Proof that about 25% of traders actually make money

[Pekelo]

There is this old thread where someone posted account statements from Tuco, trying to prove, that 90% of traders lose money. Here it is:

http://www.elitetrader.com/vb/showthread.php?threadid=162253

Now if you are like me, and you actually finished 3rd grade and have nothing better to do on a Sunday morning than practicing your accounting skill, then you would notice, that the original title is misleading, and the actual result is way better.

5 pages of Tuco statements were posted out of the 103, and we will assume here that those accounts are representative of all accounts. An assumption, I know, but we don't have more, and I don't want to analyze 103 pages anyhow.

So those 5 pages show about 200 active accounts. Lots of accounts are dormant or had only 1 trade with miniscule result. Those were disregarded.

The summary of those app. 200 active account is: 45 winners and 155 losers!

That means 1 out of 4 traders actually making money!! Way better than the industry's often quoted but seldom proved 90% losers ratio!!

So I would like to thank the OP for posting the account statements. Although he was trying to prove something else, he actually provided conclusive proof that often quoted and generally accepted "facts" can be wrong...

Now go, be blessed and make yourself the lucky 25%...

P.S.: This thread is dedicated to emg, for his obnoxious "90% of traders lose, they just lose!" battle cry....

 

[Trvlwanderer]

I always laughed a bit at the 90% or 95% or 99% claims of failure.

I guess I never considered myself a failure so I never took those numbers seriously even when starting out.

And I never became part of those stats.

 

[N54_Fan]

Quote from Pekelo:

...That means 1 out of 4 traders actually making money!! Way better than the industry's often quoted but seldom proved 90% losers ratio!!....

AWWW....Now I dont feel so special anymore.

Good Job Pekelo.

 

[Ash1972]

These results show that 25% of traders made money IN ONE PARTICULAR YEAR, i.e. 2007.

Let's assume, for the sake of argument, that those who lost money drop out and the winners from 2007 go on to trade in the next year - 2008 in this case. If the win rate is still 25%, you are basically looking at 3.125% still in the game by the end of 2012.

'Make money' needs to have some meaningful definition, e.g. being able to survive 5 years.

 

[southall]

Quote from Pekelo:

Lots of accounts are dormant or had only 1 trade with miniscule result. Those were disregarded.

These shouldnt be disgarded, these likely belong to traders who who failed at the demo/simulator trading stage.

And there are likely to be other failed traders at this firm who dont show up in the records as they never got given live accounts.

running through the numbers quickly on these pages I came up with....


206 active traders

33 profitable - 16%
7 with $50k + profit - 3%

173 unprofitable - 84%
57 with losses over $10k - 28%

Only 3% of these guys made more than 50K.. if they were all full time traders, then that is very low.

 

[Pekelo]

Quote from Ash1972:

These results show that 25% of traders made money IN ONE PARTICULAR YEAR, i.e. 2007.

You are correct, but:

1. We only had data for that 1 year.
2. The usual quoted 90% losers also doesn't classify how long period we are talking about.
3. In ANY other business, if you look long enough, the % of failed businesses increases over time. Hell, even 200+ years old British banks fail eventually!
4. A losing trader can be profitable the next year, so you have to account for improvement too.

Now maybe the original 90% losers statement should be remade to : Only 10% of traders make a living by trading. There is a huge difference between profitable and making a living....

So it is possible the 25% is correct, it just not always the same 25%...

 

[Pekelo]

You are making giant logical fallacies...

Quote from southall:

These shouldn't be disgarded, these likely belong to traders who who failed at the demo/simulator trading stage.

An assumption. And you can't even reason why they shouldn't be disregarded. We are talking about active traders, not about those who made probably 1 or 2 trades with $10 loss, that probably came from the commission anyway....

And there are likely to be other failed traders at this firm who don't show up in the records as they never got given live accounts.

We wouldn't call them traders, would we??? It is like including law students in lawyer stats who never passed the bar exam and never practiced....

 

[trade2live]

Yeah as someone said what matters is long term survival, very very few make it on that front. That's also because only a small part of those who make money derive a decent income from trading. But anyway there is no point trying to figure how many make money and how much, what matters is you . "Trading from home" and even so called "prop" trading is a losing game, if you make money you are a bit of an anomaly, if you don't make money, don't worry you are not alone, don't get obstinate there are other things better to do in life.

 

[intradaybill]

Quote from trade2live:

Yeah as someone said what matters is long term survival, very very few make it on that front. That's also because only a small part of those who make money derive a decent income from trading. But anyway there is no point trying to figure how many make money and how much, what matters is you . "Trading from home" and even so called "prop" trading is a losing game, if you make money you are a bit of an anomaly, if you don't make money, don't worry you are not alone, don't get obstinate there are other things better to do in life.

If you think that making money trading, consistently, is difficult try to open a new restaurant or any other type of small retail business.

You will find out that you need an edge, regardless of what you are doing. Instead of spending your Sunday mornings trying to guesstimate and argue about the profitability of traders it would be better if you tried a few new ideas. Usually, people that have given up spend their time with such nonsense.

There are systems with 4 lines of code that will make money consistently in any market if you are willing to put the required work to understand the essence of trading.

If you make money trading you are not an anomaly. You are a winner. If you want to equate winning with anomaly, go on in life that way.

 

[Lucrum]

Quote from Pekelo:

There is this old thread where someone posted account statements from Tuco, trying to prove, that 90% of traders lose money. Here it is:

http://www.elitetrader.com/vb/showthread.php?threadid=162253

Now if you are like me, and you actually finished 3rd grade and have nothing better to do on a Sunday morning than practicing your accounting skill, then you would notice, that the original title is misleading, and the actual result is way better.

5 pages of Tuco statements were posted out of the 103, and we will assume here that those accounts are representative of all accounts. An assumption, I know, but we don't have more, and I don't want to analyze 103 pages anyhow.

So those 5 pages show about 200 active accounts. Lots of accounts are dormant or had only 1 trade with miniscule result. Those were disregarded.

The summary of those app. 200 active account is: 45 winners and 155 losers!

That means 1 out of 4 traders actually making money!! Way better than the industry's often quoted but seldom proved 90% losers ratio!!

So I would like to thank the OP for posting the account statements. Although he was trying to prove something else, he actually provided conclusive proof that often quoted and generally accepted "facts" can be wrong...

Now go, be blessed and make yourself the lucky 25%...

P.S.: This thread is dedicated to emg, for his obnoxious "90% of traders lose, they just lose!" battle cry....

http://www.elitetrader.com/vb/showthread.php?s=&threadid=113413&perpage=30