Where did the "90% are losers myth come from?

The reason why most people fail is because trading requires people to do the 2 most difficult things in life. To think and then to have to make decisions. Most people are to lazy to be bothered by having to use their brains and make tough choices. Which is why most people do what other people tell them to do.

Most people are sheep, the need someone or something, be it religion, government, bosses, to tell them what to do. And when they enter the trading arena and have to constantly be thinking about the next decision to buy or sell, they realize, often too late, that they are completely lost and have no idea what to do or why. That's what kills them.
 
Quote from Sushi:

Do you swear to the trading goddesss that your not wealthy prior to starting trading or have access to capital via family or wife?

Yes. I will follow you cause if you tell truth and are not lying about above your one in a million
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Did you recently blow out? Why are you so bitter and vigilant about trying to convince everyone that no one can make money trading?

If you truly believe that no one can make money trading then you don't need to scream about it and bombard a message board with negative comments. Everyone will just find out on their own!!! Right?!?!?!?

Trading is a tough tough game filled with ups and downs. My guess is that you are a relatively smart successful individual that has recently failed miserably at trading. Telling everyone that it is impossible to make money trading makes you feel better about your shortcomings.

I'll be honest with you I could have easily given up on trading many times but I didn't... I am glad I stuck with it. Maybe one day I will "blow out" although I can't even imagine how this is possible with strict money management. But if I do I will remember you and say you know what Sushi was right :D :D
 
It is true though, that if we thought trading was like the roulette (random walk hypothesis), as he seems to be thinking, over time, the % of winners would tend to zero. Even if you neglected the fact that you don't have a 50/50 chance but only 19/37 chance (because of the "0").

Indeed, even with a 50/50 chance, once you win and once you lose, and over time, no one would make money. If you then add commissions and spread, then everyone would lose in the long run. But the point is that we seem to disagree on whether markets are (somewhat) predictable or not.

If they are predictable, then someone could learn how to predict them. But he seems to disagree on this assumption. And then of course he says "the longer you trade, the more you're likely to have a losing balance".

This however does hold true for all traders who didn't develop a winning method, who are the majority. In the long run, among those who don't have a winning method, the % of losers will increase and tend to 100%, whereas at the start the % of losers will only be (nearly) 50%. And some will think they've figured the markets out. Then as time will go by, more and more will realize that overall they're not making any money and actually slightly losing money (due to commissions and spread).

This unless they only go long on stocks, because in that case, over the years, everyone could win, since in the long run prices go up (or at least they have for the past 100 years or more).
 
Without a clearly defined edge, a strong money management method and discipline you will simply become fodder ....

As for predicting markets.....DON'T.
 
Quote from human151:
well I am new to trading and found this site. I read the forums and say that figure tossed around more than once. I just wanted to see if anyone could tell me if it was backed up by fact.
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...backed up by fact Excellent point!!!!

Human151,

Welcome and Caveat Emptor!!!!

Much of what is said on this thread is unsubstantiated confabulation. :eek:

Your ability to sort through the bullshit and nonsence will be one factor in your success.

There have been some good responses but the bad ones demonstrate in a painfully clear way why those negative nellies are so pessimestic.

I encourage you and everyone new to investing to be careful what they take in as vaild.

There has been some good and some excellent advice on this site. It is **clearly** in the minority.

Many things in the investment world are not what they seem. I don't think the wise investor knows the truth but rather the wise investor is suspicious of manipulation and decipt at times when the fool is trusting.

As such... what you read in investment blogs and forums is to be taken with a grain of salt and learn to descern!

As to my take on it... I don't know the stats but I doubt there are any good stats available. Everything I've heard has been mangled out of context more often than not.

If I were to analyze this question I would consider data from an online brokerage on several kinds of investors broken down by trading frequency.

I doubt the brokerage houses are going to bust out their databases for me so I figure the question is up for debate for a long time.

The other valid bit of information on this question is the frequency of small business failure. These are people who put their money where their mouth is and there is a high "failure" rate. Still... this too needs to be seen in a broad context of life. Many of these "losers" learned many valid business lessons that they take to the corporate world or other successful ventures. As well... many small businesses close, not out of bankrupcy but out of not making "enough" money.
I expect human nature to demonstrate a similar pattern in investing.

As to your original question... its human nature to exaggerate and for others to believe myths. This is an important factor in market dynamics.

