Fluttrader, thanks for pointing out that this issue has been discussed on here before. It seems that there are a few people on here who are just as frustrated with that stat as I am. Thanks again.
everyone is frustrated. But that is because this is not like unemployment rate, which is readily available. But the stats are really far worse. Anyone who thinks that the "4%" are therefore doing well should understand that most of those are actually breakeven or small profit. I hvae seen figures that less than 2% actually make over 40-40K annually.
I always get the notion that these threads try to deter traders from even trying. "Oh, only 2-10% make it, so just give up now" is a pretty shitty attitude to take on.
Back in the old days, when the CAVEMAN went looking for a girl, they notice that out of the 10 "CAVERS" only 2 would get laid all the time, while the other 8 would need to jackoff...and so they applied that rule for everything
Yes, why tell them the truth when they can blow their wad finding out the hard way. After all, half the traders on ET became millionaires within 6 months.
Once again, that sort of evidence is anecdotal. I want cold, hard facts. Hell, I want these facts to be so cold that they'll make Margret Thatcher's nipples hard enough to pierce steel. I want a goddamn fact blizzard to come in and give conventional wisdom a bad case of hypothermia. To get a good figure you need to calculate the level of experience, level of knowledge, time trading, amount lost vs. amount gained and compare that over time, location, markets, capitalization, etc. For example, the common stat is that 80% of businesses fail within their first year. I've known lots of close friends and family members that have opened up their own businesses and failed, thereby adding to the statistic. Did they deserve to fail? ABSOLUTELY! They knew nothing about running a business or about having the right amount of capital. They thought all you had to was rent out a building, sell your goods, and the money would just come flowing in. Does their example mean that starting a business is impossible? No, it just means that you should prepare beforehand. I've helped several small businesses open their doors and become successful while I was working as a small business consultant. There's no secret formula - just common sense. Another stat is that 98% of people that go through medical school graduate. Does that mean med school is easy and a piece of cake? Nope. The way they get that figure is because it's very hard to get into medical school in the first place. Once they screen you and once you're in, they're going to make damn certain that you get through. Dental school, on the other hand, lets virtually anyone in, but their graduation rate is closer to 30%, or in other words, 70% of people that go to dental school fail. Does that mean dental school is harder than medical school? When you've got relatively low barriers to entry to become a "day trader", anyone that has an account with E-Trade and watches CNBC for the next hot stock tip thinks they can become a day trader. This will skew the numbers, especially if they quit fairly soon. "This is too hard, I quit." Lots of preparation before hand and sufficient capital is what you need plenty of. I think people like using that failure stat so that they can feel good about themselves. How many day traders make more than 40k a year? Who cares? What matters is that they're profitable as a trader. Maybe they trade because they use the money for luxuries and still like having a job? Should they be considered "unsuccessful"? Nope. People trade for different reasons, so measuring a persons income from trading as measure of success without the relevance of their personal goals is moot. To sum it all up, using a figure like "80% of traders lose money" is retarded.