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95% losers - Fact or Fiction?

  • #21
  • Mar 5, 2010 8:26am Mar 5, 2010 8:26am
Quoting Darkstar
Does neither one trade or one month of data a trend make. Any idiot could have made money in January so to see a majority of traders still losing speaks volumes about their capabilities.

[color=black][font=Verdana]The mistake your making is to assume that 100% of traders visit forums and participate in market discussions socially. The VAST majority of "traders" are get rich quick suckers who see a forex.com commercial and think their going to be the...
And you would also see a lot of trading systems emerging in these trending markets . But then they'll eventually get busted when market conditions change.
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  • #22
  • Mar 5, 2010 8:37am Mar 5, 2010 8:37am
Quoting kingfisher
Look at top 10 global currency traders like UBS, deustche, barclays, citibank, JP Morgan, bank of america etc.

They are all making money. From where money comes?

I think that there's quite a lot of evidence to support that their profits mainly arise from spread, or front running large customer orders.

I suspect that the true figures for those failing are well above 95%. Failure rates for conventional businesses are not far short, and those starting a business have the benefit of support from banks. government agencies, structured training and education etc.

Trading is entirely the opposite. Its a negative sum game, your playing against some very smart, and very well capitalised people. Most advice that's offered is actually detrimental, occassionally due to genuine ignorance, but often due to a malicious intent to mislead by those who benefit from losses, e.g. brokers, forum owners etc.

Ive been trading full time now for 7 years, and over that time I've seen maybe a hundred people who just might have had the potential and resources to succeed. To my knowledge, only 3 are still around, and still profitable. For every one of those people, there's probably at least another 1000 who are completely clueles, or under capitalised or messing about trading part time.

Given the odd's, and the types of people that retail forex attracts, it would be a miracle for 5% of participants to survive over the longer term. This isnt because trading is particularly difficult, its because those attracted to trading generaly dont posess the attributes that they require to suceed, but they do tend to possess the attributes that would cause them to fail.
  • #23
  • Mar 5, 2010 9:41am Mar 5, 2010 9:41am
Quoting Razzle
Trading is entirely the opposite. Its a negative sum game, your playing against some very smart, and very well capitalised people. Most advice that's offered is actually detrimental, occassionally due to genuine ignorance, but often due to a malicious intent to mislead by those who benefit from losses, e.g. brokers, forum owners etc.
I don't want to get into the whole zero/negative sum argument but don't forget not all participants in the currency markets are currency speculators. Also don't forget this market is unlike commodities/equities and is not easily manipulated by either rhetoric or intervention on anything other than a very short-term scale.


Quoting Razzle
Given the odd's, and the types of people that retail forex attracts, it would be a miracle for 5% of participants to survive over the longer term. This isnt because trading is particularly difficult, its because those attracted to trading generaly dont posess the attributes that they require to suceed, but they do tend to possess the attributes that would cause them to fail.
I agree, and I think to analyse the numbers in any meaningful way would require details of what kind of people make up the 100% (the unemployed, unemployable, underfunded, overleveraged etc), it might be that a very high percentage are totally unsuitable to be traders.
  • #24
  • Mar 5, 2010 10:36pm Mar 5, 2010 10:36pm
Quoting Darkstar
Does neither one trade or one month of data a trend make. Any idiot could have made money in January so to see a majority of traders still losing speaks volumes about their capabilities.

[color=black][font=Verdana]The mistake your making is to assume that 100% of traders visit forums and participate in market discussions socially. The VAST majority of "traders" are get rich quick suckers who see a forex.com commercial and think their going to be the next Warren Buffett. They open an account, blow it up...
What he said.

I think its more like 85% losers though. Tradings not that hard! Oh what did I Just say, knock on wood.
  • #25
  • Mar 5, 2010 10:50pm Mar 5, 2010 10:50pm
After many painstaking minutes of research, I have came to the following conclusions:

Over 95% of the traders losing money are spending over 75% of their time on forums. The 5% that are making money are only successful with 40% of their trades. Of those 40% successful trades, 65% are made using less than 25% of the most common indicators. However, the 60% losing trades, assuming a max drawdown of 15%, account for less than 35% of total trades placed.

I have also determined that nearly 83% of all statistics are made up on the spot....at least 29% of the time, anyway.
  • #26
  • Mar 5, 2010 10:56pm Mar 5, 2010 10:56pm
Quoting pipmutt
I don't want to get into the whole zero/negative sum argument but don't forget not all participants in the currency markets are currency speculators. Also don't forget this market is unlike commodities/equities and is not easily manipulated by either rhetoric or intervention on anything other than a very short-term scale.
Always good to remember without utilitarian traders the markets would not exist. These guys will take some losses to achieve their goals outside of profits.
  • #27
  • Mar 6, 2010 12:39am Mar 6, 2010 12:39am
Quoting TJPLD
lol I wonder where all my profits come frome when I don't pay attention
to fundamentals or indicators.
MY APOLOGIES; I forgot about the "trading naked" crowd. But at least
they're using support/resistance and price action formation to decide
their entry/exit points. They're/You're using a rationale. I suspect that
those 95% are not.

