90% of new traders don’t make it.
Everybody says that like it’s gospel. But, any idea where this figure actually came from specifically?
Not saying it sounds unrealistic. But I also wouldn’t be surprised if it’s made up. I just like to know the sources before I believe something.
I also heard that the last sip is 90% saliva. Then why does it still taste like beer?
I personally dont believe that 90% fail but have no idea where that came from. I have herd of a few studies but never seen them myself.
Also it dont matter if it is 90 % saliva if you know the amount of alcohol on my breath it would not make a difference.
The CFTC reports show that in any given quarter about 70% of active (meaning have done as least 1 trade) forex traders lose money. That number cannot be extrapolated into something longer-term because we don’t know how much carry-over there is quarter to quarter, but it’s a starting point.
What I think is a related number to the 90% one is that something like 95% of all new business fail within 5 years.
“If 15% of day traders are profitable,” says Drew Niv, chief executive of FXCM, "I’d be surprised."
Currency Markets Draw Speculation, Fraud - WSJ.com
As I always say, you’re only concern should be that yourself is profitable, did JFK say, you can’t go to the moon because no one else has ever been?
This keeps coming up over and over again. We NEED unprofitable traders, the more the better. Without people losing money where do the profits come from? The losers have to come from somewhere, yes it could be hedges or mutual funds or unsuccessful day traders or anywhere else. but losing is necessary for the market to function. Like purple said, all i care about is my own profitability. If i am profitable, i want everyone else to lose.
Actually trading is a zero sum game, so the more ‘losing trades’ you have happeneing at say a Stop hunt level, the more liquid the market becomes at that given price level. Just becasue there are more losing trades out their, it makes no advantage to anyone of us.
And to also add, the market as a whole consists of 50% winners and 50% losers on any [U]single[/U] trade. Even if you were to count every trade that took place for entire year by every party involved, 50% will have won, and 50% will have lost. The difference is what parties take a greater proportion of the winning trades vs the losing trades.
Having a market with greater liquidity is a benefit to all participants in that market at any given time. That is a simple fact of market structure. Also saying that each trade has a winner and a loser is also not true. be it in what they are trying to use the market to achieve or how they trade. 2 basic scenarios i see are 1) its a hedger they expect to lose if their business is doing well which is their primary objective. So they are in fact a winner, the trade served its purpose as insurance against factors that are outside of their control that negatively effect their business. They no longer need the insurance and exit the market at which point you are taking the other side. 2) you are actually the other side of some other traders take profit order, it doesn’t matter how or why he is exiting at this point, just that he is taking profit here and you just happened to take the other side. The difference is market objectives, am i trading the market to profit from the movement of the market itself, which like i said you can be the other side of a traders take profit order OR am i using the market for an external objective for which the market can help (IE hedging - futures were invented for this). Either way there are situations were both parties and profit as well as both parties can lose. There are a lot more situations out there were this can occur but these are the 2 most common.
Sorry, that’s not logical.
On any one trade — [B]the total P/L earned[/B] (by one or more winners) [B]= the total P/L lost[/B] (by one or more losers).
If a bunch of small-fry, such as ourselves, get suckered into a bad trade (in which a big currency hedge fund, or the prop desk at a big bank, has the other side) — [B]there could be one big winner[/B] (the fund or bank), [B]and a hundred losers,[/B] or ten thousand losers (the small-fry, us), [B]on one trade.[/B]
I suspect the number is relatively accurate however i believe it refers to traders loosing money. Which is not necessarily unsuccessful … remember there are a lot of traders in these markets to hedge other positions …
By the very structure of the retail spot forex market - which is liability based, not asset based like stocks - every pip of profit on one side of the position must be lost by the other side. It doesn’t matter what the purpose of the trade is.
If you are on the other side of trade of a hedger then you are taking their money if the trade goes your way. The hedger obviously has an offset of some fashion elsewhere, but this doesn’t change at all the zero sum nature of the position between the two of you.
If you are on the other side of someone’s exit order then you and they aren’t actually joined in a long/short relationship. Your position is matched against someone else. It must be by the very nature of the market.
To use a very simple example, let’s say Trader A is long EUR/USD and Trader B is on the other side of that. Trader B wants out so “buys” EUR/USD from you. Trader B is now flat, but Trader A is still long and now you are short. As a result, you and Trader A are now the opposing parties in the position. If Trader B took a profit it came at the expense of Trader A, who is now negative. You haven’t make or lost anything yet so the net for the three of you is zero.
There is no way around it. When talking about contract-based markets like futures and retail spot forex where we are exchanging liabilities rather than actual currencies, there must be a winner and a loser - unless of course the market remains flat.
Clint is right. That 50/50 figure only works if all traders are newbies and are trading with stop/loss. There are bigger traders who actually trade forex like long-term stocks with huge balance risking very little overall and carry DD for months until they close out for profit. You can trade eurusd this way and many wealthy traders indeed do trade this way. But as we know, most newbies trade like hyperactive hamsters and start to panic is their trade is just 20 pips in the drawdown.
Yes, your right, I forgot to use the term ‘relative’. All relative aggregate buys must equal all relative aggregate sells in units which does make it a 50/50 zero sum game.
90%? i think its 95% or even more. small fries trade live,blow an account then quite, only a few try again and again. and yes for one big player to make a big score, he eats up dozens or even hundreds and thousands of us small fries every day! but still with that said I will continue to strive for success (sounds like a line from a movie or somthin’) 
Can people give there opinions on day trading please. I am going to be day trading tr 1hr and 5 min charts with VSA. I keep seeing these quotes that its near impossible to make money day trading. If thats true then what the hell am i learning this for… help
Day trading just means you are looking to exit the trade before the close. There is plenty of profit available by that definition, I assure you. But if you take day trading to mean scalping for single digit pip returns, that’s where you will get chopped up…
Hi Akeakamai,
You’re alsolutely correct! but you know what? there’re so many traders try to have quit pips everyday, every minute, and every tenth of second. That’s why I really love them!
Cheers,
I blame it on using the predictive model, very much outdated now that everyone gets live data. If more people learned how to become like a floor trader instead of a genie I feel more would succeed… Also alot of people really dont have a real precise way of exiting their trades, especially the bad one.
I have talked to some brokers, and they claim the more money you have the better chance you have of making it. So Capitol may have something to do with it, don’t know yet, I am still learning. I am into Elliot Wave stuff now, and I am just starting to grasp it. A lot of it may also be education, not willing to learn. I hope all this study pays off, because I may become part of the 90 %, then I can say I told you so!