How Common Are Really Large Successful Traders

[trader99]

There are many traders that trade or continue trading because they have another job (another source of income). Its a positive benefit for them because they know they have a support while they try very hard to become a trader, they don't have that financial pressure that other traders have whom do not have another job.

Note: There's a nice thread here at ET where a newbie traders ask if he should quit his job...now that he's been consistently profitable for a few years and making more money than his job. The consensus replies was NO because that job could be the psychological reason why he is a successful trader and that job has full health/dental benefits.
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I can totally relate to this. I'm in this bucket. I've finally achieved net profitability and some semblance of consistency in my short-term trading. I thought this day would never come. But as I've said in my prior posts, I have a well-paying FT job in a high growth industry that I love. Perhaps it's a contributor to my success as well.

For a retail standpoint, I think it's not too unreasonable to generate an "extra" $50K-$150K from your retail trading account. More than that you need a bigger trading account which you can grow. Perhaps a prop account. I'm not there yet but I'm steadily generating nice returns...

 

[wrbtrader]

I can totally relate to this. I'm in this bucket. I've finally achieved net profitability and some semblance of consistency in my short-term trading. I thought this day would never come. But as I've said in my prior posts, I have a well-paying FT job in a high growth industry that I love. Perhaps it's a contributor to my success as well.

For a retail standpoint, I think it's not too unreasonable to generate an "extra" $50K-$150K from your retail trading account. More than that you need a bigger trading account which you can grow. Perhaps a prop account. I'm not there yet but I'm steadily generating nice returns...

Keep at it and you'll get there.

There's no rush and your job is a nice security blanket to minimize the pressure.

 

[TradeCat]

I've known traders who claimed to make great profits. Problem is they wouldn't disclose the fact that they didn't just start with a fixed sum and built it up. Instead, like gambling, they would take risks, make a lot of money, and when along the way they lost quite a bit, they would dip into their other sources of wealth (job, inheritance, etc.) to replenish and continue trading.
That is not success.

 

[Handle123]

I met Don Miller in 2004/2005, we would chat during dull times of lunch, he eventually sent me some chartbook he had made with trendlines, I didn't think much of it, like many traders, we seem to one day just stop chatting. He had some clever signals, we exchanged, can't remember anything now. It pretty much like everything dealing with signals to entry, when you think you have "discovered" something incredible, am very sure 100k other traders played with it before you. In my past, have had two trading partners, one in mid 1990s and other 2004, we each trade 12 hours, funny each one had a Goal in mind and when they reached it, they walked away from trading completely, both said if I don't quit, I would lose eventually. I had in late 80s and very early 90s, both times being dumber than a rock. You think you learn a lot by making major mistakes, but sometimes you think you are so much smarter than most, it takes another shovel more crap down my throat. I remember the second time, "I Just knew" the bonds were going to reverse, finally learned lesson that you cannot foretell the markets. We foretell all trades we put on, but generally we have rules and "Uncle" area to get out, but when you stop doing the system, then you have "EMG" moments. But in a way I have quit, it all automated, why bust my rear end when PCs do it.

Perhaps Miller wants to have an 401k going and tax write-offs, it is a chore to fight with IRS on calling yourself a trader, I detest getting audits, only those who know tax codes well might enjoy the stress, but I don't, just far easier to stick in Real Estate Management or I thought bout Uber cabbie?

I think there are no one in retail are real large traders or they have sense of Barney Fife, LOL, he signs his name Barney Fife MD, Mayberry Deputy. If you doing small 10k lots a month, you could be saving 2.50 to 7.00 per lot which is 25-70k a month, savings alone is decent money.

I do think diversifying is very important, whether to have a main job producing monies for home life and even if you making ten times trading that that job, you have balance in your life, and if you quit, then what? Be at home to learn and lose at day trading think how hard can it be? Make more sense in buying house rentals and let others pay them off and you learn a new hobby about repairing houses, LOL.

Have a great weekend all.

 

[Handle123]

This is a good reply.
I think a trading account should only have about a million in it, tops.

You should however, I feel, throw Confidence out of the equation or picture.
Just when you think you're Right or confident...the market seems to humble you.
Always have a somewhat neutral, unbias, mind -- like a judge,

It is rather ironic that when I am very confident about a trade, it usually loses and when I see a trade that takes great effort to put on, I feared the worse, would often become a huge profitable trade. I have often thought through the years is big brokerage can force to make chart patterns, did they share this information with other big brokers so they all have collusion in making certain patterns to suck us into doing what our emotions push us to do.

I agree with Lawrence-lugar to get rid of confidence as it only going to hurt if it fails, have a no opinion about yourself with trades, just follow your Trading Plan. Opinions are for fun, no money on the line.