Which leads me to the rest of your comment:

Quote
The 95% figure is quite accurate I would say.

There are no real statistics but I've come a cross a paper from the German Parliament about CFD Trading and Customer Protection. They asked the two biggest CFD brokers for how long a typical CFD account lasts. <b>They said that accounts with 1-5k EURs are usually inactive after 0.5-1 year. Accounts with >5k Euros become inactive in 3 years on average.</b>
This does not necessarily mean that those traders knew what they were
doing, so it doesn't disprove my point on the face of it. They just said
a lot of clients quit; it doesn't say they were particularly dedicated
traders, nor does it suggest they were looking to improve their approach
and learn from their mistakes.
HELL IS EMPTY, ALL THE DEVILS ARE HERE. -- Shakespeare
  • #28
  • Mar 6, 2010 2:15am Mar 6, 2010 2:15am
I wish someone would take the time to correlate losing percentage with years of trading experience. Lord knows I was completely clueless when I started trading forex. It is frightening how much I didn't know. It took me almost three years to become consistently profitable from week to week. I got down to $200 and decided to give it "one more shot"......literally. The one thing you have to remember is that whenever you blow out an account or lose a substantial amount of money in the markets. When you come back the next day, you have to assess what you did wrong and begin trading a completely different way. As Einstein said..."The definition of insanity is doing the same thing over and over again and expecting a different result." Unless you have a mentor who is truly making money consistently who will show you how he does it, it will take quite some time to become a master trader. Yet, week after week I continue to learn something new about these markets. What keeps me grounded is a saying that goes "You're as good as you are, but you are not as good as you think you are."
  • #29
  • Mar 6, 2010 3:01am Mar 6, 2010 3:01am
I have heard the following from fx brokers in my time
"the average size of an fx account is 5k. The average life of an fx account is 3 months" and most recently a broker divulged to one of the managers of myfxbook that they have a 99.8% failure rate from there clients. I would say that is closer to the mark with fx traders and its about time we all started accepting this reality
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  • #30
  • Mar 6, 2010 3:39am Mar 6, 2010 3:39am
Quoting M.A.C.Doug
I have heard the following from fx brokers in my time
"the average size of an fx account is 5k. The average life of an fx account is 3 months" and most recently a broker divulged to one of the managers of myfxbook that they have a 99.8% failure rate from there clients. I would say that is closer to the mark with fx traders and its about time we all started accepting this reality
Nice trading there brother.
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #31
  • Mar 6, 2010 4:19am Mar 6, 2010 4:19am
Quoting M.A.C.Doug
I have heard the following from fx brokers in my time
"the average size of an fx account is 5k. The average life of an fx account is 3 months" and most recently a broker divulged to one of the managers of myfxbook that they have a 99.8% failure rate from there clients. I would say that is closer to the mark with fx traders and its about time we all started accepting this reality
Haha 99.8%, nice odds! Well I guess the profession extremely lucrative. Makes sense that money has to come from somewhere lol.
  • #32
  • Mar 6, 2010 6:14am Mar 6, 2010 6:14am
Quoting LasVahGoose
Nice trading there brother.
not that nice - i just took a 30% loss after closing an over leveraged losing positon and i am still holding large losses in open positions which i will cover next week to save my account and keep me in the .02% for now at least
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  • #33
  • Edited 8:23am Mar 6, 2010 7:35am | Edited 8:23am
Here is the accounting books from a "prop shop" (not specialized on the fx[I think] but the markets are the same) No demo accounts there and I don't think that the average size of the account there is 5K Read all the posts because the full informations about the accounts is not at the begin. http://www.elitetrader.com/vb/showth...hreadid=162253

So, yes, in the retail market 95% is quite an optimistic value.
  • #34
  • Mar 6, 2010 12:46pm Mar 6, 2010 12:46pm
That's true with just about anything. 95% of most businesses fail. Regarding trading, while an average 'loser' may lose 450 dollars and quit, a winning trader will go on to make more than 450 dollars. Doesn't make you special. If you apply for a job with 20 applicants, math says the chances.
  • #35
  • Mar 8, 2010 2:23pm Mar 8, 2010 2:23pm
I read that 98% traders are losers.
It is worth to make on FF a pole but the IDs not be seen.
Then we can get a real overall picture.
For example I increase my account only if I am not distracted by anything and
just working with the market. I trade M1, M5. When i do few jobs at a time,
I move up 98% automatically.

