95% of all traders lose... do they really?

J

jcl

It's known that 95% of all traders lose 50% of their money within the first 6 months of trading. Or was it 50% of all traders that lose 95% of their money?

Does anyone know the source of this ominous 95% statement? Is it based on some statistics by a broker, or is it just a urban myth? I'd like to mention the 95% in an introductory tutorial, but will probably be asked where I got this number from.
 
all the talk about 90% traders being losers.. what should one expect?? if one goes to trading it's usually with the thought of making some decent money - well, somebody has to pay for it, doesn't he?? it's not the game for minimalists imo.. IT IS GOOD THAT 95 % LOSES!!!!
IT IS GOOD NEWS!! only then one can make heaps of money, how else?? if it's 50/50 - why bother?? 95% loses! hallelujah to that !!
One has to do something extra, extraordinary to win.. ONE HAS TO BE EXCEPTIONAL !
or at least lucky :)
 
Quote from jcl:

or is it just a urban myth?
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yeah,yeah.. urban myth my hmm..how many retail traders accounts does it take to make J.Simons / who by the way is my idol :) / one of the richest?? millions?? or perhaps he is also urban myth ?? and he's not the only one who wins consistently..
 
Here is an idea for those bitching about 95% being losers - how about we put Simons out of business??? Should help with the numbers, he seems to be the smartest after all :D
Let's get rid of the world top players !!
Who's for it?? Let's help small time traders win - wouldn't that be AN E D G E ?? :D
and some people claim edges don't exist..
 
Well, I'd certainly prefer to take the money away from some institutional hedge fond traders, or from J. Simons whoever that is, rather than from newbies. But this still doesn't answer the question if the 95% are based on some hard facts.
 
Quote from jcl:

It's known that 95% of all traders lose 50% of their money within the first 6 months of trading. Or was it 50% of all traders that lose 95% of their money?
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It's probably a lot worse that that. Probably 99.95% of all traders lose 100% of their capital. But keep in mind that most of them start with $100 in mini forex accounts. A better statistic would be the percentage of traders who are losers after 3 years of trading and with at least $25 in their account. Otherwise, we are talking about a lot of noise in the data.
 
Quote from jcl:

It's known that 95% of all traders lose 50% of their money within the first 6 months of trading. Or was it 50% of all traders that lose 95% of their money?

Does anyone know the source of this ominous 95% statement? Is it based on some statistics by a broker, or is it just a urban myth? I'd like to mention the 95% in an introductory tutorial, but will probably be asked where I got this number from.
More...

It comes from anyone who has worked inside a brokerage, but is no longer talking their book.

The numbers vary for different products..

Small forex / CFD / spread bet accounts probably being the worst of the worst.

Bucket shop products for unwashed non-descripts.
 
I'm real great at flight simulator! I will fly a plane this weekend! Do you think I will make it? I can tell you the traders who don't lose is the traders who have a teacher who makes them figure it out themselves. I learned from someone who made me figure it out. When you have to figure it out, you learn it!

Remember the Magic Eye books? You see this random pattern. But they tell you there's 3D picture in there. Someone says "See there's a picture in that mess?" and you don't see anything and they turn to the back of the book and show you these pictures that are supposed to be there. Now does that mean you will now see the picture just because they showed you it was there? No you have to learn how to see it. Someone else tells you some things you can do to help you see it and if you do these things eventually you'll see it. There it is! It was alway there, but the good teacher tells you the things to do so you YOURSELF can see!

Maybe 95% of all traders lose but a trader who learns to see before they start trading will not lose because they won't start trading until they see how to make profit!
 
Quote from jcl:

Well, I'd certainly prefer to take the money away from some institutional hedge fond traders, or from J. Simons whoever that is, rather than from newbies. But this still doesn't answer the question if the 95% are based on some hard facts.
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The best place to find research on day trading or individual traders in general is cxoadvisory.com or SSRN.

I've seen research there showing that anywhere from 20% to 50% of day traders were profitable during the period being researched. Split the difference and it would seem that about 1 out of 3 individual traders is profitable. Almost every study seemed to conclude that trading is a skill, not just luck.

Another interesting tidbit that I found in that research is that the most profitable traders tend to trade either the least frequently per day or the most frequently. So, either you've got one killer set-up which prints money a couple times per day or you've built an automated set-up that casts a broad net over the market to pull in profits from a wide number of situations. It's when you have neither of those that you are in trouble. This makes complete sense to me from a strategic perspective, since both a "focused" strategy and a "wide net" strategy can work, but hybrids of the two seem very likely to fail.

I haven't seen anything that speaks to the persistence of those profits, though, but I would imagine that the longer the research period, the lower the percent profitable.

As for the sources of a profitable individual trader's profits, it's either hedgers or less skilled individual traders. Sure, once in a while you might pull a profit out of a trade where a hedge fund guy is your counterparty, but that's not typical. Most of the time you are taking cash from Joe Six-pack. If, in time, JSP becomes a better trader, he will take his profits from the next generation of Joe Six-pack. That's just how it goes.
 
Quote from logic_man:

The best place to find research on day trading or individual traders in general is cxoadvisory.com or SSRN.

I've seen research there showing that anywhere from 20% to 50% of day traders were profitable during the period being researched. Split the difference and it would seem that about 1 out of 3 individual traders is profitable. Almost every study seemed to conclude that trading is a skill, not just luck.

Another interesting tidbit that I found in that research is that the most profitable traders tend to trade either the least frequently per day or the most frequently. So, either you've got one killer set-up which prints money a couple times per day or you've built an automated set-up that casts a broad net over the market to pull in profits from a wide number of situations. It's when you have neither of those that you are in trouble. This makes complete sense to me from a strategic perspective, since both a "focused" strategy and a "wide net" strategy can work, but hybrids of the two seem very likely to fail.

I haven't seen anything that speaks to the persistence of those profits, though, but I would imagine that the longer the research period, the lower the percent profitable.

As for the sources of a profitable individual trader's profits, it's either hedgers or less skilled individual traders. Sure, once in a while you might pull a profit out of a trade where a hedge fund guy is your counterparty, but that's not typical. Most of the time you are taking cash from Joe Six-pack. If, in time, JSP becomes a better trader, he will take his profits from the next generation of Joe Six-pack. That's just how it goes.
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Best post comes last...close down the thread, it's downhill from here.
 
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