I wouldn't be surprised if the failure rate is even higher, if you are just talking about the retail crowd. I think figuring out short-term fx movement ranks as difficult as any stock index or treasury market, with much greater volatility and available leverage to take down your account faster than anything else out there (cept for maybe metal futs).
NASSA did a study of retail equity traders 7 years ago and concluded that only 12% make a profit. Without going back and looking at any charts I think this was during a raging bull market. They were criticized for narrowness of the data sample. I saw the results of a similar study done by the SEC a few years ago. I don't recall the exact numbers or where I saw it but I believe the results were more or less the same as the NASSA study.
FXet, seems to me your biggest mistake is the mental negativity. If you don't see yourself winning, you won't. So your not winning right now, so what. Quit trading real money, take a step back and re-evaluate what you are doing. Try to learn from your mistakes and then re-attack. If you are mentally defeated going into a trade at the onset, you don't stand a chance. It took blowing up two accounts for me to get comfortable with forex and develop a system and trading style that fits my personality. No, I am not getting rich overnight but at least my equity curve is positive now. A few years of pain and tuition to learn the lessons to allow me to at least survive and build equity now seems to be worth it.
FXet, One thing that I firmly believe. Nothing in life worth anything is easy. You mentioned that it was "...just too hard...". Your right, it is hard and probably one of the hardest things to do is trade successfully. But if it was easy, there wouldn't be any reward.
I totally agree. Most important is to not give up. At some point everything becomes much clearer and that's an awasome and rewarding feeling.
Ok, lets apply scientific investigation to Fx, and see if he truly is of the 95%, or that he is of the 5% and just does not know it. FX, are you up to this? And by the way these are questions that are never given answers on these stupid academic studies. Lets go! 1. How big was your account to start with 2. Who was your Broker 3. Did you pay a fee, or a spread 4. What leverage were you using 5. What pairs did you trade 6. When did you trade 7. What kind of system did you trade. (complete description please, down to the last detail). 8. Did you keep a trading journal 9. If you did not keep a trading journal, why not 10. In your trading journal, do you know why the trades you took were not profitable? 11. Are you prone to losing your temper in the following situations, traffic, your family, when the computer freezes or the cable goes out when watching Hitchhikers Guide to the Galaxy 12. Did you trade news. If you answer the questions truthfully, I think you will find out what really happened and if you should try again. And if you want to share the answers with us, maybe some of us could identify the weak areas of your trading. The Ever Skeptical Of Failure Rates VIPER
The biggest thing I see is that many of the ones still losing money are right more than they are wrong! They may be 66% winning but take on avg $110 profits but avg loss is $330 for example. Traders do NOT know how to get out of losing trades and in my experience that is the number one cause of their failure. The forex trends UNTIL it has gone too far. Here's how I trade. I personally use 4 charts in trading. A daily chart with monthly pivots and keltners and bollinger bands. A 30 min chart showing keltners adjusted for recent volatility (I do a sort of visual backtesting to come up with best settings) and show the Weekly pivots and Avg Daily range. I use a 5 min chart showing the balance point (where MOST traders have their positions, 50 period EMA (I use this for trend, above this trend up, below down). I plot the avg hourly high/low to find likely reversals but usually use these to take profits at, daily pivots including midpoints and previous day's high/low plotted. I also measure buying/selling summed up over last 10 bars and net buying/selling by all banks. The chart I use to enter orders is a 35 tick chart showing only these banks: fxcm,gain,coes,hots,gft. I use 43 bar keltners set at 3ATR. If 5 min trend up I buy the lower keltner on the 35 Tick chart. If trend down I short upper band. I continue to trade this way until market hits likely daily reversal such as avg daily range, monthly or weekly pivot or probability bands (bands based on each currencies options implied volatility). Most days I have about an 80 to 90% win rate trading with the trend UNTIL it moves too much and then trading counter trend. On Friday I was buying the CHF low as it was an avg daily range and caught 20 pips and shorted high in Euro 3 times for about 5 pips each. The rest of the day just scalped in the direction of trend. Works like a charm and most of the people I've taught this method to also make money. Try it yourself and let me know how it works for you.
leverage, you also know how to trade only what works and not hoping the trade you are getting into might work. Big difference. The Ever Trading What Works VIPER
Michael - thanks for plugging FX section there. Since K and I write most of the artciles its nice to see someone is readng them .
I just did a painstaking analysis of all our position trades over the past 2 years. 90% of all our winning trades never exceeded Maximum Adverse excursion of greater than 70 points. That means in in FX a winning trade is usually profitable from the get go. Think about that when you trading,