98% of Traders Fail? Says Who...?

B

BullsEye

Many people are fond of quoting the statistic that 98% of traders fail. Googling "% of traders fail" yields 4950 pages (interestingly, "% of traders succeed" yields only about 15 pages!).

A quick scan of the search results shows that the quoted percentages range from 80% to 99%. :confused:

Where do these statistics actually come from? Does anyone know of a reliable, verifiable source of this information, please?

And while we're on the subject, what exactly defines "failure"? Is it losing *all* of your money, all your *trading* money only, *some* of your money, breaking even, making less than 5%, quitting after 3 months, losing more money than you have (i.e. getting into debt), or what?

Thx!
BullsEye
 
95% is the statistic I hear cited most often for those who "don't make it", and my definition would be people who leave trading for one reason or another: loss of capital, emotional drain, the thrill is gone, employment is terminated, etc.
 
SEC did a study some years ago. I don't recall the exact nature or figures of the study. I'm wanting to say it was in excess of 90% though.
 
Yeah, what does that mean? I tried daytrading 1 summer in college a decade ago and gave up cuz I didnt want to wake up at 6am (west coast) and preferred to sleep in and party and go to classes that summer instead...but I now have a variety of investment vehicles from longterm retirement/car/house savings accts (mostly index ETFs, money market, fidelity freedom fund) as well as a small options trading acct that has met my profit expectations so far for the last 2 yrs. Does this mean I failed a decade ago in college and fall into the 98%? Does that number only apply to fulltime daytraders and not people who actively manage one or more of their own investment accts or is there a minimum # of trades/month or wk that needs to be met before you can be considered to be counted either way?
 
Quote from kalikahuna:

I tried daytrading 1 summer in college a decade ago and gave up cuz I didnt want to wake up at 6am (west coast) and preferred to sleep in and party and go to classes that summer instead...
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Wow, glad I got my butt up at 6AM PT to make it happen. I shiver when I think of what life would be like still working for someone else.
 
Tell that to the 80% of home owners in the Hamptons, they are all traders in one form or another.

I think Wallstreet scam artists sounding it off like it's impossible to win so most just give up.

The people I know that are still trading after 10+ years are all making money. My guess is about 40% are winners, of that a very small % are living the good life of $300K + per year.
 
Quote from BullsEye:

Many people are fond of quoting the statistic that 98% of traders fail. Googling "% of traders fail" yields 4950 pages (interestingly, "% of traders succeed" yields only about 15 pages!).

A quick scan of the search results shows that the quoted percentages range from 80% to 99%. :confused:

Where do these statistics actually come from? Does anyone know of a reliable, verifiable source of this information, please?

And while we're on the subject, what exactly defines "failure"? Is it losing *all* of your money, all your *trading* money only, *some* of your money, breaking even, making less than 5%, quitting after 3 months, losing more money than you have (i.e. getting into debt), or what?

Thx!
BullsEye
More...

I have heard the stat that 80%-90% of commodity futures traders lose money. I think you have to seperate futures from stock trading. It's a different ballgame.
 
For some reason, I just can't believe that 95%+ fail. Are we talking about all the Vegas-bound gambling monkey's that sign up with Ameritrade/Fidelity and blow-out before they learn how to read a market/chart? What's the make-up of these traders being referenced?

With that said, it's probably the case that about 95% of traders would be much better off long term position trading something like the S&P500 50ma daily and 200ma daily cross and keeping their day job for the first few years of initiation. Some of the best on Wall St use it, a simple strategy successful for many decades, why re-invent the wheel if you can't hack it in shorter time frames?

The father(retired) of a close child-hood friend is one of those guys that is fortunate to have a place in the Hamptons and guess what? The 50/200 cross is all he used when trading the spooz as a professional for a 24yr stint. Just in the last 10yrs, it triggered 5 productive trades (out of 6), netting in excess of +1100pts. Use a leveraged future contract rolled over 4 times a year with a decent initial outlay, increase size using "extremely" conservative position model, stay committed to the trade by meeting any margin calls after a recent roll-over and move against the new position, and you are looking at good $ down the line. This is what I have started to do for my retirement account at age 28.
 
I assumed it meant day traders who quit because they're not profitable. People who tried to make their entire living from trading.

Not long term investors.
 
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