Why do 95% of retail traders lose?

[Joman]

What are you talking about

Shouldn't have wasted my time to reply to you initially...

Good luck with your trading.

 

[tommo]

Joman,

Yeah i've seen that link before which suggest 20-30% of retail trading accounts are positive. Assuming those figure are accurate you also have to remember those stats take into account all newbie accounts that come into the market have a punt and quit. I wonder what the stats would be like if you only include people that take it seriousy. Quite how you would quantify that im not sure. Maybe if you were positive for the last quarter what percentage of accounts continue to be positive on a month on month basis

 

[cornix]

How many people become good professional sportsmen or artists, so that they live solely by that activity?

It always amazes me why people think trading should be any easier to succeed at...

 

[Joman]

Very true Tommo.

On the other side, you also have to consider 2 things:

- what is the percentage of people that are really serious ?
If do your own due diligence, you would choose the cheapest of these brokers: the percentage goes to 50% of positive accounts.

- what is the percentage of people that do it full time ?
I'm not sure a lot of these accounts belong to full time traders.

The point is if you're serious and do it full time, I'm sure the odds are much higher !

So like you said, not everyone can do it but this is very feasible.

 

[cornix]

Another life example (and a hint to what is most difficult about trading ):

How many obese people try to lose some weight? Apparently most. How many of those people solve their obesity problem? Right, only a few %.

Is it because advices to stop eating crap, generally eat less and do more physical activity are scam?

Or is there another reason?

 

[Peternam]

Quote from fanews:

Why do 90% of people who attempt daytrading the ES lose or quit after 6 months?

someone told me at least 90% of daytrading accounts close after 6 months after blowing out.

those are the stats from the broker

from a big broker ?

forex,futures or stocks broker ?

 

[Peternam]

Quote from Rabbitone:

This is about the 100th time I have seen this topic. So, I finally decided to finally toss in my two cents.

We all agree traders lose money because they don’t know what they are doing. Here is how it happens to most newbie traders:

The majority of newbie traders start out by reading countless trading books, magazines, paying for expensive trading lessons, conventions and courses and/or trying techniques derived from the internet. These materials stress trading special setups that promise the world to us. However, few if any of us can take on these special sets-ups (specially designed by another trader) directly from these sources and trade them profitably over any length of time, if at all.

The reason we cannot trade most special setups is they lack giving us 2 essential items we desperately need – experience and constraints. You read “…only trade the ES it’s the easiest to trade… just use this setup…” The 95% of us that try to trade this set up do not have the experience to know when it may work or when it may not work (the author left those details out). This lack of “experience” with most set ups leads us to abandon the set up at the 3rd consecutive loss it takes (the teacher forgot to tell us 5 consecutive losses is the normal drawdown).

In the few times we try to trade the special set up we had no idea what realistic constraints to put in our plan to trade the set up. If you were to ask these authors and teachers directly most of them would give you a set of constraints to put in your plan that are totally unacceptable to you. Such as “ …Why are you trading with $10,000?…this setup has drawdowns bigger than that trading 1 contract!.. You need $25,000 minimum in your account (which they neglected to tell you)…” “…Why are you doing position sizing that way? This special set up only works with ---- position sizing (which they neglected to tell you)…What, you didn’t know that after an 6% drawdown in month you must stop all trading? (the teacher left their key rule out and your account is down 32% in 20 days)”

The next layer that is piled on top for a newbie trader in trying to adjust this special set up using forum advice to make it work. “…I read that author. Don’t trade ES try the special setup with CL it will work.” “The authors time interval doesn’t work …I trade 734 Ticks with the special set up and it works for me!...” “You have got it all wrong you have to back test that special set up into an strategy with a minimum of 10 years of data.” “Another states back testing is a waste of time it never works…”

By the time most newbies try to adjust to all these fluctuations to try to trade this special setup or another special set up they have burned through one maybe two trading accounts and 95% give up (…some will try again…). The 1 in 20 who is still live with the special set up hit a huge random winning streak (…this is the one who writes the author or teacher and tells them their whole life has changed because of the huge profits the special set up has made for them…).

A select few passionate traders having been consumed by this juggernaut that has crushed them to pulp start over. This time they realize they must build trading from the ground up using set ups and rules that are right for them. What all successful traders eventually find out is that their trading is a form of artificial intelligence. In this process each trader develops a rules based expert system that works from our experience to specifically to manage our trading criteria or edge. These traders find that the rules that work for you as trader in the majority of the cases will not work for me and my trading edge.

Thumbs up !

 

[endsongs]

RE: Why do 95% of retail traders lose?

One acronym to answer the question: RTTM

 

[luisHK]

Quote from cornixforex:

Another life example (and a hint to what is most difficult about trading ):

How many obese people try to lose some weight? Apparently most. How many of those people solve their obesity problem? Right, only a few %.

Is it because advices to stop eating crap, generally eat less and do more physical activity are scam?

Or is there another reason?

Are you a shill for weight watcher or do you really make money trading ?

 

[cornix]

Quote from luisHK:

Are you a shill for weight watcher or do you really make money trading ?

Whatever makes the most money.

But if seriously, people tend to look for outside reasons for their failures in many fields, when in reality cause of the failure is often inside, their own lack of practice, lack of discipline, lack of focus et cetera...