The 95% of losers, it's true?

I'm newbie of course. I knew FX and forexfactory only 4 months ago. I read many of articles here and i have two very simple questions.
Everywhere, we see this and make it as an alert: 95% traders go with the win each year, only 5% survive. These words appearred in 70-80 decades, now all the world we have indicators, patterns, autochartist, so this ratio is true untill now? if it's right, from where we have such many people participate in FX everyday ?
The second question is that do you know what legends of the FX today? ( and the sum moneys they take from FX? please dont tell me that he is someone who own a company or some millions $ at the beginning)
Thank for comments

Yes, and probably higher.

The fact is this:

To be of benefit to a society in a free market economy speculators MUST LOSE.

If you mean 95% of beginners quit forex in the first year, I think it is probably true.

I don't quite understand this question.
I know more than a few traders who make substantial amount money out of forex trading. Some of them manage other people's accounts.

The 5% get all of the money from the 95% excluding broker fees.

Now you see why Forex can be so profitable, but only if you can out trade the other 95%.

It all comes back to you. You get to decide to be the 95% or the 5%. To follow the emotional speculators without a plan, or a committed professional trader with a solid business plan. If you know this statistic then you'd also know that money and risk management is the Holy Grail in FX. Your entry and exit strategies could be as bad as 50%, but if cut your losses quick and let your profit run, coupled with the all important risk and money management, you'll grow your account in the long-term. Techniques only affect how quick can you make money.

just focus on improving, study, spend hours in front of charts, question everything, study some more, etc

don't worry about how much money other people make or lose

Yes its fact that they are earning millions $ at the beginning. No one can change this fact

In the long run 5 years + , 99%+ of all retail traders lose , don't even bother to start trading if you still haven't invested any real money , cuz you will lose it all .

Globally and in general terms its true.

However if you take 1000 individuals that know nothing about FOREX and give them classes for 1 month (well, if you want 6 months or 1 year), then you would see maybe only 80% of losers..

I think that one Forex Broker released some stats last year about their active traders and I think only 70% or so were losers...

Basically having so many banners on the internet about fxcm or such make people join like they join a casino, and that generates so many losers. The number is obviously over-inflated, but its also truth.

And the FACT that its a ZERO SUM business doesn't help at all either. As long as you have rich traders become more rich, it generates more losers over time.

Id say its 95% of people give up before they're profitable.

Trading is better approached as a skill.

I think the zero sum game logic is rubbish.. People are in the market for a universe of different reasons.. in abstract the person who's taking the other end of your contract could be closing out a profitable position, entering a long term position in the other direction, buying parts from japan, whatever. In reality its probably the interbank market/your market maker, but conceptually that the case.

As far as prices go, doesn't it take many thousands of contracts to move the market one pip? So if the market spikes 10 pips somewhere.. its very illogical to think someone is out there to beat you personally. Its more a function of you yourself trading badly (trust me, i've got tonnes of experience at this )

Of course, if your market makers prices don't match the feeds on forexfactory or tradingview etc, then maybe someone is out to get you, but that isnt the market itself...

+1

The stats are probably right.. 95% losers 5% winners.

But here is the thing.

95% of traders, in any Brokers trade with under usd 1000
Under-capitalized and placing trades like they have usd 10 000

So, does not matter the "number" of traders losing.. most likely, speculators make money overall.

Of course the small accounts trader lose.. they over trade.

It is extremely easy to average 2-3% per month trading forex...
And that is excellent return any way is look at....but in forex, there is this notion that if someone does not make 20% a month you are a moron... how stupid is that?. Nobody can do that without taking big risk.

J.

Let me present this in light of Greed to push small accounts further, limiting true profits and Fear to trade a larger account because you can establish the trading rules that could make you successful.

The trouble with the 95% statistic is that it likely includes the entire trade population which is mainly made up (participate volume not capital) small speculators/gamblers. These traders are the ones starting out, with small capital looking to make it big. It is not neccesarily a bad thing. I found out early on trade a small account that it made little sense (to me at least) that I would fret over a float P/L of a few dollars yet on a Friday night I could go to the casino and place a bet for $100 on red or black (fools game in the long run).

