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Attachments: New study shows only 1% of traders are consistently successful
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New study shows only 1% of traders are consistently successful

  • #21
  • Mar 30, 2010 3:58pm Mar 30, 2010 3:58pm
Quoting FXSurfer
It's our mothers' fault if we fail!



Really good post, Pip!
Cheers Surf!

Haha yes, I bet that would have been his theory, lol
  • #22
  • Mar 30, 2010 7:28pm Mar 30, 2010 7:28pm
99% losers? Very sad. Aren't they strategies hunters?
  • #23
  • Mar 30, 2010 8:58pm Mar 30, 2010 8:58pm
Quoting MarketPips
99% losers? Very sad. Aren't they strategies hunters?
Sort of... they are grail hunters. Grails are much better than strategies because they come with flashing arrows and they work 100% of the time. Besides, strategies are applied to that which is yet to come which is bothersome. Grails are applied to that which has already occurred making it much easier to see how to use them and how wonderful they are.

http://www.fotosearch.com/bthumb/UNC.../u10858653.jpg
  • #24
  • Mar 30, 2010 9:16pm Mar 30, 2010 9:16pm
Too many relying on some worthless trading MT4 robot.......
Learn how to trade and do it yourself.
  • #25
  • Mar 30, 2010 9:24pm Mar 30, 2010 9:24pm
I think the number of successful day traders is about 50% for the past week, 25% for the past two weeks, 12.5% for the past month, 6.25% for the past two months, 3.125% for the last 4 months, 1.5065% for the last 8 months, circa .75 for the last year and a half.... or something along those lines. The numbers may be off, but thats the trend.
Living the adventure in my head.
  • #26
  • Mar 30, 2010 9:57pm Mar 30, 2010 9:57pm
I don't think it matters how many % it is, either way its a hard market and if you want to make it in this market you have to work hard, learn lots, discipline yourself, and spend time on it.

I told myself that i'd make it in the forex market 2years ago, and not making is like as if I'm not as good as other people, and i definitely don't like to think i'm not as good as other people, and 2 years later I think i'm doing pretty well for myself. I donno how consistent you have to be to be considered consistantly successful, but I haven't lost money at the end of the week for 14weeks now.

Not trying gloat about how successful I am, just trying to give others an insight that If you set off thinking its too hard to learn then you'll never make it with that attitude. Work hard study, if don't know everything about the market then you better keep learning (and you'll never know everything so keep learning).

Google is your friend.
  • #27
  • Mar 30, 2010 10:09pm Mar 30, 2010 10:09pm
Quoting tradestar1
Too many relying on some worthless trading MT4 robot.......
Learn how to trade and do it yourself.
Having consistently ~10% per month for consecutive 2 years can be considered in the 1% group?

If all the 99% loser, using the same EA, would the results will change to 99%+1%=100% winner..hahaha
  • #28
  • Mar 30, 2010 11:47pm Mar 30, 2010 11:47pm
Quoting akukaya
If all the 99% loser, using the same EA, would the results will change to 99%+1%=100% winner..hahaha
Good remark.
What happens if everybody will trade a very profitable EA?
How the exchange will happen?
Everybody wants to buy and nobody wants to sell...

Therefore, losers are necessary for they make the market move.
  • #29
  • Mar 31, 2010 1:14am Mar 31, 2010 1:14am
It may help to get a grip of the facts in the story posted.

1. The story was referring to daytraders of stocks. Not forex. Two different things.
2. The theorum that 95% of new forex traders fail is loose terminology. What it should read is that 95% of first time forex traders will blow their first deposit.

What typically happens in forex is that traders will refund that account and keep plugging away. Over time the discipline and market knowledge becomes refined and so performance improves.

There is however, (to my knowledge) no body of sound research on the subject of forex profitability but it would certainly be useful to see some university quality research on the subject so that the mythology can be put to rest.
  • #30
  • Mar 31, 2010 2:31am Mar 31, 2010 2:31am
A. According to what I remember, the Bureau of Labor states that 80% of all new businesses fail within in the first 5 years. If you believe that trading is a business (it is and you should view as such), then there is really no reason to think the success rate is higher. In fact, you should think it is lower-see B.

