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

Still dont get what you are looking for...you will never find a sample size of data large enough that will push your standard error to comfortable levels. That data set must contain reliable data and must contain a large enough sample size. I expect that nobody wants to admit defeat and become part of such statistic so what do you expect? you could have instead spent the same amount of time to program a back test engine (or purchase one) and test many of your own ideas, way more useful.

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Quote from BullsEye:

Hmm, while the link I posted above is excellent and fascinating reading, it doesn't quite answer my original question. The search continues ...

BullsEye
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Take a long hard look at ET membership. They boast over 69,000 members. I'd have problems identifying 100 successful traders here .
 
must point out the following fact is true:

No.1 that is just those mutual fund's commercials. they want your money to stay with them, so those guys can get fat pay from the so called managing your money like 12b fee etc., ....

No.2 another fact is: those floor trading firms want their own business, day trading was once their business beforte internet, now everyone can do it, they lobbied hard the government and made this false statement, and set up so called pattern day trader rule, a totally liar. if you bought a stock and hold overnight, then next day dropped 50%, the PDT can proctect you? you see how they lie to you general guys, actually maybe you bought it and sold it at the same day, you may make some even you may lose, but you will not lose 50%!

I have some friends including myself, they are doing pretty well in day trading, like magiclly consistent, everyday make $500~1000, just occusinally get minor loss. the most important thing is: you need dedication, never give up from the beginning, and you need enough fund and the fund is not supposed for buying food/clthing...just for the sake of day trading

because trading is about uncertainity, psychologically most people are not well trained, that will create tramandous stress on them, finally they can not tolerate it any more and give up. the statement partly is true, but not totally.

actually the basic trading principle is "buy low and sell high", it looks very easy, but why people can not execute it emotionalessly, they fear they may make mistakes, since a dip may mean a buy but also mean a short
 
Conclusions (Day Trading) [from the nasaa study]

There was only one successful day trading account in the 17 accounts analyzed.

Fifteen of the 17 accounts analyzed had a significant risk (probability of ruin over 27.6%) of losing all funds. Eleven of these 17 accounts had a 100% chance of ruin.

That is, 65% of these accounts would almost certainly lose any and all funds put at risk in them.

Five of the six accounts, which realized net profits, were no more than marginally profitable and realized a large percentage of their profits from a single trade.

Speculative trading is volatile. Clearly, if a trader can make most of his or her profit on a single trade, he or she can lose it on one or two trades. Moreover, it should also be noted that any profitability evaluation must be conducted on a risk/reward basis. If you have 5 times the risk, you should require at least 5 times the reward.

The Sharpe Ratio compares the return from an investment with the risk incurred to earn the return. A risk/return analysis was conducted for account A30, the only account considered successful in both day and short-term trading. The Sharpe Ratio analysis (Exhibit I) clearly shows that although Account A30 was profitable, it did not produce a return commensurate with the risk to which it was exposed.

The Bottom Line

If this analysis is representative of public trading, it is abundantly clear that the average public investor should refrain from short-term trading. Only three (3) of twenty-six (26) accounts (11.5% of the sample) evidenced the ability to conduct profitable short-term trading. This study shows that 70% of the public traders will not only lose, but will almost certainly lose everything they invest.

Day trading is particularly risky. While the study found that three (3) accounts in twenty-six (26) could successfully conduct short-term trading, there was only one successful day trading account.

A Sharpe Ratio analysis of the only account considered successful in both short-term and day trading showed the trading returns were not commensurate with the risks to which the account was exposed.

