdo,

 

I think what Tim was saying, unless I'm very much mistaken, is that because trading is supposedly 90% psychology, only 10% of people will make it past year 1. I am saying that I don't agree that the percentage of people making it past year 1 directly correlates to how pscychological trading is. It's like saying that 90% of becoming a pro athlete is psychological, so 10% of people who try will still be trying or have made it after year 1. It just doesn't make sense. Maybe I misinterpreted the point.

 

The two weren't meant to be correlated. And it's just my belief that trading, or sports, or business is 90% mental. Granted, you still need that other 10%, but if you look at any great sports figure they will tell you how they mentally rehearse and practice in their mind.

 

As for guessing that 10% of traders make it past the first year. Just look at the "give up" rate on humans in general. How many times do people start something and quit right away, or start with a plan of doing big things and then fizzling out in the first year. So there wasn't much analytical research on the topic. Although the 3mo failure rate for traders I've heard mentioned by my broker and others multiple times.

[todds 10]

And it's just my belief that trading, or sports, or business is 90% mental. Granted, you still need that other 10%, but if you look at any great sports figure they will tell you how they mentally rehearse and practice in their mind.

 

 

Tim, I have heard this statement in various forms in trading and sports. When you or others say "mental" or "psychological" what specifically are you referring to? Are you referring to more broad definitions to include things like perseverance and determination, or is it more specific like a traders ability to follow their trading plan or a quarterback's ability to read a defense?

[TheNegotiator 13]

Tim, I have heard this statement in various forms in trading and sports. When you or others say "mental" or "psychological" what specifically are you referring to? Are you referring to more broad definitions to include things like perseverance and determination, or is it more specific like a traders ability to follow their trading plan or a quarterback's ability to read a defense?

 

The psychological battle with yourself is for the most part what it refers to.