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95% traders go broke, only 5% survive

  • #221
  • Mar 5, 2014 1:10pm Mar 5, 2014 1:10pm
Quoting Forexnuts
{quote} 10% is a good return annually, that's a given. But with most traders, especially the ones with the smaller account, the need to increase or ensure ROI exceeding this, is a must resulting in more risky traders, larger exposure which may account for the title of this old thread..
Sorry forexnuts, my answer was relating to the large investors, just my thoughts from the last couple of posts.. the small retail trader is a completely different animal, in all ways..of which there are so many variables of why 95% fail..
Memories caught in time but never forgotten
  • #222
  • Mar 5, 2014 1:25pm Mar 5, 2014 1:25pm
Quoting Forexnuts
{quote} 10% is a good return annually, that's a given. But with most traders, especially the ones with the smaller account, the need to increase or ensure ROI exceeding this, is a must resulting in more risky traders, larger exposure which may account for the title of this old thread..
sorry, but a 10% return annually is definitely not good. Investing in the S&P would have given you a compounded annual return of 9.8% since 1965 (http://www.berkshirehathaway.com/letters/2013ltr.pdf - see 1st page). If a 10% return is what you are after, then invest in the S&P 500 and don't bother with trading.
  • #223
  • Mar 6, 2014 5:06am Mar 6, 2014 5:06am
I agree with Custos in some respects, except to say that there are times when the S&P goes down and therefore on a year to year basis the stock market is not necessarily the best vehicle. It is difficult to argue against 9.8% annually over nearly 50 years. Anybody have a figure for average inflation over the same period?

These last 27 months in the stock market I have averaged 45% on an annual basis. 27 months is where I have bothered to compute data, oh and it looks good too. However I know and admit that in the past there have been periods where my portfolio growth has been negative. Particularly during the dotcom bust when my experience was considerably less than today. When the recovery opportunities have exhausted I will be diversifying into an arrangement that yields between 5% and 10% annually, and keeping my eyes peeled for the vanguard of the next bust.

IMHO the lower one sets one's sight the more likely to achieve the target. With forex 25% annually would seem reasonable, that is 0.5% per week compound for only 43 weeks of the year, a realistic anybody-should-be-able target. At that rate it would take 31 years to turn $1k into $1m, and lends support to the earlier post from Drizzt that people with a substantial balance in their trading accounts can take larger trades with moderate or low leverage and win enough to make it worthwhile.
Carbon-Dioxide: the gas of life! https://youtu.be/ttJBdr6eBuo
  • #224
  • Mar 6, 2014 7:24am Mar 6, 2014 7:24am
Quoting Custos
{quote} sorry, but a 10% return annually is definitely not good. Investing in the S&P would have given you a compounded annual return of 9.8% since 1965 (http://www.berkshirehathaway.com/letters/2013ltr.pdf - see 1st page). If a 10% return is what you are after, then invest in the S&P 500 and don't bother with trading.
Totally agree. Opportunity cost is high in 10% annual return. We need to go for much better return.
  • #225
  • Mar 6, 2014 11:08am Mar 6, 2014 11:08am
Here is the big question for everyone on this forum:

If most everyone here believes that 90 - 95% of traders fail & lose money, then WHY are you spending your time trying to be successful in trading?

Why are you going through that headache when there is almost no chance you will be successful? If most here really believe that about 95% fail in trading & go broke, then why in the world are you involved in trading?

In my case, I don't fully believe the often repeated statement that "95% of traders fail & go broke". That is why I have not given up. Yes I do believe more people than not fail at trading, but I don't think it is 95%. And in regards to those that DO fail at trading, I think a lot of those people didn't take trading seriously enough to put in the time and work to truly learn what it takes to be successful. Those type of people drive up the overall percentage of failed traders.

But again, back to my main question: If you REALLY believe 90% of people fail in this business of trading, then why are you essentially wasting your time AND money trying to be successful as a trader?
"Dream big and dare to fail." - Norman Vaughan
  • #226
  • Mar 6, 2014 1:12pm Mar 6, 2014 1:12pm
because everyone believes they are one of the 5%
or one of the 0.5% depending on which stats you prefer
  • #227
  • Mar 6, 2014 1:30pm Mar 6, 2014 1:30pm
Quoting Custos
{quote} sorry, but a 10% return annually is definitely not good. Investing in the S&P would have given you a compounded annual return of 9.8% since 1965 (http://www.berkshirehathaway.com/letters/2013ltr.pdf - see 1st page). If a 10% return is what you are after, then invest in the S&P 500 and don't bother with trading.
I was talking about a large account, pref a million or more..frankly, the way to look at it is as the account gets larger, we can use the "safe leverage" option, and ten percent of the million should do just fine. But when it comes to the specs, I get your point..I suppose as our account becomes large enough, we get to reevaluate our trading strategies..
  • #228
  • Mar 6, 2014 4:59pm Mar 6, 2014 4:59pm
Quoting Forexnuts
{quote} I was talking about a large account, pref a million or more..frankly, the way to look at it is as the account gets larger, we can use the "safe leverage" option, and ten percent of the million should do just fine. But when it comes to the specs, I get your point..I suppose as our account becomes large enough, we get to reevaluate our trading strategies..
Shhhh dammit, don't tell eveyone or they'll all be trading million dollar accounts....
  • #229
  • Mar 6, 2014 11:10pm Mar 6, 2014 11:10pm
It seems most people just ignore FACTS...

