95% of traders fail???

here you have it: I was asking for highly successful traders that exclusively trade technical systems. Per definition, Stat. Arb. and other Arbitrage trading does not belong to technical system trading. Also program trading is not considered technical systems trading. I talk with confidence about the definitions as I work in S&T myself. I am sure there are many highly successful guys doing all kinds of Arb trading but that is not what I meant.

Have you got anyone making BILLIONS (as you claimed) utilizing technical trading systems, such as the ones offered to the masses or set up by oneself? At least if I believed the "selfclaimed trading gurus" trading technical systems (based on technical analysis) is about equal to picking up free money on the street. And those claims are all I highly despise and criticize because they are simply not true or performance statistics are altered to such extent that still calling it statistics should be considered a crime.
 
As Easyguru said, John Henry and Bill Dunn are trend-followers. Nonetheless, I understand what you are saying and the answer is no, I've never seen anyone make any significant money utilizing an off the shelf so-called holy grail technical system.
 
your post was funny in a sense that if I traded ANY GIVEN system during certain periods in time I would have gained huge profits. I could have thrown darts and still have picket winners. Of course we all have to look at long term performance. Or do you look for a system that was profitable last year and dont care how it fares for the next couple years. (I claimed before such system does not exist but for the pure argument I pretend it existed).

I know the cocoa study and it is seriously flawed as it does not consider commissions and other added costs to the trades correctly. There are many systems out there that claim to be profitable but if you add slippage, commission costs, the cost of risk of broker default then you end up in the reds. You NEED to consider all those costs because if you don't trade with a long term view of equity conservation you are per definition a gambler and not even a professional one.
 
How can you know the cocoa study I am talking about since there can be many studies on cocoa and the one I quote I can tell you that it takes into account commission costs. Of course you could get winners during CERTAIN periods in time : that is randomness per se :D. I will post the url of the study when I will look in my archives. As for what is randomness, if you don't know what is persistency's law from statistician Levy, I invite to see here:
http://www.elitetrader.com/vb/showthread.php?s=&threadid=22256&perpage=6&pagenumber=12

There can a majority of winners during a certain period only due to randomness as well as of course losers. At long term this is different. But long term is a relative term as I said (so that 15 years is rather short statistically speaking if it concerns daily trading system as in the case of cocoa):

'It's rather that at long term there are only a few percentage of "good traders" but on short term (this is relative of course to period and style of trading this means dozens of years for portfolio managers for example to a few months/years for short term traders) there can be even a majority of winners ... and after that a majority of loosers: that's what persistency means, it's easy to see it during bull phase where all the public and traders believe into a "new era" because it seems to last long time enough (remember arcsinus law is about time not about the distribution of mean which is another law - the central limit theorem) and that everybody seems to be winner . Since at each cycle there are newcomers the same illusion can begin again and again, this on multiple scales.'


Quote from bbmat:

your post was funny in a sense that if I traded ANY GIVEN system during certain periods in time I would have gained huge profits. I could have thrown darts and still have picket winners. Of course we all have to look at long term performance. Or do you look for a system that was profitable last year and dont care how it fares for the next couple years. (I claimed before such system does not exist but for the pure argument I pretend it existed).

I know the cocoa study and it is seriously flawed as it does not consider commissions and other added costs to the trades correctly. There are many systems out there that claim to be profitable but if you add slippage, commission costs, the cost of risk of broker default then you end up in the reds. You NEED to consider all those costs because if you don't trade with a long term view of equity conservation you are per definition a gambler and not even a professional one.
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BTW I don't understand what you want to assert exactly ? that trading systems cannot work or what ?