Can somebody organize the poll?
  • #36
  • Mar 8, 2010 3:08pm Mar 8, 2010 3:08pm
Quoting MarketPips
I read that 98% traders are losers.
It is worth to make on FF a pole but the IDs not be seen.
Then we can get a real overall picture.
For example I increase my account only if I am not distracted by anything and
just working with the market. I trade M1, M5. When i do few jobs at a time,
I move up 98% automatically.

Can somebody organize the poll?
Yea i,d love to see the poll with reality but im sure most of traders will not post their real results in poll...
See the threads like this seems almost everyone is profitable lol
http://www.forexfactory.com/showthread.php?t=170443
So forget about the poll with real results
  • #37
  • Jun 6, 2010 1:19am Jun 6, 2010 1:19am
I really can't talk about other people as I don't anyone who trades 4x, at least personally. But in my opinion, and this is just my opinion, it seems to me that the 95% figure is B.S, pure B.S. I still have faith in Humankind. It took me 2 years to become profitable, consistently. The problem wasn't the market, it was me, my expectations.
The sadly truth is that most people enter in this business thinking they will became rich soon, as I did, thinking this is easy money. I discovered it wasn't like that on my first day placing live trades.
Those guys quickly quit and I don't think of them as traders.
Traders are the ones who are willing to learn, to spend their time away from anyone and anything else just to watch charts, reading, buying, waking up at 4am to trade a breakout just to gain 2.50 eur, selling, backtesting, leave their girls hanged to watch the reaction of the markets to another Trichet bomb, experimenting different MM approaches, etc... Traders are the ones who fall in love by this amazing science/art, traders are the ones who live and breath numbers, prices and volumes.
I refuse to accept that 95% of those guys fail, if they fail, their not traders, a trader, a true trader does not fail, he discovers 10, 100, 1000 ways that don't work but he does not quit, he keeps trying until he became profitable.

This way we can say that 95% of the chumps who enter this business actually fail, the others 5% turn themselves into real traders.

The "95% figure" contains everyone but only a few have the "trader bug" inside them, they are the ones who should be considered in this kind of statistics. Let the chumps be on the other side. I bet 95% of the traders here fail as chumps.
  • #38
  • Jun 6, 2010 1:51am Jun 6, 2010 1:51am
I don't like the stat as it divides everyone into winners and losers, rather than considering how much was won or lost. Quite a few losers will be marginal losers, and most winners probably aren't substancial winners.
  • #39
  • Jun 6, 2010 2:22am Jun 6, 2010 2:22am
I loose more than I win, but I'm making money. Ask my car! It's for sale, by the way!
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  • #40
  • Jun 6, 2010 2:23am Jun 6, 2010 2:23am
I find this thread great.

I have been demo for 3 odd months so far ( because that is what was suggested to me ) and i have lost demo money consistently.

I now have a mentor who I believe is sucessfull and I think I will learn to use the method he uses well in time, or at least parts of it with my own method. that word again TIME.

But anyway, I got interested because it would be a great full time job for me considering my circumstances.
The fact that 95 + % of people who try fail does not worry me all that much, it just warns me to be cautious.
The fact that after 3 months I cannot make money does not bother me, I have had 2 previous professions and I could not make money with either of them after 3 months ( or not money worth making ). The failure rate for one of them is much higher.

The big thing for me is that I believe I can make money as a trader most of the time, I do have short periods of doubt when days are hard but I get through it and knuckle down to more study and more demo. I have no set time for how long it will take me to go live, I might have a breakthrough tomorrow and demo well for the next three months, I might have already had that breakthrough. I might demo for another 3,5,7 years before I consider myself able to earn a living doing it.

To me the big one is believing, I believe if I put in enough time and effort I will learn the skills I need, both mental and practical.

The second big thing to me is being willing to put in the hard yards and pick yourself up after failures and keep trying. These do not need to be with real money if you learn the discipline to treat this and your demo account seriously ( I may have achieved this already, maybe not ? )

It seems to me it is easy enough to understand systems, methods, what trading is about, the mental aspects, MM etc but it is like the difference between teaching something and doing something. Just because you know how to do something does not mean that you can do it. It seems to me there is no substitute for time in the saddle.

I would love feedback of any intelligent type on my thoughts from experienced people ( please PM me if you like ). If I get 1 person saying I am a wrong and 3 people with positive feedback, great. If I get 4 people telling me I am wrong, It would be foolish to argue : )

Cheers.
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