Proof that about 25% of traders actually make money

Quote from ElCubano:

In 1998-99 broadway trading in miami had 90- 100% of their traders making absurd amounts of money......theyve all since disapeared.
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I got your point, but was 2007 a similar year to 1998?

And in return, I could say, a bigger than usual % of traders lost money in 2008, because the market turned down. Since we don't have lots of data from different brokerages from different years, we have to go with what we have

As Rumsfeld would say: You make conclusions with the data you have, not with the data you would like to have.... :)
 
Quote from emg:

The successful traders in the house are making more than $20K per month.
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This is an offtopic and blatantly stupid statement.... Without knowing the account size, you can not make such an overgeneralization.

If I have 10 million bucks on my account, and I make 240K a year, that is only 2.4% annually, hardly a success...

This statement of yours just shows that you have no ability to think critically...But if you SHOW ME some similar account statements from another brokerages showing a 90% failure rate, I will gladly believe your mantra....

So show me proof, simple as it is....

By the way I know, the long term survival rate is much smaller than 25%, but that wasn't the point. The point is that finally we had some kind of reliable data, and the data showed a much bigger profitable ratio than what one would expect in a year's interval...

Not to mention it proved exactly the opposite what the OP tried to prove in the original thread....
 
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.
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This is true imo. I started day trading in 2000, at the time my managers group had 80 traders in it. Fast forward to 2011 and 5 of us are left from that original group, one other great trader I know started in 2005ish and is still trading today, and likely will be for as long as he wants. Trading is hard I never for a second thought I would be one of those 95% who fail, but then again who does? After much success I brought my brother in to the business with my own money and lost alot on his tuition. I was so confident that I could teach him what I knew, but that was a dream.
 
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.
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For some "failing" is not an option. I left my corporate job in 1996 and have traded since; 15+ years. I'd be a dinosaur in my former field given all the advances and changes in that time. So continuing to succeed as a trader requires adapting at times to how to best make money that week (month, year).

One thing I've found is that I now trade less hours than I did the first 10 years. Getting away from the market and in my case tutoring at risk kids in math is a welcome diversion and breaks up a few days each week. And when I come back to trade I'm more refreshed and focused.

Last, being out of mainstream employment for 15 years would create major challenges in the current environment with unemployment at 9+% and closer to 17-18% if you count the underemployed, those who have given up looking.
 
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!!
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Interesting stats;
Of the 25% that made money how many outperformed the market? Had they bought and held SPY they would have gained about 5% over the year in 2007. How many accounts were up over 5%?
 
The biggest lesson I have learned is that trading for a living is not realistic for most people, including me. For me and most people coming up with a 100k account is pretty much impossible. Lets say I did the nearly impossible and got 100k together. Lets say I earn 40%. That figure is pretty much out of reach for most people as well. That 40k is going to leave me in the poor house after taxes and self employment expenses. I know this because while I traded full time I supplemented my income by playing online poker which was my real breadwinner. I made maybe 100k total each year and we were always broke. (I have wife and 2 kids). We were penny pinchers too.

There is also a learning curve. One can't expect to make an income right away. How are you going to cover living expenses while you learn? Again for the majority of people this is not doable.

IMO trading is best approached as either a career with a firm or as a part time hobby/investment strategy.

For example once I realized trading full time was not a good idea for me I joined the military. Right now I can only trade EOD and I have very little capital. So I am mostly studying and make little longer term investments. If all keeps going according to plan I will eventually be a physicians assistant and will accumulate more capital. I will also be able to get a schedule that allows me to trade maybe 2 hours in the morning. This should be enough to allow me to earn excellent returns. My income will allow me to make contributions.

Do the math on account value after 10 years given 2 different scenarios:

1. High returns and regular withdrawals
2. Lower returns but no withdrawals and regular contributions.

For me it is a no brainer. Especially when you factor in the fact that I won't be on a computer all day. And I am pursuing a career I really enjoy. I like being in the military right now and I like being a medic and studying medicine. I hated being on a computer all day and being relatively isolated.