Quote from harrytrader:

How can you know the cocoa study I am talking about since there can be many studies on cocoa and the one I quote I can tell you that it takes into account commission costs. Of course you could get winners during CERTAIN periods in time : that is randomness per se :D. I will post the url of the study when I will look in my archives. As for what is randomness, if you don't know what is persistency's law from statistician Levy, I invite to see here:
http://www.elitetrader.com/vb/showthread.php?s=&threadid=22256&perpage=6&pagenumber=12

There can a majority of winners during a certain period only due to randomness as well as of course losers. At long term this is different. But long term is a relative term as I said (so that 15 years is rather short statistically speaking if it concerns daily trading system as in the case of cocoa):

'It's rather that at long term there are only a few percentage of "good traders" but on short term (this is relative of course to period and style of trading this means dozens of years for portfolio managers for example to a few months/years for short term traders) there can be even a majority of winners ... and after that a majority of loosers: that's what persistency means, it's easy to see it during bull phase where all the public and traders believe into a "new era" because it seems to last long time enough (remember arcsinus law is about time not about the distribution of mean which is another law - the central limit theorem) and that everybody seems to be winner . Since at each cycle there are newcomers the same illusion can begin again and again, this on multiple scales.'
More...
 
I have read most serious studies on commodities and therefore think what you are talking about. But I will also check once I get home. So far, not one single serious(!) study has demonstrated that systems trading proves profitable over the long term. Again (for those who have not read from the beginning): I am not and no one else is interested in performance over, let's say, 2 months.

If anyone is interested in some studies on this topic please PM me and I am happy to reply with references.
 
I am trying to make a point that trading systems is not profitable over the longer term. I am not trying to convert those who stubbornly refuse serious academic studies (their argument often is that those 'stupid' PhD possess no knowledge of the markets. I am just wondering that why those 'stups' considered in their studies all variables and possibilities but studies conducted by market practitioners often do not. Could it be that those away from the markets have no self-interests in selling something to the investing and trading public?).

The problem why there are so few studies is that of the lack of historical data (except for price, highs, lows) and that it takes ages to set up and run useful tests over many years. But it seems that many guys trying to sell their 'holy grail' systems do not appear to be bound to such limitations and publish without hesitation half-hearted performance reports.

That, in a nutshell, is what I try to get across. I am not interested in discussing with those know-it-all technical fetishists as they anyway believe what they want to believe. Let them fail and experience for themselves. But I am trying to get a point across to many of the beginners who are not really having a chance to build up their own critical viewpoint of the market because critical remarks are so increadibly rare.
 
bbmat, just curious, if you feel that way about technical systems how do you approach trading? Lately, I'm starting to feel as though the "darts" approach with a 3:1 Reward:Risk will suffice. Patterns seem to work when they work. It could be a case of the market makers using their influence to profit from negating popular patterns. It's not a conspiracy theory I just know what I'd do if I controlled a stock.
 
Getting back to 95% of traders fail, I would dare say the number is ABOVE 100%!

If you read Market Wizards, then you'll see that many of these supertraders BLEW OUT not ONCE, NOT TWICE, but sometimes as many as THREE or more times! The countless wannabes traders who blow out their account then fund their account again. And he succeed how do you count that? What happens if he blows out multiple times?

My figure is that there is a constant supply of losers in this industry to make the few winners wealthy. There has to be.

Just my experience with prop shops, I think very few people make it. And those that "make it" are getting by on a measly living maybe enough to pay rent, bills, and very little leftover.
No 401K plan, no health plans, no nothing. If you call that success in trading, then there's some serious problems there.

Obviously, I also know a very small minority maybe 1 in 100 that do extremely well - maybe 10-20K a month or more. BUt the vast majority are hanging on and hoping they don't blow out or dwindle their account to zero or have second jobs to support themselves. That's the reality ladies and gentlemen.

But people like to be wild eyed bushy tailed and dream big. But they can barely support themselves in trading, how are they going to get their millions?

Just look on this board. There are people who down to $1K in their account and hope to run it up to $13K in 12weeks or whatever it is. I'm not trying to be negative. It's possible. I mean anything is possible.

But in trading we are playing a game odds. That's a low probability occurrence. We should aim for high probability odds or setups. And one of those high prob. setups is being adequately capitalized. Being adequately capitalized does NOT mean trying to make money off of your $5K-$10K account while paying bills with your trading gains.

I mean I guess it's possible too IF you have some incredible edge and some incredible risk mgmt. and you are trading futures or something where the margins are so thin. Like I said, ANYTHING is possible. But something are more probable.

The trading industry, brokers, magazines, prop trading,etc. has feed this fantasy on a lot of people.

But like I said, you should spend timing finding that niche of yours and trade the hell out of it.

But good luck to all! Hope you'll have a great trading year next year!
 
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