Right. I'm just saying no one has done a long-term study like that on full-time retail traders. If they did, they'd find that 1-2% group who "trade for a living" has a lot of turnover. Many of them quit their day jobs and trade for a bit with nothing but hope and prayer as a strategy...or they're only successful during a temporary bull market (cryptos in 2017, dot com in late 90s, etc. like I mentioned).
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How many traders are actually making a living?
- Thread starter orbit23
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Right. I'm just saying no one has done a long-term study like that on full-time retail traders. If they did, they'd find that 1-2% group who "trade for a living" has a lot of turnover. Many of them quit their day jobs and trade for a bit with nothing but hope and prayer as a strategy...or they're only successful during a temporary bull market (cryptos in 2017, dot com in late 90s, etc. like I mentioned).
My personal estimate:
The success rate for all those who've ever opened a trading account or "given it a shot", is probably around 0.1%.
Narrowing it down to folks with adequate resources (say >$500k trading capital plus 3 years of living expenses saved, or an equivalent passive income stream, prior to going full-time) and who've invested 2 or more years learning the trade full-time, I'd guess the success rate is low but certainly out the basement. Figure maybe a third achieve some level of consistent profitability, half of whom wash out when the market changes or never bring in enough to make it worthwhile, while the other half end up "making a living".
In other words a low-odds play, but one that compares favorably with the odds of success in many other "follow your passion" type pursuits (novelist, political leader, musician, artist, pro sportsman, entrepreneur, etc.)
The success rate for all those who've ever opened a trading account or "given it a shot", is probably around 0.1%.
Narrowing it down to folks with adequate resources (say >$500k trading capital plus 3 years of living expenses saved, or an equivalent passive income stream, prior to going full-time) and who've invested 2 or more years learning the trade full-time, I'd guess the success rate is low but certainly out the basement. Figure maybe a third achieve some level of consistent profitability, half of whom wash out when the market changes or never bring in enough to make it worthwhile, while the other half end up "making a living".
In other words a low-odds play, but one that compares favorably with the odds of success in many other "follow your passion" type pursuits (novelist, political leader, musician, artist, pro sportsman, entrepreneur, etc.)
Right. I'm just saying no one has done a long-term study like that on full-time retail traders. If they did, they'd find that 1-2% group who "trade for a living" has a lot of turnover. Many of them quit their day jobs and trade for a bit with nothing but hope and prayer as a strategy...or they're only successful during a temporary bull market (cryptos in 2017, dot com in late 90s, etc. like I mentioned).
There was an fxcm study that showed that some 20percent of the accounts were profitable in a given month. However that wasn’t the same 20percent that were profitable in the previous month. I suspect 1-2percent is very high.
Perhaps 1-2percent of traders starting with a 1mm liquid net worth survive after five years.
I posted the study from the SBA. Over 20percent of businesses survive past 5 years. And that percentage hasn’t changed over time.
Not sure what the study says but that a business stops doesn´t mean it goes bust.
And that a business goes bust doesn´t mean its owner and related parties go bust either
Perhaps 1-2percent of traders starting with a 1mm liquid net worth survive after five years.
That seems overly dramatic, but I can't really back up that impression with any number.
There was an fxcm study that showed that some 20percent of the accounts were profitable in a given month. However that wasn’t the same 20percent that were profitable in the previous month. I suspect 1-2percent is very high.
Perhaps 1-2percent of traders starting with a 1mm liquid net worth survive after five years.
Exactly. Same thing with those FX monthly contests, World Cup futures championships, etc. It's a bunch of traders with high-risk, high-reward strategies that perform well in a certain type of market (trending, countertrend/choppy, etc.). In one six-month period they make 150% and look brilliant. Then they lose it all in the next 6 months. It's no way to trade full time, that's for sure.
Not sure what the study says but that a business stops doesn´t mean it goes bust.
And that a business goes bust doesn´t mean its owner and related parties go bust either
Also where do you place in the survival stats a trader who gives up trading actively and starts investing his former proceeds either in different fields, or still in financial markets but longer term ?
He´s no longer an active trader but one could hardly say he went bust, same a someone who sold or closed down his company and went to try different waters or retire,
Not sure what the study says but that a business stops doesn´t mean it goes bust.
And that a business goes bust doesn´t mean its owner and related parties go bust either
Correct. Survival rates of businesses doesn’t mean bankruptcy.
That seems overly dramatic, but I can't really back up that impression with any number.
I bet the percentage is even worse.
I bet the percentage is even worse.
What point do you consider the line between trading and investing? I have no good opinion on success rates but would’ve thought there aren’t too many people who have the discipline to accumulate >1mm in personal capital and then fail to even tread water.
With capital, intelligence, interest in markets, and an appetite for risk it seems like it isn’t too unfeasible to hit maybe double the total return of B&H on SPX or something, over the long run. Would you disagree with that?