What % of traders fail?

[itsybitsybob]

I'm curious as to what the % is of winners and loosers in the trading game. Does anyone have any numbers? I think I read somewhere that only 10% of traders in CFDs make money, which seems crazy! As in, what a crazy waste of money! And I bet forex is even less!

 

[Wysiwyg]

Re: What % of traders fail...

I'm curious as to what the % is of winners and losers in the trading game. Does anyone have any numbers? I think I read somewhere that only 10% of traders in CFDs make money, which seems crazy! As in, what a crazy waste of money! And I bet forex is even less!

Trading securities successfully is something one has to know how to do. Why the likes of myself have failed is because of not knowing. As for percentages, the number I see bandied around is about 10% are successful. I think that percentage is higher at about 20 - 25%.

People lose more often because they don't know and believe me there is a lot to know.

 

[sleepy]

Re: What % of traders fail...

https://www.aussiestockforums.com/forums/showthread.php?t=18658

sleepy

 

[tech/a]

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."

From the handfull of people Ive know in brokerage over the years this comment would be far and away succinct in its explaination from what I have gathered through discussions over the years.

There have been a few studies but would be interesting if some academics did a real one!

 

[Trembling Hand]

Here is a great study done by a bunch of people who work in academia from 2004,

http://faculty.haas.berkeley.edu/odean/papers/Day Traders/Day Trade 040330.pdf

Its specifically on day trading but you would think that's it applies to any form of shorter term trading.

We analyze the performance of day traders in Taiwan. Day trading by individual investors is prevalent in Taiwan – accounting for over 20 percent of total volume from 1995 through 1999. Individual investors account for over 97 percent of all day trading
activity.

About one percent of individual investors account for half of day trading and one fourth of total trading by individual investors. Heavy day traders earn gross profits, but their profits are not sufficient to cover transaction costs. Moreover, in the typical six month period, more than eight out of ten day traders lose money. Despite these bleak findings, there is strong evidence of persistent ability for a relatively small group of day traders. Traders with strong past performance continue to earn strong returns. The stocks they buy outperform those they sell by 62 basis points per day.

What they found is that only a small amount of traders made money after transaction cost. Yet most of the profitable traders income was less than half the average wage.

Only 386 made consistent profit out of 50,000 and had income that was nearly 4 time the average wage. They also accounted for most of the volume - go figure!!

 

[awg]

Then there is the issue of complete failure vs relative or qualified failure.

This can be the difference for example of blowing up your account

Stop trading due to mounting losses

Underperform benchmark ie cash or index

Not outperform Benchmark enough for it to be worthwhile.

I have seen a figure of 97% closure of CFD accounts bandied around.

Of the 3% remaining open, probably many would be lineball

 

[Knoxy]

Agree that failure is relative. If using risk money and highly speculative method some may accept failure as ok 'I took a punt and lost, but could have made it big'. Lotto mentality.

A harder question to answer, but to most here probably more relevant could be 'What% of traders fail after they have reached a suitable level of knowledge to trade in the first place and from then are using a consistent trading method?'. Who knows could be low, say, 30%.

I trade forex and through forums etc. can see a large group that see it as get rich quick or through their comments show they're dangerous to themselves or are always in search of THE method and constantly chop and change. I find fx trading easier than equities, guess the poor stats are from the number of fools attracted by the high leverage.

 

[IB12]

Hello all,

In light of the question in this thread I was just thinking about applying for a position at Propex in their grad program.

However I'm apprehensive about what happens if don't make it and fail to exceed my costs vs. trading profits. Do all the grads they take on succeed? I would think not. So where do they end up going?

I know that there are guys on here who know about Propex, I was just wondering what other avenues in terms of career path can you go should you not make it. What happened to people who didn't make it, where have they ended up?

Because it is a bit of a risk in terms of career/CV wise b/c the skills you learn aren't transferrable and the habits are a bit contrary to what other financial services organizations need (i.e. team work, client service, management skills).

Thanks.

 

[Largesse]

100% of propex traders fail, worst gig in the world

 

[IB12]

I've been doing well personally trading my personal account.