In the end I discovered for myself that my lack of discipline early was based on that the results from a financial POV had very little impact - Greed saw me up risk or push profit boundaries until I hit a satisfying point, which seldom came and often what would have equated to a strong % growth, lacked any punch in financial view. Losses were the same, I only saw them as I would in the casino instance. A 10-20% drawdown didn't feel that way because the amount was "easy" to reload.

I was fortunate enough to realise this before blowing any accounts, not that they would have hurt anyway. This however brought me to my next problem, because I had no real trading plan, putting an amount of money up front, especially when I new that fact, would have left me frozen with fear - essentially a good thing early on as I would find, because now looking at 1% was actually a daunting thing that made me respect the capital in a new way.

If the statistic could remove the higher caps and the lower caps leaving you with the mean statistic I think the % values would be higher. There will still always be larger players that tend to gamble more, they exist in the casinos so trading would be no different, but I would be incline to think that the largest portion of failed accounts come from the very bottom end, at least that has been my experience talking to a number of people who have blown a number of accounts.

Jeuro, i think when you look at it from over an annual POV, 2-3% is definitely achievable without being too risky but there are certainly times when if you allow it too occur, gains can be extreme without increasing the risk. I have had my fair share of 10-15% months were market conditions favour you considerably and you make the market pay up, they do help when the market is flat or you take a few losses.

RT

Good Post RT.
I agree, while carrying out a conservative strategy ... those 10-15% just happens.

J.

I like the RT under-script!
"A cool, disciplined trader will take an average system and make money with it. A nervous, arbitrary trader will take a brilliant system and wreck it."

The problem is with the "system". If the market is changing and is moving by technical, fundamental, or just plain sentiment, how to know you have a fully tested system in which you can have trust? Will you test 2 year and use 1 month, because it has ben changed already?

I wouldn't ever I am disciplined , neither nervous, maybe arbitrary, because I haven't found my system yet.

Sometimes I am sure about my trades, I will enter with a normal or a bit higher position. If need correction than I will correct, if I see it isn't moving as I have expected, than I am trying to get out at BE or closer.

After a news release when it was a huge impact and all candles are 2x-3x longer as other time than do not trade, because my system is a simple system and has no case for that? If I enter, than I will not be disciplined, because sometimes I will enter sometimes not. Maybe, when I can't monitor my trade I don't want to enter. It happens to enter to a trade, because I see/ I am hoping
it will go on that way, but when I am in I see, it isn't moving, as I have expected, so I want to get out.

for eg: it seems it is a clear Short.
http://img820.imageshack.us/img820/636/54870896.png

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I have entered in the trade, and I saw this trend has no more fuel, isn't going down, there are stops or no sellers, something happent, it is not what I have expected:

http://img824.imageshack.us/img824/6707/83760055.png

Uploaded with ImageShack.us

Than ofc I will get out if I can. If I have entered and must exited it seems I have no correct vision what happens there, so I will leave the currency pair for a while or re-analyze why was that.

http://img819.imageshack.us/img819/1502/28182403.png

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I didn't enter anymore and I had right: Something happent.

I have no system, just based on my last exp and forum post, ebook I am entering - exiting from trades. I wouldn't say it is profitable, but can't say it isn't.
I had many demo accounts I have a few Live too. One demo cen be cjecked here: http://www.forexfactory.com/matheszabi#40

I still think to be able to be a long term profitable trader you need to learn exercise min 5 year. To live only from trading you need a capital with min 20x monthly desired salary, but with 50x I would prefer. A safe, nice 10% / month you have money and free time too. 30% / month needs a lot of work and risk.

Hi Matheszabi.
Does the forex market really change? I believe that does not change...And for sure it DOES NOT "move" by technical analyses.

The Problem is that with all the crap, millions wanabe "system" and millions of worthless indicators, traders lose site of what the forex market really is.

In the forex market, prices "always" go up or down.. yesterday, today and forever. It is tick based. Meaning that each tick has their own participants and once those Millions of participants place an orders, and those order are filled at whatever price those units were found, that millisecond is history... it will never repeat itself. ... it is the new set or orders that will move the "quoted" prices. That is why, there is no specific point in a chart that is relevant to anything.

