What % of traders fail?

[nickemp]

My view is that most failures come from a lack of Capital and understanding.

Small accounts are almost doomed to failure from trying to climb over brokerage and other fixed costs.

Risk vs position sizing, money management, expectancy and the mathmatical possibility of strings of losses rarely feature in the lexicon of trading newbies.

Not having a written plan (I must do that soon)

I submit this not as a great trader but at least I have survived for 7 or 8 years and I am getting better

Nick

 

[tech/a]

What is failure?

 

[roland]

What is failure?

failure would be, to not learn from your mistakes

 

[BuffettFan]

All of them fail eventually. They fail in two ways: either fail to do as well as the relevant index or they lose all their capital. You only hear them talk about the good times, never the losses.
The great investors like Graham and Buffett have made observations that they don't know anyone who has made lasting money by trading.
There is a book about Australia's top ten traders that was written in the late 90s. I can't remember the exact title. Someone did a followup a few years later and they had all failed!

At about the same time, I did get sucked in to investing in a trading fund setup by a broker, which was run by a professional trader who had had a very good 5 year record. He did well for about a year and then started losing money. After client complaints, the broker closed the fund and I received about 95% of my original investment. I consider myself very lucky to have learnt the trading lesson so cheaply.

When I retired in 2001, I spent a full year doing nothing except investigating all the possible trading systems and doing some comprehensive simulations. (I do have the necessary maths, accounting skills and business knowledge.) After tax and brokerage, none matched a passive buy and hold of the All Ords. If you don't believe me, put all your money in an index fund for a year or two and do paper trades.

It's human nature to love to trade, so you have to fight the urge all the time. Just keep saying to yourself "where are all the customers' yachts!"

 

[weird]

All of them fail eventually. They fail in two ways: either fail to do as well as the relevant index or they lose all their capital. You only hear them talk about the good times, never the losses.
The great investors like Graham and Buffett have made observations that they don't know anyone who has made lasting money by trading.
There is a book about Australia's top ten traders that was written in the late 90s. I can't remember the exact title. Someone did a followup a few years later and they had all failed!

When I retired in 2001, I spent a full year doing nothing except investigating all the possible trading systems and doing some comprehensive simulations. (I do have the necessary maths, accounting skills and business knowledge.) After tax and brokerage, none matched a passive buy and hold of the All Ords. If you don't believe me, put all your money in an index fund for a year or two and do paper trades.

It's human nature to love to trade, so you have to fight the urge all the time. Just keep saying to yourself "where are all the customers' yachts!"

A bit pessimistic Buffetfan,

check out,

http://abrahamtrading.com/performance&accept=1

since inception, and return statistics,

Abraham S&P 500 GSCI
Average Annual ROR (since 1988): 20.22% 9.64% 4.17%

 

[ThingyMajiggy]

And so it begins...

In the red corner....Investoooorrrrssss!!!


In the blue cornerr...Trraaaaddeeerrrss!!

:shoot: :sword:

 

[gav]

"Win or lose, everybody gets what they want out of the market. Some people seem to like to lose, so they win by losing money." - Ed Seykota

 

[Wysiwyg]

A bit pessimistic Buffetfan,
check out,
http://abrahamtrading.com/performance&accept=1
since inception, and return statistics,
Abraham S&P 500 GSCI
Average Annual ROR (since 1988): 20.22% 9.64% 4.17%

The Abraham Bear Cave.

Interestingly enough Weird, the figures do mighty well through the bear market. While the bounce from March 2009 has poor returns. Maybe I should send them my kick ass long system.

 

[nickemp]

What is failure?

I guess you never really fail unless you give up. Running out of capital can be a snag though

Nick

 

[Smile]

What is failure?

Stop pussy footing around and making excuses!

Failure in the markets, is not making heaps of cash easily.
If you keep running out of money you keep FAILING!

We are all in this to make a quid without working to hard, admit it.

 

[nomore4s]

All of them fail eventually. They fail in two ways: either fail to do as well as the relevant index or they lose all their capital. You only hear them talk about the good times, never the losses.
The great investors like Graham and Buffett have made observations that they don't know anyone who has made lasting money by trading.
There is a book about Australia's top ten traders that was written in the late 90s. I can't remember the exact title. Someone did a followup a few years later and they had all failed!

At about the same time, I did get sucked in to investing in a trading fund setup by a broker, which was run by a professional trader who had had a very good 5 year record. He did well for about a year and then started losing money. After client complaints, the broker closed the fund and I received about 95% of my original investment. I consider myself very lucky to have learnt the trading lesson so cheaply.

