I believe that 95 percent to 98 percent of traders fail is a bit more accurate. Even successful traders have down years but if they do constant research and development they manage to stay abreast. Check out the performance of these fund managers at www.iasg.com, all of them have different strategies. One thing I do know that once you have a successful trading systems the core stays in place the only thing that changes is the parameters, the system has to be fractal. Which means that it has to successful from the 1st market crash to the internet heydays. Just understand the parameters change(ie 1% at risk and may change to 2% at risk and so forth) but the system remains as is. Hope this info helps out.
IMO, the vast majority of people that begin trading (myself included when I was new) underestimate the degree of dedication to learning and the required "seat time" and probable several fundings of a trading account needed to really learn how to trade like a Pro. Consequently, most of them (the ones who got into it to make a fast buck or to gamble - in other words, about 9 out of 10) will blow out quick and contribute greatly to the statistics. Of the remaining traders that treat trading like any other profession and spend the required years of time and devote major resources to it, I doubt the number is 90% losers. When my wife and I were looking at the first account I had wiped out in my rookiness, it dawned on me that my expectations for instant success were unrealistic. Look what it takes for other careers... Example: Plumber - school, + apprenticeship, then journeyman, then Master after 5 to 7 years. Same with electrician, programmers, auto mechanic, etc. Doctors and lawyers: 7 years of college minimum, then internship or associate status - if lucky can pay off $100K + school loans and become partner in a thriving practice someday. So most of the loser traders that wash out fast are just like other folks that drop out of some type of college after a year or 2 - they don't have the dedication, desire and tenacity to make it all the way. For someone to give up trading after a few years would be like only going to 3 years of medical school and never becoming a physician - you will have spent a lot to do it and have nothing to show for it afterwards. Ya gotta follow through. Just my .02 Peace, Paul
Most of the studies showing failure rates in daytrading were done immediately following the bubble collapse and I remember the most common study involved All-Tech. I don't have the links anymore, but I posted this study a couple of years ago. How you doing Slapshot? The North American Securities Administrators Association, Inc. ("NASAA") Project Group Report on Day Trading states that, based on a sample of 26 accounts, "70% of public traders will not only lose, but will almost certainly lose everything they invest." See North American Securities Administrators Association, Inc., Day Trading Project Group Report: Findings and Recommendations (Aug. 9, 1999) nasaa.org/nasaa/scripts/fu_display_list.asp?ptid=16 The Electronic Traders Association ("ETA") states, "after an initial period of three to five months of losses, 60-65% netted in the range of $28,000 per month, with the balance of customers losing $6,000-$8,000 per month." The ETA concluded that "the majority of those who day-trade after training do not lose money." Statement of Electronic Traders Association, Hearing Before the Permanent Subcommittee on Investigations (Sept. 16, 1999) http://electronic-traders.org/state030.html
This subject seems to come up every year or so on ET. The last time I think the thread starter used 95% as his figure. Someone sent me a study done on retail accounts of a broker from years back which I thought I had saved to another computer and looked for to post here. Unfortunately after a quick search I could not find it. What I recall is that the figure might have been a little bit higher than 90% unprofitable taking into account commissions and around 60% unprofitable when commissions were taken out. Mind you I'm going off my recollection, and the study was done on stock accounts and quite a few years ago if I remember. Commissions have changed a lot in recent years. Before broadband became ubiquitous, I traded in an office with over 100 retail traders and I would say that a majority of the people I met there didn't make money even during the boom years 1999-2000. These were people serious enough to do it full-time, plop down $50,000 minimum and pay for a $3,000 "training" course. No doubt there were a lot of people trading from home or work during that time. I remember the local pizza shop had its TV tuned to CNBC every day and the owner was doing some trading through Datek or some similar broker. I would guess that the success rate was not better for these folks than for those at the office. My personal experience is that most people aren't suited for trading because they're not that interested in it once they get past their fantasies of easy money. Percentages don't matter much because they don't discern those who persist with effort from those who don't. The handful of people I know personally who do it full-time or almost full-time as swing traders derive most if not all their income from trading. One person I know has been trading for around 30 years. ET is a place of learning for me, because currently I don't personally know anyone trading full-time who doesn't make money. Go figure.
Not just retire but get burned out or move on to other more capital intensive ventures. What about traders that made a bunch of money for a few years and then all of the sudden could not make a dime so they quit. Are they considered failures if they gave back an insignificant amount to the market in comparison to what they made in the previous years? Some quit because they did not find the current market fruitful enough. And most by far, simply cannot make money trading.
i trade in a prop firm.... it hasn't been long.... but there is recruiting going on all year.... i have already seen more than 200 ppl that enter our firm's traning since i came.... if you were to tell me only 5 or 10 of us ( including myself ) will still be here after 2 years i wouldn't be surprised that's about right..... NOT 10 % of existing traders make money...... more like 10 % of ALL the people that ever entered the daytrading business survived after a period of time ....... i think that make more sense
it simply is very hard. Not only the market is pretty tough........ undercapitalization is a problem.......the numbers just dont' work out the same as what i had planned before i came......... Most ppl agree that full time traders that watch the market all day will have more oppotunities and learn more, but w/o a job the expenses just keep piling up ......... desk fee, softwarefee, other acct overhead............... commission are insane because the number of trades we do............ Trying to grasp this line of work on your own can easily take 1 , 2 yrs depending on what much hw you have done before coming to trade full time. i mean, w/ deskfee and etc....... you can easily have $500-$800 fixed cost a month....... if you take $50 loss every day for you first 6 month or so ( which i am on the way there ) you will have cut ur acct in half in 6 months ( assuming u put up 25 K ) . Don't forget u still have to live and eat , that's another $1500 a month u need to save up ahead of time. it doesn't take a seasoned trader to state the obvious , trading itself may not be harder than advanced biochemistry, but trading for LIVING is a living challenge.
In one of my lines, without going into much detail, most individuals who play the horses lose just like traders....very few percent make a good living at it and those that do keep a very low profile....( I'm talking about the betting part of it..not trainers or jocks or owners) The most successful gamblers are those in what we call syndicates (Not to be confused with the mob)...There are groups of usually a max of 6 individuals all over the country who only chase large Pick 6 carry-overs.....Very successful and again, very low profile.... I enjoy betting more than I enjoy the market...that is why I am only a small time option player..nothing fancy at all..just buy Calls when I'm bullish, buy Puts when I'm bearish....I tip my hat to those day traders though..it has to be one of the most stressful lines of work to be doing for a large portion of the day.....on the flip side of that, there seems to be many who bullshit a lot, just like at the race track..