Are you a "believer" in peak oil, free market economics, the (ever) coming of hyper-inflation or the Treasuries Bubble?

Myths always have some basis of fact but most believers seem to lack a grasp of mitigating circumstances and every now and then something extrordinary actually does happen.

It's as if cows shit pearls and your job is to find the pearls in a pile of investment manure.

Good luck,

Eric

PS I highly recommend a humourous and informative book called "A Fool and His Money" by John Rothchild.

Although the book and financial instruments are old, the principals are sound - always look to understand the other person's motivation.
 
so 10 percent of all traders succeed and 90 percent fail. That doesnt sound like a lot. But, there are 300 mil people in the US. How many will try to trade this year? A half of a percent is a very conservative number, so we'll go with it. So thats 1.5 mil in the US will try to trade. If ten percent of those people are profitable thats 150 thousand people will be profitable this year. Thats a lot. Say 1 percent is profitable long term. Thats still 15000 traders right now. Thats still a lot, or at least sounds like a lot.
 
90% are losers by choice. Over long periods of time I think there is positive expectancy. The question is whether the beginner takes the time to develop his system and his skills. Many don't know the difference between what they think are "skills" and luck. I think learning trading setups, particularly breakout trades, and swing trading are the most beneficial types of systems to learn. I think most people don't know how to trade futures b/c it's too leveraged. Making 2 points for $1000 on the ES only tells me that trader was significantly overleveraged, and didn't make much for the risk he was taking. That's another story.

Just have some reasonable expectations. Like flat for a couple years, then when you get it, you'll understand how to trade. That aha moment will come, but not likely in the first two years.

It's not to say 90% lose, more that, 90% don't know how to learn to win. When you can't learn, there's no point in continuing, and this is most likely why most quit. They don't understand why they lost, and gained no knowledge by losing. The one's who blow out should have known way before that that they didn't know what they don't know.

I learned with years of backtesting, WL, and econometric time series research. Paper trading a little, but then going whole hog about 5 years ago during college. Took a couple years, but give me some credit, I was studying for my bachelors of science at the same time. Allowing yourself to learn while doing is how the game is won.
 
Alright these discussions are getting a little ridiculous. Look, to become a successful trader you have to be willing to do your research and trust your gut instincts. Now this might sound freaking ridiculous but after a long period of trading you start get a 7th sense that sort of guides you. It's sorta like your unconscious mind that triggers mass quantities of data into a sort of feeling by noticing patterns. Your unconscious mind being millions of times more powerful than your conscious mind. However, I will say one thing that traders won't tell you. They won't tell you that one of the biggest things that distinguish traders is how much experience they have. Once you have tons of experience you have more accurate predictions, and more accurate instincts to base your decisions on.

Now, before you start saying I suggest relying on gut instincts alone don't get me wrong. I also rely on data and facts I pay attention to the news, moving averages, foreign market movements, etc. etc. It's like what the CEO of Intel Said "Dive into the data and go in with your guts"

I'm an unorthodox investor/trader some positions are meant to score massive gains due to the fact that I have 70% of the information I need on the trade and about a 90% success ratio. However if I don't have enough information and I can't evaluate my success ratio I won't walk into a trade.
I don't have a set criteria set, I just look for positions that have a high ratio of success. Some traders will stick to one strategy and call it good. Others will do a bunch of speculating and suck at it and blow a bunch of cash. Some investors are extremely long term like warren buffet. I on the other hand trade any stock or option for any time frame as long as I have a high chance of success. I don't have a set defining principle but it works for me and that's my strategy.
 
This is funnier than the natinal inquirrrrer. We have one guy who claims to have a seventh sense. Another never losses and takes only high probability trades yet is just guessing. Delusions in this business run deep hence the rewards for the winners. This thread is clear evidence of the 99% losers. One thing for sure. Ya can't argue with the mystics that use 7th senses! 90% win ratios. Mystics rule the freaking markets. Seriously delusion runs rampant on this site
 
Quote from Hester:

so 10 percent of all traders succeed and 90 percent fail. .
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That is not a reasonable assumption. Most of those 10% succeeders likely break even, make small profits or make profits for a very short time.

Number of "traders" who are longterm successful and support themselves well or are rich from trading? I estimate maybe 0.3%
 
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