There is only one fundamental in money exchange... that is.. at one point on time, that crap from one country looks appealing and cheap to other countries and demand for that currency start increasing.

How simple is that?

a) Trade with the direction of were you find more ticks movements in the last 24 hours. (5 or 15m chart in your screen. Nothing else matter). Absolutely no point in knowing what happened before that. Does it really matter "why" is moving in that direction?? NO.

b) Use a hedge trade as your stop loss. Use a 1:2 risk/reward .. 15/30 minimum 30/60 maximum

c) If you hit TP, close your hedge pending order. If you hit the hedge trade, remove the TP of the first trade. Do no worry about those trades.
You have a loss.

d) Wait for another trigger as in a). At that time you can choose to open a new trade or close one that is in "profit" for at least 15 pips. You still place a hedge trade for protection.

Thats it. You will be trading with the trend, caching "all" the divergences, indirectly averaging down. Using all "paid" spreads to make money.
No stress, you can trade as much or little you want.

How many times you can be wrong trading like this??? 50% ?? It is almost impossible to be wrong more then that. ..and you still make money.

J.

Being too optimistic. 100% have lost so far, there is not one retail trader who has made a consistent income from trading. You can make money but its no different than roulette.

Anyone claiming to be successful show us your income of the past 5 years from forex not 6 months of wins. Even I have made 100% in a year lol.

I think it is different for everyone but the point I would like to make is that it needs to be an amount that actually makes you stand up and take notice of your trades, to management them and enter on your plan.

My signiture (which I got from either a Peter Crown post or a Joel Rensink post) is based on knowing your system inside and out.

Recently I had the pleasure of watching a seminar based on GAP trading (Forex market open GAP primarily). After years of testing on the EUR, the host provided 3 scenarios. In each the entry was always the open candle for the market, the target was always the close of the GAP however the SL was tested over the period and 3 options where given. They were

SL at 50% of the pip distance of the gap. So far example the gap equated to 50 pips, the entry was the open and the SL was 25 pips below the open

SL at the = distance. Same example although the SL is now 50 pips from trade open

SL at 2x the gap distance. Same example although the SL is now 100 pips.

Breaking each down he found that the natural order for win % was about 77% for the 3rd, 62% for the 2nd and a lowly 44% for the last.

Now what is interesting is the even though the first option (1/2 SL) was the least succesful, it had the greater expectancy and by far. SO the best option going forward was the trade that was going to win less than 50% of the time but when it did you got a return of 2R.

Now each scenario was profitable over the course of 3+ years, doesn't guarentee success in the future but as a measurement of previous success you would be best off with option A, B and then C.

Now had I just put the % there, 95% of people would have gone for option C. WHY, because it wins more. That is the mentality of the majority which leads me to this. Just because something wins more, doesn't mean you can up your risk. In the C option, you still do not know when you will get a string of winners and loosers but so many traders take a high hit % and trade it recklessly. They do not understand the bigger picture.

The other thing most unsuccessful traders do is take the % as the be all and end all, seldom do they revisit their statistics, and that is usually for the lack of record keeping and having a journal. Like a fine instrument your system need calibration from time to time. You need to go back to the results and input the new data. For all you know that 2x SL now has a win % of 64% and actually carries a negative expectancy. Couple that with the high risk and you are bound to blow up.

That is the problem with trading systems and the more complicated they get, the harder they are to follow to a T, and the less likely you are to calibrate them, therefore a full robust system with a strong expectancy could be handed to an amateur and they will likely fail with it. An ordinary system could be handed to a skilled traders and they would go about tweak it for the best parameters to gauge the higher expectancy and then along the way they will also revisit the system to ensure the way they are trading it is still the optimal way in terms of probability and outcome expectancy.

There is nothing wrong with trading a $1000 account if $300 per annum is a suitable result but 99 times out of 100, that account will be dust as you try to push the boundaries and if you don't have a robust system or approach then you might aswell close the account before handing your broker that cash.

RT

actually there are no exact percentage for this, however it's true that most traders are losing money in the market, the problem is that those small group of people are much smart people with strict self-discipline.

I think it is fake information. Please don't panic when you will have heard this kind of news. I have found in a statistics that 30% trade are earning profit from forex.
May be 95% beginner are failure.