To me "Swing Trading" has same amount of risk as long term, so I make them add-on trades unless I didn't have a beginning trade, just follow my rules to take something out on my direction needed and keep something for long term runners.

Had an idea late last night, wow, stayed up all night testing it out. Many many many nights of doing this.

 

[mlawson71]

The popular opinion (although I would love to see an official study made by a legitimate research and statistics agency) is that about 95% of all traders generally lose money. Obviously, that means that only about 5% make profits consistently. I think it's logical to conclude that only a small percentage of those 5% have the kind of accounts and the kind of profits the original post is asking about. In other words, such traders exist, but they are quite rare.

 

[wrbtrader]

The popular opinion (although I would love to see an official study made by a legitimate research and statistics agency) is that about 95% of all traders generally lose money. Obviously, that means that only about 5% make profits consistently. I think it's logical to conclude that only a small percentage of those 5% have the kind of accounts and the kind of profits the original post is asking about. In other words, such traders exist, but they are quite rare.

Over the lifetime of ET forum...I've seen at least 3 times that someone has illegally posted a firms clients statements summary without the firm's permission online link to a blog, website and uploaded here at ET too. One particular posting included specific names of every client, account value and other personal information although the moderator here was quick to delete the post after a few hours. Most likely posted by some pssst off broker that got fired or quit...

95% were not losing money. I was like 72% were losing and I was surprised at the profit levels of some people at that brokerage although I don't know if they were stock traders, futures traders, option traders or forex traders.

Also, last year, another firm (Interactive Brokers) in comparison to 5 other brokerage firms posted in some magazine that 40% of their forex traders were profitable while using IB and the mean for all the firms was around 32%.

In addition, years ago there was an investigation by a senate committee (I believe it was around 1999) involving brokerage business and I remember someone on that committer used the phrase 2/3 were not profitable although the investigation had nothing to do with how many traders are profitable.

I've also seen stats of firms in France and Asia that varied as much as 40 - 80% were not profitable each quarter and hugely varied in % from firm to firm. Yet, still nothing like 95% are not profitable.

My point, I don't know where this 95% myth comes from although all the stats I've ever seen only involved quarter to quarter or year to year but nothing long term like over a 10 year time span.

I still can't understand why the percentages varied so greatly when comparing the results of one firm to another firm. For example, in one particular quarterly comparison last year...IB had 46.5% profitable while MB Trading had 29% profitable. What does that suggest ?

 

[Xela]

I would love to see an official study made by a legitimate research and statistics agency

There are some, actually. Not many. But I've seen one quoted and linked to, here, before.

It was an independently audited "survey" of the proportions of winning and losing accounts (no client names, of course) held by non-institutional traders at various different brokerages.

From my perspective, the interesting feature of it was that the clients at the counterparty market-maker "brokers" were very predominantly losers, while those at genuine brokers were a mixture of winners and losers (still more losers than winners).

I don't find that surprising at all.

One still needs to be careful interpreting it, though: the "causation" probably works both ways round. Winning traders are more likely to be at genuine brokerages than at counterparty market-maker "brokers" for all the obvious reasons, but in my opinion traders using genuine brokers are also more likely to be winners because they're not being fleeced by scammy "brokers".

For example, in one particular quarterly comparison last year...IB had 46.5% profitable while MB Trading had 29% profitable. What does that suggest ?

Indeed.

 

[ironchef]

I asked Mr. Google and here are two articles:

https://vantagepointtrading.com/archives/13922

Conclusion:

Only 3.5% - 4.5% day traders were profitable over a 5-year observation period by the author. The odds are actually much better than making it as a professional basketball player.

Another academic study, by UC Berkeley et al looking at day trading in Taiwan:

http://www.econ.yale.edu/~shiller/behfin/2004-04-10/barber-lee-liu-odean.pdf

Conclusion:

Our analysis of performance indicates day trading is treacherous, but not entirely a fool's game. Heavy day traders, as a group, earn gross profits (before transaction costs). Thus, heavy day traders do appear to have a trading advantage over other investors. The stocks bought by the most active day traders outperform those sold by 31 basis points per day. Unfortunately, the gross profits of heavy day traders are not sufficiently large to cover reasonable estimates of transaction costs. Thus, as a group, they lose money. In contrast, occasional day traders experience both gross and net losses. The stocks bought by occasional day traders actually underperform those sold, even before considering transaction costs.

i.e., day trading is a negative sum game but probably as the first article concluded, a small percentage of traders were profitable.

I am beginning to ask if trading options, which I do full time, is the same?

 

[007Arb]

Only 5% of U.S. households have over $1,000,000 in investable assets. They must all be traders who hang out on trading fourms.

http://mutualfundobserver.com/discu...pparently-millionaires-are-not-a-dime-a-dozen