Just some things to think about.

Are you setting yourself up for failure? Most traders are.
 
Quote from baggerlord:

The biggest lesson I have learned is that trading for a living is not realistic for most people, including me. For me and most people coming up with a 100k account is pretty much impossible. Lets say I did the nearly impossible and got 100k together. Lets say I earn 40%. That figure is pretty much out of reach for most people as well. That 40k is going to leave me in the poor house after taxes and self employment expenses. I know this because while I traded full time I supplemented my income by playing online poker which was my real breadwinner. I made maybe 100k total each year and we were always broke. (I have wife and 2 kids). We were penny pinchers too.

There is also a learning curve. One can't expect to make an income right away. How are you going to cover living expenses while you learn? Again for the majority of people this is not doable.

IMO trading is best approached as either a career with a firm or as a part time hobby/investment strategy.

For example once I realized trading full time was not a good idea for me I joined the military. Right now I can only trade EOD and I have very little capital. So I am mostly studying and make little longer term investments. If all keeps going according to plan I will eventually be a physicians assistant and will accumulate more capital. I will also be able to get a schedule that allows me to trade maybe 2 hours in the morning. This should be enough to allow me to earn excellent returns. My income will allow me to make contributions.

Do the math on account value after 10 years given 2 different scenarios:

1. High returns and regular withdrawals
2. Lower returns but no withdrawals and regular contributions.

For me it is a no brainer. Especially when you factor in the fact that I won't be on a computer all day. And I am pursuing a career I really enjoy. I like being in the military right now and I like being a medic and studying medicine. I hated being on a computer all day and being relatively isolated.

Just some things to think about.

Are you setting yourself up for failure? Most traders are.
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Good points, but frankly, there are several proven routes for raking in well over 40%/year with just 100k.

Running an account with 100k, one can do a litany of things (strategies) that no HF firm or any sizable account could. For example, intraday trading leveraged ETFs or futures that move with indexes. Nobody likes to talk about it openly because they don't want to reveal their strategies, but doubling ones money each year, or even each quarter, is doable, IMO. Of course, once you size up a high seven or eight figures, then 40%/yr is better than day trading 100k.
 
if these stats are true and you work at a trading firm or a bank and can get access to pnl and positions.....why not select the absolute worst traders and just keep betting against their positions until they improve their trading results or exit trading. if you dont have access just make friends with the worst traders.....they will tell you what they are thinking because they are already doubting themselves and are seeking validation of their ideas.
 
Quote from EricP:

How does one calculate the percentage of losing traders, assuming all of the data is in hand?

For example, let's assume the following history for a prop firm:

Year 1: The firm opens. 100 traders begin trading. 90 fail miserably and go away. Ten have some level of success and continue trading with the firm.

Year 2: In addition to the 10 net profitable traders from the prior year, another 100 new green rookie traders join the firm. Of the rookie traders, 90 fail miserably and 10 have some level of success and continue trading.

Year 3: In addition to the 20 net profitable traders from the prior year, another 100 new green rookie traders join the firm. Of the rookie traders, 90 fail miserably, while 10 have some level of success and continue trading.

etc, etc, etc

Year 9: In addition to the 80 net profitable traders from the prior year, another 100 new green rookie traders join the firm. Of the rookie traders, 90 fail miserably, while 10 have some level of success and continue trading.

So, the question is: "What percentage of traders actually lose money?" => In Year 9, one might conclude that 50% of all traders are profitable (80 experienced traders + 10 rookie traders made money while 90 rookie traders failed). However, someone could also look at all of the data for the firm and see clearly that 90% of all traders that came into the firm lost money.

Obviously, this is a simple example, but I suspect most people looking at all the data would say that 90% of all traders lose money, not 50%.
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the 95% stat was based on 1st year traders at the cboe,95% of new badges were not around at the end of the year..so your logic is clear,the stat of 95% when quoted is misquoted,it should be 95% of new traders fail within their 1st year
 
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