The most successful account in the study, A8, had limited short-term trades and no day trading.

http://www.nasaa.org/content/Files/Day_Trading_Analysis.pdf
 
You know, I'm ABSOLUTELY SICK of people saying that 95%, or 98% (whatever it is) of traders fail. This is THE STUPIDEST THING I'VE HEARD. You don't have to lose much money... It's called TIGHT STOPS people - It's all of these idiots who put thousands into a stock, not knowing the market or that particular stock, then they lose a lot of their money and then complain because they did. If you do your research DAILY, study charts, study the chart setups, have a dedicated news source, and NOT GET GREEDY, then MOST people can make a great living trading for a living! Now all of you people who say most traders fail... just shut up... jeez :)
 
I am not a broker, so your analysis is just nonsense to me, or put it another way, did not get teh point. whether a long-term trader or day trader, to my unstanding is:

general public can not dedicate their time to trading, and they have false illusion about trading/investment, to them they are naive thinking "trading is piece of cake, trading/investment does not need skills'/experiences", they end up like buy and hold (they have no idea about when to get in and when to get out to cash out profit, most likely they may ride it to the sky and then ride it to the ground), so either way they will lose, there is no advantage one over another. the truth is: you need the knowledge, the skills (like market selecting/timing/how to cut loss/how to take out profit/where to look...), and the dedicated time, just like any profession, the expertise, plus you must have MONEY.

whether day trading or so called investment, the principle is the same: get the low price and sell it at higher price, but how to execute this principle is totally a profession's expertise: some buy low and sell high, some sell high and buyl low, some buy high and sell higher, some sell low and buy lower, .... if there is at least several years of experiences, I doubt people will grasp those skills easily




Quote from Businessman:

Conclusions (Day Trading) [from the nasaa study]

There was only one successful day trading account in the 17 accounts analyzed.

Fifteen of the 17 accounts analyzed had a significant risk (probability of ruin over 27.6%) of losing all funds. Eleven of these 17 accounts had a 100% chance of ruin.

That is, 65% of these accounts would almost certainly lose any and all funds put at risk in them.

Five of the six accounts, which realized net profits, were no more than marginally profitable and realized a large percentage of their profits from a single trade.

Speculative trading is volatile. Clearly, if a trader can make most of his or her profit on a single trade, he or she can lose it on one or two trades. Moreover, it should also be noted that any profitability evaluation must be conducted on a risk/reward basis. If you have 5 times the risk, you should require at least 5 times the reward.

The Sharpe Ratio compares the return from an investment with the risk incurred to earn the return. A risk/return analysis was conducted for account A30, the only account considered successful in both day and short-term trading. The Sharpe Ratio analysis (Exhibit I) clearly shows that although Account A30 was profitable, it did not produce a return commensurate with the risk to which it was exposed.

The Bottom Line

If this analysis is representative of public trading, it is abundantly clear that the average public investor should refrain from short-term trading. Only three (3) of twenty-six (26) accounts (11.5% of the sample) evidenced the ability to conduct profitable short-term trading. This study shows that 70% of the public traders will not only lose, but will almost certainly lose everything they invest.

Day trading is particularly risky. While the study found that three (3) accounts in twenty-six (26) could successfully conduct short-term trading, there was only one successful day trading account.

A Sharpe Ratio analysis of the only account considered successful in both short-term and day trading showed the trading returns were not commensurate with the risks to which the account was exposed.

The most successful account in the study, A8, had limited short-term trades and no day trading.

http://www.nasaa.org/content/Files/Day_Trading_Analysis.pdf
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Quote from daytraderbm2:

You know, I'm ABSOLUTELY SICK of people saying that 95%, or 98% (whatever it is) of traders fail. This is THE STUPIDEST THING I'VE HEARD. You don't have to lose much money... It's called TIGHT STOPS people - It's all of these idiots who put thousands into a stock, not knowing the market or that particular stock, then they lose a lot of their money and then complain because they did. If you do your research DAILY, study charts, study the chart setups, have a dedicated news source, and NOT GET GREEDY, then MOST people can make a great living trading for a living! Now all of you people who say most traders fail... just shut up... jeez :)
More...

Thats all you have to do? Hmmm sounds like somebody is about to become a statistic :D
 
No, ALL I am saying, is that you need to do your DAILY research, play safe when the market is crappy and protect your capital... I mean, seriously! :)

I mean, people need to set small goals at first and not try to be the next Warren Buffet in a week. That's why they fail.

And yes, I know, everyone is not cut out to be a daytrader... but only 2% who try make it? Come on?!??!
 
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