It has been proven over and over again with ACTUAL OFFICIAL BROKER NUMBERS that after 1 year period, 99.6% of traders lose money... Only 0.4% of traders end 1 year of trading with a profit.
The Black Swan: The Impact of the Highly Improbable
  • #230
  • Mar 7, 2014 5:54am Mar 7, 2014 5:54am
Quoting MapleLeaf
It seems most people just ignore FACTS... It has been proven over and over again with ACTUAL OFFICIAL BROKER NUMBERS that after 1 year period, 99.6% of traders lose money... Only 0.4% of traders end 1 year of trading with a profit.
99.6% whatever number is not 100%.

Words of wisdom from Bruce Lee:

“If you think a thing is impossible,you'll only make it impossible.”

“If you love life, don't waste time, for time is what life is made up of.”
"To hold, you must first open your hand. Let go." - Lao Tzu
  • #231
  • Mar 7, 2014 7:19am Mar 7, 2014 7:19am
I totally agree with vox dei.

If you believe something impossible, then don't even try learning it... The minute you fail, you will give up. So don't waste time if you think it's not possible. This is true to everything in life.

In my opinion consistent traders are around 4%. Otherwise you would see more successful traders.

I think it's not hard to make money trading a month, but do that year by year its a different story.

Anyway... the best traders are those who know that failure is the path to success. Some achieve it with less failure, some with more... How much failure can you handle?
  • #232
  • Mar 7, 2014 1:21pm Mar 7, 2014 1:21pm
And what makes you think you will be part of the 0.4% ???

Wow, your EGO must be HUGE, to believe you will be part of the GIFTED selected 0.4%.

Either that, or you are looking to crash your head against the wall.

And still, the 0.4% includes some people working for some BROKERS too. So, for normal traders trading from their home, its close to 0%.
The Black Swan: The Impact of the Highly Improbable
  • #233
  • Mar 7, 2014 1:45pm Mar 7, 2014 1:45pm
The true stats are actually higher than the 5%
although the outright cheating brokers will distort the true figures
and these stats only usually covers most of the bucket shop type brokers and not usually the better ECN and Banks
true ECN brokers / Banks will have a higher percentage of winners, especially as they have real traders on their books rather than spread betters, chancers and gamblers
even some of the slightly better bucket shops, have been known to say on camera, even if reluctantly, but around 5-8% of there clients win per yr

i've read the true figures are 5-10% make money
5% make very big money
and another 10% breakeven over the yr
the other 80-85% loose

still not great - but not quite as we are lead to believe
some brokers even like a few good winners as they copy there trades
(and as they say - don't believe all you read on the internet)

Broker choice is paramount - this should be obvious, but also slightly overlooked, in the pursuit of easy money
where a good strategy with a bad broker won't ever win for long
some brokers (allegedly) let their traders triple their initial deposit then the fun and games start and the broker will do all they can to get back all the profit and more if the trader is stupid enough
ie over leverage, and can end in complete disaster for the trader, with losses more than the initial deposit etc
much more loss than the initial deposit in some cases

if someone is to win a few k with a half decent bucket shop, take the money and run and then save up the extra few K needed to go with a True ECN, there are nt many well known real brokers, but there is just enough for very serious traders

10K+
get saving

if someone does n't have a very good broker and a 70%+ winning strategy don't bother trading
do something else
  • #234
  • Mar 7, 2014 3:42pm Mar 7, 2014 3:42pm
Quoting MapleLeaf
And what makes you think you will be part of the 0.4% ??? Wow, your EGO must be HUGE, to believe you will be part of the GIFTED selected 0.4%. Either that, or you are looking to crash your head against the wall. And still, the 0.4% includes some people working for some BROKERS too. So, for normal traders trading from their home, its close to 0%.
My DETERMINATION is UNSHAKABLE. I believe 100% that with TIME and HARD WORK even an AVERAGE joe like myself can achieve things guys like you deem impossible.

