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95% of traders fail???
- Thread starter oddiduro
- Start date
Quote from I Missed Boat:
look at the date of this study.
Most of the studies I know of relating to the profitability of daytrading were done in in the 2 year period around the markets top. These studies were the basis for enacting the PDT rules. I am sure there are newer studies out there, I have just not seen them.
I work by myself from home, so I have no idea how people are doing now, nor do I care. I just feel that saying 95% of people fail can be misleading. I see no reason why a sufficiently capitalized trader with proper training and discipline can't make a living at this.
>>An EDGE is absolutely required
...with "absolutely" being the operative word. I guess position sizing is all the rage nowadays. Someone out there is telling people that if they play with their position size they can turning a losing system into a winning one. It don't work that way folks.
...with "absolutely" being the operative word. I guess position sizing is all the rage nowadays. Someone out there is telling people that if they play with their position size they can turning a losing system into a winning one. It don't work that way folks.
How wrong you are!! With out money/position/risk management it is much harder to keep your account in the positive.
Take a simple idea, that I am sure 90% of the ET group knows this example, like a coin flip. You have 100 flips of a coin and every time it lands heads you will win 2 times your bet. Every time tails lands you lose your bet.
You think you can't lose right? 100 flips should have about 50 heads and 50 tails. You win twice the amount that you bet when it lands heads.
You still can lose if you don't have the right Money Management strategy and this is in theory is a no lose situation. The reason you lose is because of the series of losers one incurs.
So the winning system can still lose with poor MM.
Regards,
Tanp21
Take a simple idea, that I am sure 90% of the ET group knows this example, like a coin flip. You have 100 flips of a coin and every time it lands heads you will win 2 times your bet. Every time tails lands you lose your bet.
You think you can't lose right? 100 flips should have about 50 heads and 50 tails. You win twice the amount that you bet when it lands heads.
You still can lose if you don't have the right Money Management strategy and this is in theory is a no lose situation. The reason you lose is because of the series of losers one incurs.
So the winning system can still lose with poor MM.
Regards,
Tanp21
That is the way to do it if you are running a prop firm or large hedge fund.Quote from NUTSNEAL:
The 80/20 rule probably applies to trading profits. I suspect 20 percent of traders are making 80 percent or greater of the profits.
There are trading firms out there with success rates of 100% profitable traders starting with individuals with little or no trading experience. One firm I know of personally, which has been in business for several years, receives over 1000 resumes a month. I know a person they recently hired. He was one of only four hired over a four month period. They are extremely selective based on THEIR PROFILE for success. Traders are trained in classes, given a reading list for study, and watch and ask questions of existing traders as part of the learning process. Then as learning progresses traders start looking for swing trades to present as suggestions based on setup, risk reward ratio, etc. If one of their trade suggestions is taken, they will share in the profits of that trade. Traders with little prior experience will not make one single trade on their own for at least 12 months. This firm has not had one single trader fail and they have some very very successful traders. This trader made no capital contribution and will be on salary plus bonus.
At a more individual level I do not think any of the thing being discussed here like position sizing, risk management, sufficient capitalization , training is going to make a much difference.Many traders who are successful may explain their success that way but it is more likely that they themselves do not completely understand why they are successful.
If you look at the Market Wizards most of them were not well capitalized, many had no training in trading, were in many cases taking wild risk.
Some have talked of edge but edge is a destination if you survive you will have gained edge.
Those who are interested in understanding the 5% who succeed may want to look at MIHALY CSIKSZENTMIHALYI's work.
http://www.ccp.uchicago.edu/faculty/Mihaly_Csikszentmihalyi/html/
I believe that the reason is that most do not understand elementary concepts that make one successful at trading.
The majority are too busy flaming those that are trying to teach them new ways at looking at the market.
When I started the "EGO CHALLENGE" only a few people showed up. the rest made excuses such as being too busy to participate because they were busy trading?
Ohhhh, and let's not forget that ....TRADING is exactly what WE were doing in the "EGO CHALLENGE".
the point is that most here at ET do not trade for a living and most that claim that they do are very good at it. If they were they would have no problem participating in open forum or within the CHAT room were traders can post trades in realtime.
Furthermore, what successful trader does not have a journal?
ALL successful traders keep a diary of sorts so that they can improve themselves both internally and externally in their trading After all isn't the overall objective to make $$$$?
T-REX
The majority are too busy flaming those that are trying to teach them new ways at looking at the market.
When I started the "EGO CHALLENGE" only a few people showed up. the rest made excuses such as being too busy to participate because they were busy trading?
Ohhhh, and let's not forget that ....TRADING is exactly what WE were doing in the "EGO CHALLENGE".
the point is that most here at ET do not trade for a living and most that claim that they do are very good at it. If they were they would have no problem participating in open forum or within the CHAT room were traders can post trades in realtime.
Furthermore, what successful trader does not have a journal?
ALL successful traders keep a diary of sorts so that they can improve themselves both internally and externally in their trading After all isn't the overall objective to make $$$$?
T-REX
"What are YOU doing?", is the only question a person should ask themselves in regards to trading results. Who cares if 75% or 95% fail at this endeavor...what does that really have to do with YOU? YOU get to decide how you are going to approach trading and conduct trading activities...this is the most important thing in my mind.
Chris
Chris
Quote from NUTSNEAL:
The 80/20 rule probably applies to trading profits. I suspect 20 percent of traders are making 80 percent or greater of the profits.
There are trading firms out there with success rates of 100% profitable traders starting with individuals with little or no trading experience. One firm I know of personally, which has been in business for several years, receives over 1000 resumes a month. I know a person they recently hired. He was one of only four hired over a four month period. They are extremely selective based on THEIR PROFILE for success. Traders are trained in classes, given a reading list for study, and watch and ask questions of existing traders as part of the learning process. Then as learning progresses traders start looking for swing trades to present as suggestions based on setup, risk reward ratio, etc. If one of their trade suggestions is taken, they will share in the profits of that trade. Traders with little prior experience will not make one single trade on their own for at least 12 months. This firm has not had one single trader fail and they have some very very successful traders. This trader made no capital contribution and will be on salary plus bonus.
Ok this sounds like pure BS. I think you are talking about FNYS and I know for fact that they have had quite a significant % fail (considering how arrogant they are). This was told to me by the guy interviewing me, the same one hyping it up beyond belief. And their traders are not such hot shit as they claim. It's a solid firm, but nowhere near what they claim and portray themselves to be.
Even if it isnt FNYS, it is completely false to state that just studying and training will make great traders. It just does not work like that. Hypothetically, you can keep training people and just make a killing, like a generic formula to make money in the market. But neither the market nor the world work like that. Academics and book smarts do not equal good trading. You cannot teach discipline and patience. You cannot teach how to take losses, suck it up and accept it because no trade is ever guaranteed. You cannot teach how to keep your nerves in check.
Good training definitely helps a lot, as it helped me. But it is not the main factor. Experience is probably the biggest one and most people just do not allow themselves to suck in enough experience and just give up. Discipline is a tough one also. Controlling your emotions is probably the hardest one. Many many people have never been through life situations where you just have to learn how to halt your emotions completely, because they are tearing you up inside. Ability to do that take YEARS to develop.
Bottom line, most traders, both institutional, fund, prop and retail will always lose money so that the minority will make money. Whatever the reasons are, that's just how it is going to be. Except in bubble times, when there is enough of the mom & pop money to go around.