You are 100% Certain to lose 99% of the time 1/2 the time.

[TradingLogic]

I see the statistics mentioned in the various places on the Internet, including these forums. They are usually something along the line of: Only 1-10% of the people can be successful at trading or in other words 90-99% fail.

In my favorite way to stringently evaluate all possible information (a Google search) I stumbled upon this article:

http://www.forexschoolonline.com/do-95-of-traders-really-fail/

The purpose of this post isn't to say the data in the article above is accurate or not; or the data clearly shows its easy to be successful, which it doesn't. It is simply to show another side of the same dice.

 

[skilluk]

The article referenced is written by a vendor with an agenda to sell the fake dream.
Its not impossible to be profitable. And its not easy. Its just very very very hard to overcome very very very high expenses.

Lets say you only trade SPY (price around 200 currently).
You only put ONE trade a day (RT). This is about as low frequency as you can get as a daytrader.
It costs you about .01/share to enter and exit a trade using a low cost broker.
So that's .02/share RT.
So your commission cost at year end is .02*250 = $5.
Now 5/200 = 2.5% loss every year just due to commissions.
Now add slippage, data fees, all other trading related expenses.
You can easily expect expenses to eat up at least 5% of your account each year WITHOUT even having any losses.

That is a HUGE and constant headwind even for this very LOW Frequency trading system.
The more you trade the larger the expenses drag your account into the red.

Over 90% lose only due to expenses period.

The only way to increase your chances is to trade as infrequently as possible, wait for the fat pitch, and be a pig when everything lines up. But all daytraders do the complete OPPOSITE of this.

I just wasted my time typing this as very few trade to win.
Everyone knows the statistics backed up by thousands of studies but they just deny the science.
Most just trade for excitement or to act out some impossible fantasy.

 

[i960]

The only way to increase your chances is to trade as infrequently as possible, wait for the fat pitch, and be a pig when everything lines up. But all daytraders do the complete OPPOSITE of this.

I disagree that you have to trade as infrequently as possible. While it is important to keep expenses and excessive trading curbed, appropriate use of leverage goes a long way.

On the other points I do agree that he's selling the dream.

 

[TradingLogic]

I agree he is selling a system.

My point is we all just throw around the statistic of how much traders fail but I've yet to see a report that actually breaks it down. I'm not saying it is or isn't true, I would just like to see a more statistical description of that. The chart he presents is the step in the right direction. If your saying there is no way that is accurate that is fine, but show me where the accurate data is.

 

[marketsurfer]

Once a FX dealer ran a contest with the prize money going to whoever could lose the $50k of virtual money the fastest. Guess what, the losers still lost by winning. Think this over very carefully. surf

 

[i960]

Once a FX dealer ran a contest with the prize money going to whoever could lose the $50k of virtual money the fastest. Guess what, the losers still lost by winning. Think this over very carefully. surf

Surf any background info on this btw? I'd be interested in reading about it.

Obviously the moral is that they have a losing mindset in the first place.

 

[kut2k2]

I disagree that you have to trade as infrequently as possible. While it is important to keep expenses and excessive trading curbed, appropriate use of leverage goes a long way.

On the other points I do agree that he's selling the dream.

Please expand on "appropriate use of leverage."

 

[i960]

Please expand on "appropriate use of leverage."

Meaning sane levels with reasonable risk management such that one is controlling a significant amount more capital than what is in the account but not doing stunts like 100:1 on CHF as an example.

Leverage allows returns to be higher such that return on capital, if traded well, significantly outshines any fees from daytrading.

 

[marketsurfer]

Surf any background info on this btw? I'd be interested in reading about it.

Obviously the moral is that they have a losing mindset in the first place.

I wish i could remember the details, sorry. Maybe someone else here remembers who the dealer was and the results. Thanks, surf

 

[kut2k2]

Meaning sane levels with reasonable risk management such that one is controlling a significant amount more capital than what is in the account but not doing stunts like 100:1 on CHF as an example.

Leverage allows returns to be higher such that return on capital, if traded well, significantly outshines any fees from daytrading.

Sorry, what I meant was how do you determine enough leverage without applying too much? TIA.