Time for you to crash your head against the wall... again... bye now
"To hold, you must first open your hand. Let go." - Lao Tzu
  • #235
  • Mar 7, 2014 5:01pm Mar 7, 2014 5:01pm
Quoting vox dei
{quote} Time for you to crash your head against the wall... again... bye now
  • #236
  • Mar 7, 2014 5:16pm Mar 7, 2014 5:16pm
95% losing - they must define losing
for example :one person open account with 10k after one year balance is 9k (is this losing) or 10k then 5k or 10k then zero or 10k then withdraw 9.5k ?

how ever i think most of people losing there account for 2 reasons:-
1-scam email (advertising huge amount of profit)
2-easy to open account and fund it ( not like stock market)
  • #237
  • Mar 7, 2014 7:55pm Mar 7, 2014 7:55pm
Quoting MapleLeaf
It seems most people just ignore FACTS... It has been proven over and over again with ACTUAL OFFICIAL BROKER NUMBERS that after 1 year period, 99.6% of traders lose money... Only 0.4% of traders end 1 year of trading with a profit.
I've seen only one original citation of the 99.6% figure, by John Forman (here). Everybody else is merely quoting it, i.e. I've yet to see any confirming independent research.

My understanding of Mr Foreman's conclusion was that only 30 out of the 8,000 traders (0.4%) were profitable over each one of four consecutive quarters. But what does that actually mean? For example, a trader could be profitable for 9 out of 10 quarters, yet would still fail under Mr Foreman's criteria, in that there was at least one period of four consecutive quarters that included one unprofitable quarter. Or he could have quarters that returned, for example, +30%, +20%, –1%, +10%, i.e. been handsomely profitable overall, but nonetheless fail on the basis of the criteria being used.

Anyway, here are some more recent "actual official br0ker numbers". How would you interpret these?
  • #238
  • Mar 7, 2014 10:56pm Mar 7, 2014 10:56pm
Quoting vox dei
{quote} My DETERMINATION is UNSHAKABLE. I believe 100% that with TIME and HARD WORK even an AVERAGE joe like myself can achieve things guys like you deem impossible. Time for you to crash your head against the wall... again... bye now
You cannot defeat a Gambling Scheme with DETERMINATION, no matter how hard you try. It's stupid to believe you can.

It's all mathematical, just take a look at The Wizard of Odds. He explains it very well, and it applies to FOREX TRADING as well.

One thing is DETERMINATION to achieve your goals. Another very different thing is being stupid.

It's your call if you want to go ahead and crash your head against the wall, average Schmoe.
The Black Swan: The Impact of the Highly Improbable
  • #239
  • Edited Mar 8, 2014 12:21am Mar 7, 2014 11:41pm | Edited Mar 8, 2014 12:21am
Quoting MapleLeaf
{quote} You cannot defeat a Gambling Scheme with DETERMINATION, no matter how hard you try. It's stupid to believe you can. It's all mathematical, just take a look at The Wizard of Odds. He explains it very well, and it applies to FOREX TRADING as well. One thing is DETERMINATION to achieve your goals. Another very different thing is being stupid. It's your call if you want to go ahead and crash your head against the wall, average Schmoe.
I agree that determination in itself is not enough. You need a methodological edge.

The material presented by the Wizard of Odds discusses both
(1) gameplay that's specific to casino games; and
(2) money management (staking systems) which is universally applicable, i.e. including forex.


(1) Gameplay

Roulette is an example of a casino game that can't be beaten (unless the wheel is physically biased), because the playing conditions remain constant. No matter what gameplay the punter uses, the house edge is always 2.7% (if there is one zero on the wheel) or 5.26% (if two zeros).

Blackjack is an example of a casino game that can be beaten, because the deck composition is constantly changing, allowing the punter to establish an advantage from his gameplay (by counting cards, and placing higher bets when the ratio of high cards remaining in the deck is high) that can overcome the house edge.

So the question is: which one of these two categories does forex fall into? The equivalent of 'gameplay' in forex is how the trader organizes his entries and exits around price behavior. If price movement is occasionally non-random, and price moves far enough, often enough, to allow costs to be overcome, then forex is mathematically beatable. You need to show that this isn't so, if you want to prove your case.


(2) Money management (staking systems)

What can be shown mathematically (e.g. here), is that if a system of entries and exits doesn't provide a long term edge, then no staking system can make it profitable. The Wizard agrees.
  • #240
  • Mar 8, 2014 12:33am Mar 8, 2014 12:33am
You cannot predict the Future and you cannot predict what will happen to a pair, thus FOREX is pretty much a gambling scheme.

Past behaviour of a pair, doesn't tell you anything. Thus all indicators and MT4 signals are Lagging and Useless.

They only serve the purpose of convincing people in their brains there is a possible edge, when it's all lies. Like the person who bets on BLACK in roulette, because he saw 5 reds in a row and believes that BLACK must come out... If he wins, he becomes convinced that he won because he found an edge and exploited it.

Same thing happens when someone who saw some James16 Candles and went into a trade and won the trade, he believes it was because of James16 candles, when it was just PURE RANDOMNESS...

That person will lose it all LONG TERM... That's a fact. Same as the roulette guy.

Indicators and MT4 also open business opportunities to Programmers to profit coding stuff, like you do Hanover. At least it puts food on your table.

I have had my BET open for a while here and NOBODY, not even 1 person in 10,000 active members from this forum, NOBODY can take it...

They don't take it because they don't want to lose. And they know for sure they will lose.

All said.
The Black Swan: The Impact of the Highly Improbable
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