Failure Rate of Traders

[monistat7]

Most people say that 90% of people who trader their own money end up losing money.

Anyone have any published references for where this statistic comes from?

After searching the net, I only found one quoted statistic from National American Securities Administrators Association, which said 70% of traders lost money. That study was from 7 years ago when it was like free money in the market.

http://money.cnn.com/1999/08/09/markets/daytrade/

I don't doubt that the majority of people lose money trading on their own. But 90% vs 70% is a huge difference. The failure rate of newbies that I have observed at my prop shop over the past 2 years is closer to 70% as well.

 

[brokerboy]

They say 90% don’t make money they don’t say 90% lose money. I can see 20% breaking even.

 

[Tuneman]

define trader though, does that include the that buy and sell a little stock here and there?

 

[slowdown]

In the article (from 1999) it said there were fewer than 5000 active daytraders -- wow, even if you add some for the last 7 years.... maybe 20,000 now? I thought there would be like 150K. You guys think that is accurate?

 

[eagle488]

We have come a long way from 1999. Today things are a lot more advanced then they were back then. Technical analysis seems to be pushed a lot more.

 

[brokerboy]

The stats are for day traders who do it full time under a series 7. it does not include hedge fund traders or anyone with a longer time frame. It only includes NYSE and NAZ traders. The field has changed so much in 7 years I am not sure if there are 5000 day traders that fit that definition. If you add all markets and people doing it part time I can see it being a lot higher.

 

[El OchoCinco]

Statistics are just a formal way to lie.

I know lots of traders who were never polled or asked so how is some 90% figure pulled out their butts .
It is a generalization based on a review of some nrokers accounts.

Private hedge funds run by individual traders who are not required to report were never polled I do not think. Was every single trader out there asked to show their account?

I wish this 90% stat would die already as it is oft quoted and is just an off-based genrealization.

MOST traders who start out fail because of lack of discipline, skills, knowledge, understanding of risk, sufficient capital, etc.... Is it 90 or 60%.... I aks you..... does it really matter..