B. Harvard University did a study that concluded that the greater the barriers to entry the higher the success rate. The fewer the barriers to entry the higher the rate of failure.

Think of a neurosurgeon. Few Neurosurgeons fail. There are many barriers that weed out those that don't ultimately have what it takes. There is college, med school, internship, residency. With each level being more competitive and cut-throat. But if one can make it through all that, the end is a high 6 to 7 figure salary complete with a trophy wife and all the trimmings.

Trading is different. Especially Forex. Anybody with $50.00 and a dream can open an account. The lack of barriers means that many people unsuitable for trading are able to enter. Logically that must result in a failure rate no less than that of the 80% cited. Many people enter trading not because they want to work hard, but because they desire easy money. Some may see that school of thought as a sin, but regardless it is pervasive and naturally leads to many a "wake up call" in the cold arms of the market.

C. This may seem somewhat contradictory to B, but it is not. Trading attracts a high degree of intelligent and successful (in other area's of life) individuals. Many of these people are not equipped, however, to deal with diametrically opposed matrix of the markets.

For example, In my High School a score of 90% was a B. So in a 100 question, test, missing 10 was a B. An A- was 92%. One could only miss 8. Many high achievers (not that I am one) seek perfection. They seek the A, or 100 out of 100. This perfection is equated with success. But the market is different. A trader can be right 40% of the time an make a killing. Yet, since the tender age of a high schooler, I and many others, have been taught that 40% correct means 60% incorrect and is failure (F). So there's the rub. The strive for perfection that has been ingrained and brought success elsewhere is counter productive in trading because perfection is not only not possible it is not necessary. Seeking that elusive perfection, ultimately dooms many an intelligent and successful person. If the thought of getting a B in contracts from Duke University Law School sends your heart into palpitations, Imagine how hard it is to accept only getting a D (40%) in the market.
Without VSA, you're playing checkers while the Smart Money plays chess.
  • #31
  • Mar 31, 2010 2:40am Mar 31, 2010 2:40am
Quoting curtains

I told myself that i'd make it in the forex market 2years ago.....and 2 years later I think i'm doing pretty well for myself. I donno how consistent you have to be to be considered consistantly successful, but I haven't lost money at the end of the week for 14weeks now.
That kind of demonstrates what I was saying earlier about people (subconsciously) expecting to lose, you consider 'not losing' as success. Don't get me wrong, if you're breaking even or better still turning a profit then you're doing better than most, but is that really what could be called success? If it is then not trading at all could be called successful, if you see what I mean!
  • #32
  • Mar 31, 2010 2:46am Mar 31, 2010 2:46am
Quoting HiddenGap
Anybody with $50.00 and a dream can open an account. The lack of barriers means that many people unsuitable for trading are able to enter. Logically that must result in a failure rate no less than that of the 80% cited. Many people enter trading not because they want to work hard, but because they desire easy money.
Very good points, I think any statistic is meaningless without knowing what type of people make up the sample, it could be that 90% of the alleged 95% failures are totally unsuited to trading.

But what about the various studies and experiments which have been done, for example the turtles, the failure rate is still quite high.


-
  • #33
  • Mar 31, 2010 2:48am Mar 31, 2010 2:48am
The winner of the race is not always the one who runs fastest, but the one who endures longest.

Which is why, especially in this market, that new traders should never put more than $500-$1,000 in their first account and use low leverage for the first 3 months. Keep the motherlode of funds for later, when you've earned your stripes.
  • #34
  • Mar 31, 2010 2:49am Mar 31, 2010 2:49am
  •  MPP
  • Joined Jun 2007 | Status: Be yourself, everyone else is taken | 2,734 Posts
what also needs to be considered is how Forex trading has changed over the years, now days you hear and see many adverts about how you can make $500 a day in just a few hours (none telling you how you can lose $10K in the same period)
this might have a real impact on actual failure numbers as now more than ever people think it's easy or are convinced that the meeting they've been invited too on saturday will make them rich

purhaps it's a play by the big players to bring in new money for them to steal - what ever way you look at it, more people are trying to get into home based cushy lives and think it will all happen over night

