Really? 50% of traders win? Remember, we're talking about trading rather than investing. And who is funding these traders' winnings? The other 50%? Seems kind of thin. The only way for good traders to make good money is for the majority to take the other side of their trades. As I understand it, anything other than simple equity investment is necessarily zero sum. Please correct me if I'm wrong.
Why do 5% of Traders Win?
- Thread starter oldtime
- Start date
That is a myth really, that winnings only come from losers. I said already in this thread, retail traders in general constitute negligible amount of total volume in markets like ES or currencies.
Financial markets are zero sum game indeed, but it doesn't work as straight as "5% pocket what 95% lose".
It's more like "fund starts buying, winners notice that, jump onboard and are now this fund's slippage". The money comes from all clients of the fund, getting a bit less profit in this case if trace this chain deep enough.
Not from some guys losing $200 on their retail account and getting stopped out of ES trade in wrong direction.
Them too of course, but that's like if you swallow an ant, which sticked to your steak.
You cannot possibly assign probability values to such events. At best, you have "balance of probability." And I would argue that the nature of the price action itself is more relevant than the level at which it presides, which was my original point. We need not agree.Quote from cornixforex:
Both parts of my post are in agreement.
But it's never cast in stone. Everything is probabilities. And certain price action around a certain level has different probability than the same price action in absence of the level.
You did not appear to take the time to read the post to which you responded. And your response is all over the map.Quote from cornixforex:
That is a myth really, that winnings only come from losers. I said already in this thread, retail traders in general constitute negligible amount of total volume in markets like ES or currencies.
Financial markets are zero sum game indeed, but it doesn't work as straight as "5% pocket what 95% lose".
It's more like "fund starts buying, winners notice that, jump onboard and are now this fund's slippage". The money comes from all clients of the fund, getting a bit less profit in this case if trace this chain deep enough.
Not from some guys losing $200 on their retail account and getting stopped out of ES trade in wrong direction.
Them too of course, but that's like if you swallow an ant, which sticked to your steak.
I did.
You wrote the only way to make money for good trader is that majority to take the other side of his/her trade.
My point is, yes, of course there is always someone on the other side of every trade, but it's not even close to individual winners just taking the opposite side of the individual losers.
This "winners' money comes from losing traders" is a myth, because of course it does, but to much higher degree it comes from economy in general through the chain of intermediary players. In exchange for the risk, us speculators take.
P. S. If a trader opens the trade and majority of other market participants opens in the opposite direction, he is the loser in that case, not the majority, cause market goes where the majority goes.
you made a point. look at those 401k guys, they never touch their accounts. they lose nothing if they hold through this 2008 crisis.
so the majoriy does not lose. the losers are those who trade frequently. the more often you trade, the more chance you lose. warren buffet does not trade, he wins, all the money goes to him.
is that true?
it is not a zero sum game in stocks/funds/etfs. people can cheat, they buy this moment, but will not promise to sell next minute, they may hold infinitely. so a seller's money will go to the buyers. or those frequently out/in guys' money go to investors or those guys who have lots of money and do not care daily ups/downs. also onther cheaters, like a company goes public, they collect money from those buyers, then they pocket the money and let the company die. most time in this case the mojarity.
it is a zero sum game in future/option. people can not cheat, some one buy this moment, but even they will not promise to sell next minute, they are forced to sell before expiration. since if you are in, you must get out.
in this case, only those guys who know who are in or insiders win, or those who dominate the market win, those who know the game win, and those who accept physical deleviery win.
in a trading session from 9:30AM to 4:00PM, the huge volume, I bet 99.999% are day trades. the losers are those who are not prepared before the opening, those who jump in and jump out based on the whim. the winners are those who are well prepared (have a rough idea about what a session will be, know big trend, and key support/resistance, news schedule, have a trading plan, know how to respond and take action ...).
for exmple, how i trade this friday's session. when i wake up and turn on my computer, I first take a look at overnight trading, take a note about high/low, then check news schedule, i found there are no majr news. so I reasoned it is a range band session. I found NQ's overnight low 2633 is a key support (I noticed thursday it bounced from 2634), 2649.25 is a resistance (the market retreated from there). so I waited till it hit either resistance or support, then I hit button. ding ding, did everything as planned.of coourse a pretty good day.
so the majoriy does not lose. the losers are those who trade frequently. the more often you trade, the more chance you lose. warren buffet does not trade, he wins, all the money goes to him.
is that true?
it is not a zero sum game in stocks/funds/etfs. people can cheat, they buy this moment, but will not promise to sell next minute, they may hold infinitely. so a seller's money will go to the buyers. or those frequently out/in guys' money go to investors or those guys who have lots of money and do not care daily ups/downs. also onther cheaters, like a company goes public, they collect money from those buyers, then they pocket the money and let the company die. most time in this case the mojarity.
it is a zero sum game in future/option. people can not cheat, some one buy this moment, but even they will not promise to sell next minute, they are forced to sell before expiration. since if you are in, you must get out.
in this case, only those guys who know who are in or insiders win, or those who dominate the market win, those who know the game win, and those who accept physical deleviery win.
in a trading session from 9:30AM to 4:00PM, the huge volume, I bet 99.999% are day trades. the losers are those who are not prepared before the opening, those who jump in and jump out based on the whim. the winners are those who are well prepared (have a rough idea about what a session will be, know big trend, and key support/resistance, news schedule, have a trading plan, know how to respond and take action ...).
for exmple, how i trade this friday's session. when i wake up and turn on my computer, I first take a look at overnight trading, take a note about high/low, then check news schedule, i found there are no majr news. so I reasoned it is a range band session. I found NQ's overnight low 2633 is a key support (I noticed thursday it bounced from 2634), 2649.25 is a resistance (the market retreated from there). so I waited till it hit either resistance or support, then I hit button. ding ding, did everything as planned.of coourse a pretty good day.
Quote from cornixforex:
I did.
You wrote the only way to make money for good trader is that majority to take the other side of his/her trade.
My point is, yes, of course there is always someone on the other side of every trade, but it's not even close to individual winners just taking the opposite side of the individual losers.
This "winners' money comes from losing traders" is a myth, because of course it does, but to much higher degree it comes from economy in general through the chain of intermediary players. In exchange for the risk, us speculators take.
P. S. If a trader opens the trade and majority of other market participants opens in the opposite direction, he is the loser in that case, not the majority, cause market goes where the majority goes.