95% of traders fail???

Quote from Mecro:

Ok this sounds like pure BS. I think you are talking about FNYS

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.

Academics and book smarts do not equal good trading. You cannot teach discipline and patience.
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Merco


It is not FNYS and yes it does sound like BS, but it is not.

I quoted easyguru's post because of "the other factors at work" in the 5% who succeed. This part mainly dealing with the PROFILE of that successful few.

I didn't say that JUST studying and training would make great traders. I pointed out that this firm is extremely selective based on THEIR POFILE FOR SUCCESS.

The initial pool of candidates was reduced to 50. Then after further tests and interviews the field was reduced to 10. Then after more tests and interviews the field was reduced to 4. At that point, it became more like a fraternity rush with social events etc. The 24 year old (ex big four account, math contest gold medalist) individualselected is one of the best holdem poker players I have played with.

This firm has developed a process (PROFILE) for selecting recruits much like many of us look for trade setups. If this and this and this and this etc. and then selecting the best of the bunch.

The individuals selected are raw material which has the characteristics or properties which will allow them to be molded, fashioned, turned, etc. into successful traders. Not every piece of coal can be cut into a diamond and not every individual can be trained to be a successful trader. With the selection process used, this firm has not had one trader fail!!!!

I agree academics and book smarts do not equal good trading. I did not say it did.

But given the right characteristics (PROFILE FOR SUCCESS) discipline and patience can be taught along with the other skills necessary to be a successful trader.


Quote from easyguru:

Focus on the 5% who succeed.
What makes them successful, Even though lot of people talk about techniques, tools, and attitude. there are other factors at work besides that.

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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.


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Hi all,

95% comes from accounts of people who are daytraders (more than three trades a day in average). So, 95% of those accounts lose money.

Following your definition of a "real" trader, it is better to say 100% of traders who make money are not losers .......;-)

If you are asking the percentage of losers among full time traders, with let say 3 years of trading, then yes your question makes sense, otherwise...

momoNY.
 
I heard on CNBC a while back, that 70% of Day Traders fail. Again, not sure exactly who is considered a Day Trader. Did it include the deli worker down the block, who opened up an eTrade account during the late 1990's, and traded a few dot bombs ? I dunno.

In any event, I have been a full-time trader for all of 1 1/2 years. I make a living doing it.....not getting rich, but paying the bills, supporting my family, living comfortably, and enjoying it immensely. I worked for Reuters for my last 13 years in the workforce, and developed trading systems for a living (foreign exchange systems), so I had a large exposure to the markets during my tenure there. Additionally, I've read countless books on the subject of trading - most of which, I do not employ, but it was a necessary part of the education. I have a lot of custom apps that I've written, that make use of my market feed data, and enhance my trading experience. So, my technical skills have definitely been an asset.

The most important recent addition to my repertoire was my investment in Wealth Lab Developer (www.wealth-lab.com), which has allowed me to back-test my trading strategies. To use it effectively, you really have to be a programmer. I have successfully implemented trading scripts which I now run in real-time to automate one aspect of my trading. It enforces rules, and eliminates the emotional aspect of the trading totally, which is a major plus for me. I cannot over-emphasize how useful a tool this has been for me. It is paramount in importance, however, that you back-test your scripts on data that represent bear and bull markets. Testing it on data over the last year only, will be certain to give you a false positive. Back-testing is certainly not a predictor of the future; however, it can certainly eliminate non-profitable trading strategies from your repertoire, without costing you a penny.

I also trade manually still as well, on lower liquidity stocks. But, my profits are not as good there as they were when I first started, largely due to Specialists being more aggressive and pennying a lot more frequently (I think they call it Price Improvement....is that a joke or what ?).

In any event, not to ramble further, but I believe that a strong education, a solid strategy, discipline, knowing how and when to take a loss, and the ability to back-test the strategy to test it for viability, are the necessary ingredients to profitability.

I've heard that a new trader cannot expect to make a profit trading for a couple of years. Hogwash !!!! I was making money my 2nd month of trading, and in one of the worst downtrends in history, and have not had a losing month since.

If you are prepared, and dilligent, you will succeed !!!!!
 
Quote from I Missed Boat:

As someone who has traded at and knows many people at many prop firms, I can say that this is absurd. Six figures now is very far from the norm! As people have noted as well, common sense would tell you this can't be the norm. This is worse than a zero-sum game (due to commission and MMs/specialists). If the average person were netting six figures, then who is losing gross this six figures?
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I assume that one is trading multiple contracts.

Regards
Oddi
 
Quote from momoNY:

Hi all,

95% comes from accounts of people who are daytraders (more than three trades a day in average). So, 95% of those accounts lose money.

Following your definition of a "real" trader, it is better to say 100% of traders who make money are not losers .......;-)

If you are asking the percentage of losers among full time traders, with let say 3 years of trading, then yes your question makes sense, otherwise...

momoNY.
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This is a very good point.
 
A 2000 dollar account is hard to turn into 100,000.

A 100,000 account is easier to turn into 1 million.

Simply a hypothesis.
Criticism welcome.
 
The difference is that when you get a degree as a Doctor or Lawyer you still do not have to be any good to make a living. Average will suffice.
As a trader you must be exceptional ALL the time.
Nothing else will do.

So 95% is consevative if you ask me , I feel the number is closer to 99%.

20 years in this business and I have seen MANY come and go.
 
Quote from bbmat:


"...I am also 100% sure that almost any purely technical trader over a 10 year period will fail..."

"...In the end it comes almost always down to money management and statistics..."

LOL! For someone who believes in statistics, I find it amusing that you do not think there is AT LEAST 1 successful purely technical trader, over a 10 year period. Wouldn't random variation alone provide for the possibility of such a trader to exist over a 10 year period, which, after all, isn't really that long of a time frame?

While I agree with your opinion about the necessity of a balanced trading approach, your tone seems rather critical and almost dismissive of technical price action. I believe an understanding of technical price action can be a great benefit to many traders, and in particular, those who are inclined to fight a market that continues to make new highs or lows, despite fundamental analysis that suggest it should do otherwise.
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I think certain classes such as floor locals have a much less attrition rate. Here is an interesting exercise for those who say attrition is not quantifiable.

Take the list of members of an exchange 5 years ago-NYMEX, NYBOT,,etc. Cross out the ones who make their living doing brokerage and isolate the locals who have to make thier daily $ by trading and cross reference them against current member list. I bet you it is less than 50%. possible reason.. order flow edge(buying bids,selling offers) , dirt cheap commish (imagine not having to pay comish if you scratch a trade i.e. buy at 10 sell at 10 no commish).
 
It's not really a bad stat, comparatively. I forget the numbers, but it was something like 50% of new businesses fail in the first year, and 90% in 5 years. Why should trading be any different?

Don't kid yourself, it ain't easy. Neither is starting a donut shop or a pizza place. But it ain't impossible.
 
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