so is the number that wrong - 150 poeple sit down at a convention/seminar and told how easy it is - none want to put the time in, all want to get rich ?? how many will realise quick enough thats it's not that easy ??
  • #35
  • Mar 31, 2010 2:55am Mar 31, 2010 2:55am
Quoting MPP

purhaps it's a play by the big players to bring in new money for them to steal - what ever way you look at it, more people are trying to get into home based cushy lives and think it will all happen over night

so is the number that wrong - 150 poeple sit down at a convention/seminar and told how easy it is - none want to put the time in, all want to get rich ?? how many will realise quick enough thats it's not that easy ??
which is why brokers should be obliged to educate before traders go live and the content of those courses should be written by experienced retail traders with no other agendas to run... to make sure newbies get the core information they need most... level out the playing field from day one.
  • #36
  • Mar 31, 2010 3:00am Mar 31, 2010 3:00am
Quoting Jade Gate
which is why brokers should be obliged to educate before traders go live and the content of those courses should be written by experienced retail traders with no other agendas to run... to make sure newbies get the core information they need most... level out the playing field from day one.
Sort of like a driving test for potential traders?

Probably a good idea but no-one cares enough whether some clueless noob loses his shirt or not, and where do you draw the line, reality checks before entering a casino or a bookies or buying a lotto ticket? There's no law against being stupid!
  • #37
  • Mar 31, 2010 3:08am Mar 31, 2010 3:08am
Quoting pipmutt
Sort of like a driving test for potential traders?

Probably a good idea but no-one cares enough whether some clueless noob loses his shirt or not, and where do you draw the line, reality checks before entering a casino or a bookies or buying a lotto ticket? There's no law against being stupid!
Yes, exactly. Just a real basic obligation on the broker's side to ensure that if people are going to trade this instrument, that they at least have the most important basics under their belts. I made those recommendations in my comment paper to the CFTC.

Here's a list of what I think needs to be in the course -(from an article I wrote on the subject last year)

1. Respect for Risk.
2. The Global Trading Sessions / Trading Waves.
3. Trading Styles and Stop Losses.
4. Characteristics of the Major Pairs.
5. Support and Resistance in Forex.
6. Technical Analysis.
7. Money Management.
8. Demo to Live – What’s different.
9. Dealing Desk, STP and ECN, what they mean.
10. Scams to Avoid.
  • #38
  • Mar 31, 2010 3:11am Mar 31, 2010 3:11am
Quoting Jade Gate
I made those recommendations in my comment paper to the CFTC.

Here's a list of what I think needs to be in the course

Great!
  • #39
  • Mar 31, 2010 3:13am Mar 31, 2010 3:13am
Quoting pipmutt
That kind of demonstrates what I was saying earlier about people (subconsciously) expecting to lose, you consider 'not losing' as success. Don't get me wrong, if you're breaking even or better still turning a profit then you're doing better than most, but is that really what could be called success? If it is then not trading at all could be called successful, if you see what I mean!
I am reminded of a story of a young brash trader. Let's call him Trader Joe. Trader Joe landed a job as a floor trader in Chicago and was psyched to become one of the cabal. Surely riches would ensue. He was young, attractive and going to be wealthy. The world was certainly his oyster.

Upon arriving in the Pits in Chicago, what was the first thing he was taught? Some magic indicator only floor traders are privy too? A set of mystical numbers sent down from the mount on high? No. Trader Joe was taught to get out of a losing trade 100 times out of 100.

In other words, Trader Joe was taught losses are to trading what air is to breathing. Success would not be measured in how well he managed the winners. Those take care of themselves. Success comes from managing the losers.

Should one expect to lose? Maybe a bit, but not so much as to make it a self fulfilling prophecy. But one must certainly know what to do when a loss is occurring.

Trader Joe summed up his first lesson like this; " I am less concerned with the return ON capital and more with the return OF capital".

Ultimately, the Big Boys are not the Big Boys because they win more, but rather because they lose better.............
Without VSA, you're playing checkers while the Smart Money plays chess.
  • #40
  • Mar 31, 2010 3:32am Mar 31, 2010 3:32am
Right. Risk management is everything in this market. You learn that early and repeatedly until you get it. If you don't get it, you move on and do something else. If you do get it, you get it right more and more and that's how accounts become profitable and stay that way.
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