However, it's just I'm not arrogrant to think that all will work out well ... because the statistics and odds are against me.

Does anyone know how long they keep you for, and mentor you and help you try to succeed before they move you along?

 

[cutz]

100% of propex traders fail, worst gig in the world

Are you for real Largesse ?

How does the outfit pull a profit.

 

[SmellyTerror]

Here is a great study done by a bunch of people who work in academia from 2004,

http://faculty.haas.berkeley.edu/odean/papers/Day Traders/Day Trade 040330.pdf

Also interesting from that study is that "occasional" traders were almost universally wiped out over time, which reinforces the earlier view that occasional traders are food.

For the heavier users, there was a much more promising 20% or so who turned a profit. It wasn’t a great profit, but it was something. If I can add a third of the national mean wage to my income from day-trading (assuming that a fair proportion of those regular traders have their day job, too), then I won’t be too upset. Not my aim, but it’s not a crushing defeat either.

I think the lesson from this is that dedication and experience counts. Which should be obvious, but for some reason isn’t to a lot of people (me included, at times). Look at everyone trawling for an indicator, reading MORE books and signing up for MORE courses. Nothing in this study is saying “the people who used the right indicator or took the right course made money”. It’s saying “only the people who traded enough even had a chance to make money”. And of the people who did the time, only a few of those did really well.

…but those people COULD do really well, consistently. I think that’s promising.

All of that tells me to get off my **** and on to the sim.

 

[skyQuake]

Are you for real Largesse ?

How does the outfit pull a profit.

Desk fees of course!
But largesse is talking tongue in cheek

 

[cutz]

Desk fees of course!
But largesse is talking tongue in cheek

So what's the deal,

You pay a fee to work there ?

What sort of fees are we looking at, can anyone work there (within reason). ?

 

[vincent191]

I trade forex and through forums etc. can see a large group that see it as get rich quick or through their comments show they're dangerous to themselves or are always in search of THE method and constantly chop and change. I find fx trading easier than equities, guess the poor stats are from the number of fools attracted by the high leverage.

I agree.....get rich quick and high leverage goes hand in hand and accounts for most failures. In my early days I go for the maximum leverage hoping to get maximum profits for a minimum outlay, this has resulted in many losses.

Even if I did picked the right trend overall, I often get wiped out because my position will only allow a maximum5% adverse movement against me. So unless I get it right from the start any short term adverse movement would wipe me out completely and I cannot recover from any subsequent favourable movements.

I put my failure to too high leverage hoping for maximum gains. You may ask, if this is the case then why don't I lower my leverage and put in a bigger deposit? I did, but I started losing even more when trades did not go my way.

I have learnt my lesson......no more trading for me. It is not easy to give up......my tendency was to try and get my money back and it has resulted in me losing even more money.

My philosophy now is not to be too greedy, I now believe in the "time in the market" concept. I guess I wasn't cut out for short term trading.

I am happy now but I would have been a lot happier had I not gone into highly leveraged short term trading.

 

[tminus]

The average portfolio in ASX game is 52,600 (from a start of 50,000) 6 weeks into competition. Which is clearly not a failure.

 

[Trembling Hand]

The average portfolio in ASX game is 52,600 (from a start of 50,000) 6 weeks into competition. Which is clearly not a failure.

GAME being the word thats important here.

 

[awg]

The average portfolio in ASX game is 52,600 (from a start of 50,000) 6 weeks into competition. Which is clearly not a failure.

It IS a failure though.

A relative failure, as that is a 5% return, and the XAO is up more than that in the last 6 weeks.

Just having my money in STW and playing golf, I would be ahead.

 

[So_Cynical]

The average portfolio in ASX game is 52,600 (from a start of 50,000) 6 weeks into competition. Which is clearly not a failure.

383 dollars a week assuming 300 in brokerage. :dunno: gota remember the market has had a run up in the last 6 weeks so anyone just buying wow, Santos and a couple of banks would of made that much.

 

[kazzumX10]

yeah its true but in a trending market like we are in now anyone can make money