- that old adage that 90 or 95% of traders lose must be another chestnut from brokers â 'give Us your money, WE won't lose it, but You will' - Another idea: among the 30% or so who are profitable in a given year, it may be that many (or most) of these individuals are not in the ~ 30% that are profitable the following year. Perhaps the adage needs to say "90 to 95% of traders are not consistently profitable"
I've prepared enough tax returns in my day to know that the 95% losing rule is completely untrue. If a trader tries to make it as a living this rule generally holds true but if a trader does it as a part time job to earn extra money the win rate is roughly 2/3rds. If a trader trades any type of leveraged instrument whether it be full-time or part time the win rate is in the area of 5% but for equities with proper money manange management (meaning no greed) the win rate is about 2/3rds. Moral of the story: Keep your day job.
23.5% is based on qtr basis winning percentage. According to his article: http://articles.latimes.com/2011/apr/03/business/la-fi-amateur-currency-trading-20110403 75% lose on a qtr basis that result to 98% lose annual basis. For example, this small trader may have a profitable qtr and next qtr, blew his account. The L.A Times mention of the 615K accounts annual, 605K accounts lose. More than 90% of small traders lose. They just lose!
To become a successful traders, u must join the house (banks, HFT, prop firms, brokerages, hedge funds) It doesn't have to be a prop firm. It can be either Banks, HFT Firms, Brokerages, and Hedge Funds. Remember small traders, most of the successful traders begin their career working for the house and not from reading books, subscribing 3rd party educational and system vendors, and reading 98% of ET members advice/lectures on how to win.
'a fool and their money are soon parted' thanks EMG for posting the LA Times article link, I found it interesting since I've not read such articles elsewhere, but also thought it biased and unbalanced this idea of the over-the-counter trading, who cares who gets the loser's money, I don't think about it when I have a losing trade with an fx broker or, at the CME's Globex when I've had a losing 6E trade one statement typifying the bias: "Experts say the unusual structure of the currency market makes it hard for amateurs to beat the house." oops ! it's a 3 page article !!! very biased and unbalanced - page 2 very very biased and unbalanced - end of article I've always thought and found FXCM to be a straight and up-front company, never felt the same about GAIN fx brokers do have a great and profitable business model, but aren't the only ones selling over-the-counter products, but I am surprised they can churn And replace so many new clients quarter after quarter Day-to-Days/Weeks B&H trading offers imo the best profit potential, but as we know based on the majority of the many various threads here on ET, it's intraday trading that has people hooked, and in order to be consistently profitable, such traders are Expert or use a coded Expert system to execute trades I think the majority of posts are correct, that while the 1/4 results may show profits without knowing how long the account remained open and what the net +/- was at closure, the data remains incomplete, and the '+ 23.5% up to + 39.9% profitable' still doesn't reflect the true profit/loss of traders, but is a smart way to alert individuals of the potential losses would-be traders face - Before they sign on the dotted line
You're falling to a fallacy here too... Ok 30% of the traders were profitable that month... but even a loser trader in the long run will have positive months... so of those 30% how many are consistently profitable during many months or in the long run? Because the traders that are in those 30% this month are not necessarily the traders that will be in the 30% of the next month and so on... i hope i can make myself understood if they would take the long term profitability statistics then we'd see a big drop in those numbers it is my assumption...
Survivorship bias? What about the accounts that are closed? What about average account age? If you look at all hands at a Blackjack table at one point in time across all casinos in the world, you might see 48% profitable given. But how many players survive long term with proper money management?