The Failure Rate of a Proprietary Trader

Great article on the failure rate of a proprietary traders. Applicable to many on here and reinforces many of the issues T/H constantly tries to get across in his posts....

e.g.,
"To become great at anything requires deliberate practice. If you want to get better at a consolidation play you must practice this trade hundreds of times until you have developed the skills to automatically trade this play in real time. How many three pointers do you think Kobe shoots everyday?"

http://www.smbtraining.com/blog/the-failure-rate-of-a-proprietary-trader
http://www.stocktwits.tv/?p=4150

sleepy

sleepy,

I have a book called The Commodity Futures Game, by Tewles, Harlow and Stone. In chapter 13, called Who Wins, Who Loses, Why, it has many statistics from brokerages into customer accounts from different eras. (the book was written in 1969, reprinted in 1974, so pre-then).

Basically 65% of all accounts are losers. Of the winning 33%, 84% were winning, or up less than $1000. The Hieronymus Study showed that only 6 out of 462 accounts made more than $15,000 and that a large number of accounts (170) only traded a few times a year. The infrequent traders contributed 64% of total losses.

Overall, the statistics... "strongly suggests that the regular traders relieved the one-time traders of their money and then deposited it with the firm in the form of commissions."

brty