When I retired in 2001, I spent a full year doing nothing except investigating all the possible trading systems and doing some comprehensive simulations. (I do have the necessary maths, accounting skills and business knowledge.) After tax and brokerage, none matched a passive buy and hold of the All Ords. If you don't believe me, put all your money in an index fund for a year or two and do paper trades.

It's human nature to love to trade, so you have to fight the urge all the time. Just keep saying to yourself "where are all the customers' yachts!"

LOL, talk about blinded by your bias.

I love how investors idolise Buffett. Buffett is not an investor like you or me or the millions of Mum & Dad investors, he is a businessman - there is a huge difference.

Most people have no idea the sort of returns that are available to a good trader on markets like Futures (my bias). If I wanted to match the returns of the All Ords I'd only have to trade for 2 weeks of the year.

There are traders on this forum who would blow your mind if you knew the sort of income they were pulling out of the market year in year out.

And yes I also invest but my returns on that portfolio are pedestrian by comparison to my trading account.

 

[nomore4s]

We are all in this to make a quid without working to hard, admit it.

The bold bit is exactly why most fail.

 

[BuffettFan]

Well, everyone is entitled to an opinion, but I am trying to focus on facts not opinions or biases.
All I am saying is that, after many years experience and simulations, I cannot find any way that short term trading is worthwhile, after taxes and brokerage.

I'll look at the Abraham record when I get time, but I usually find these sorts of results are pre tax and expenses. After these costs are taken out, the results usually underperform the market over any decent period.

I like Buffett because he started out as an individual investor and performed very well at that time.

If you have done well at trading, please share your annual return numbers (after expenses) for the last, say 20 years. I suggest that 16% pa is a reasonable benchmark for an individual.
No opinions please, just the numbers.

 

[yonnie]

The bold bit is exactly why most fail.

exactly.....most see themselves trading on a cruise ship on the deck chair near the swimming pool with a cool drink.

it is possible (I`ve done it myself), but only after a lot of bloody hard work to get there where I am now.

you got to be almost a fanatic to succeed in this business.

 

[yonnie]

If you have done well at trading, please share your annual return numbers (after expenses) for the last, say 20 years. No opinions please, just the numbers.

what, for the last 20 years???

you better ask around at the retirement homes

 

[BuffettFan]

Well, anything under 5 years could be just luck. I have discovered that many systems work well for a few years and then fail. Fooled by randomness.

Thanks for the Abraham link. A quick analysis: if we assume 1% fee and a 30% tax rate, the Abraham result is an average return of 14% pa return for 1988 to 2009. Not failure, but an individual would want to do better than that to justify giving up the day job.

 

[nomore4s]

Well, everyone is entitled to an opinion, but I am trying to focus on facts not opinions or biases.

That's funny cause all I've seen from you is assumptions based on your bias.

The fact is you won't get 20 years from most traders because the methods used to trade now were not possible 20 years ago due to technology restrictions.

 

[skyQuake]

Well, everyone is entitled to an opinion, but I am trying to focus on facts not opinions or biases.
All I am saying is that, after many years experience and simulations, I cannot find any way that short term trading is worthwhile, after taxes and brokerage.

I'll look at the Abraham record when I get time, but I usually find these sorts of results are pre tax and expenses. After these costs are taken out, the results usually underperform the market over any decent period.

I like Buffett because he started out as an individual investor and performed very well at that time.

If you have done well at trading, please share your annual return numbers (after expenses) for the last, say 20 years. I suggest that 16% pa is a reasonable benchmark for an individual.
No opinions please, just the numbers.

The good ones turn to some kinda of fund managers generally. Brokerage sure does add up but most pros +ve expectancy takes into acct brokerage.

 

[nomore4s]

Well, anything under 5 years could be just luck. I have discovered that many systems work well for a few years and then fail. Fooled by randomness.

Thanks for the Abraham link. A quick analysis: if we assume 1% fee and a 30% tax rate, the Abraham result is an average return of 14% pa return for 1988 to 2009. Not failure, but an individual would want to do better than that to justify giving up the day job.

Again no understanding of what is possible by a good trader in say the futures markets. Of course systems fail after a while because market conditions change but a good trader adapts as market conditions change and continues to make money.

Trying to compare something a Fund can return to something a trader like TH can return is like comparing apples to oranges.

 

[tech/a]

Actually I agree with Buffett.
There arent that many around who would frequent a forum.

I know your not looking for opinion but offer up a reason for near to zero replies.

You would need to earn $65k a year to be on a basic wage thats 60% on 100K and 30% on 200k
3% on $2 mill.

Let me tell you that if you have 2 mill then you wont be remotely thinking of trading for a living.
You dont have to.

Facts are those that dont have to trade for a living are those who are most likley to succeed as they arent undercapitalised.

Undercapitalisation causes all sorts for business errors.