95% of traders lose
- Thread starter fubar
- Start date
It's the fact that "95%" (aka a high percentage although there are no real hard numbers) of traders fail that makes me confident that trading can be a consistently beaten game. If only 45%-55% made money I would lean more towards randomness and luck that produced the results. Although on the surface it would seem like a much higher success rate.
i really dont think thats true at all. i think the problem with the huge failure rate is that people obviously come to trading to make money. They find a setup, try trading it, lose money and think its the setup. look for another setup, repeat. eventually have no capital left to learn with and thats it. the real problem was not gaining enough experience with how to trade the setup.
kind of like learning to golf. its almost like people have the mind set with trading of buying a set of clubs. go out and try to hit some balls, see that they suck at it and instead of taking the time to practice/perfect their swing go out and buy a new set of clubs.
I don't believe that 95% actually lose money. Fail to become successful...yes, and even that depends on how you define success. Failing by my definition is that you cannot live on your trading income alone. By that measure I am a failure, yet I am profitable, just not profitable enough.
I believe most people that really make a serious attempt end up failing, but not losing money. It's just that their profits are too small to justify all the time and effort that goes into trading, so they simply give it up. Do some lose their shirts? Certainly! But I really do believe most just lose interest and move on to the next "bright idea".
I believe most people that really make a serious attempt end up failing, but not losing money. It's just that their profits are too small to justify all the time and effort that goes into trading, so they simply give it up. Do some lose their shirts? Certainly! But I really do believe most just lose interest and move on to the next "bright idea".
Honestly i believe there are steps in trading. I have been through 4 out of 5 of them.
The 95% ratio applies to the first 2 phases that most of the ones that make an attempt at trading go through.
Phase 1: You don't know anything and you are generally losing
Phase 2: You start learning and continue to learn and switch through systems and continue to lose. However, you have been through so many systems and managed to understand that most of them win as well as lose.
Phase/Moment 3: is when you realize that no matter what system you use, the most important thing when dealing with it is money management
Phase 4: Comes after the realization and this is where you generally break even or win small time
Phase 5: Is when your profits start increasing slowly because you think more about your trades while practicing discipline and learning more about the market as an entity and explore new things.
Now, i believe the 95% is valid in Phase 1 and 2, but then as you "survive" and get past the Eureka moment in phase 3 and go on to Phase 4, the percentage drops dramatically.
The idea is to get there, and then, have a life that allows you to get better and head on to Phase 5. That is either you have enough money so you can trade and live, or you work in a corporate environment that encourages you to get better as a trader.
Cheers y'all
The 95% ratio applies to the first 2 phases that most of the ones that make an attempt at trading go through.
Phase 1: You don't know anything and you are generally losing
Phase 2: You start learning and continue to learn and switch through systems and continue to lose. However, you have been through so many systems and managed to understand that most of them win as well as lose.
Phase/Moment 3: is when you realize that no matter what system you use, the most important thing when dealing with it is money management
Phase 4: Comes after the realization and this is where you generally break even or win small time
Phase 5: Is when your profits start increasing slowly because you think more about your trades while practicing discipline and learning more about the market as an entity and explore new things.
Now, i believe the 95% is valid in Phase 1 and 2, but then as you "survive" and get past the Eureka moment in phase 3 and go on to Phase 4, the percentage drops dramatically.
The idea is to get there, and then, have a life that allows you to get better and head on to Phase 5. That is either you have enough money so you can trade and live, or you work in a corporate environment that encourages you to get better as a trader.
Cheers y'all
According to my accountant (who has a big practice preparing traders' tax returns) the 95% number is pretty much on the button plus or minus a percentage point or two. Also, the other 5% do really well. Very few are in the middle or breaking even.