I already have access to 3 years of trading data for a set of traders and am working on getting hold of more. Obviously, you can never look at all traders or all of history. The best you can do is try to find representative data and draw meaningful conclusions from that. We’ll see how it goes.
My work will mainly be research done toward my PhD, but I do intend on writing some articles that are more “practitioner” oriented and will let the folks here know when and where they go up.
Its not 50 people right / 50 people wrong its a 50/50 chance. Price can only go one way or the other…
That is assuming every trader employs a risk to reward ratio of 1:1 then, yes, broadly speaking, the trader starts off with a 50/50 chance of randomly predicting the movement of price. When spread (and slippage) is entered into the equation, however, then chances of the coin flip outcome are actually reduced to 53/47 or 54/46 against the trader. It may not sound like much but casinos profit handsomely on far less an advantage than what the typical trader is up against since the vast majority of trading “systems” are nothing more than an extremely complicated means of flipping a coin.
Once a trader has developed a method that is consistently profitable 53 or 54 percent of the time then he can look forward to breaking even. Again, it doesn’t sound like much but the house edge in blackjack is only roughly half of what the trader is up against in forex. That small edge built the city of Las Vegas.
We can break down a simple message as much as we want but the key message is that you have 50/50 chance of choosing the right direction. Price can either go up or down. Not talking returns here.
I agree with you!. Randomly picking up or down gives a 50/50 chance of being right in the movement of price. I was adding what I thought to be a major reason why so few people are successful in trading. They can be “right” 50% of the time and still lose money.
RE: the 95% question. What if 95% of the time spent on contemplating, discussing, examining, and posting on the 95% theory was converted, spent and invested on the simple question [I]what do I need to do to become one of the 5%[/I]?
Might be a good topic for a bellybutton lint type examination and debate for the upcoming weekend! 
Best response ever.
Haha, yeah … quite harsh … and very true. 
Cheers,
P.
There are no secrets to success. It is the result of preparation, hard work, and learning from failure.
(Colin Powell)
Hehe, so soon we’ll have to address you as Dr Rhodytrader, I guess.
I sure hope you’ll share some of the data, thanks … would really be interesting to have a look at a broader segment.
Cheers,
P.
There are no secrets to success. It is the result of preparation, hard work, and learning from failure.
(Colin Powell)
You cannot compare blackjack and trading 1:1.
The next card to come out of the shoe is pure random chance, whereas trading offers the opportunity of analysing past market movement in similar market conditions; you might call that the trader’s edge.
Maybe you could compare trading with blackjack played by a card counter, but not with it being played by a ‘regular’ player.
Cheers,
P.
There are no secrets to success. It is the result of preparation, hard work, and learning from failure.
(Colin Powell)
Its not as simple as that,as you might be right for a one pip move in your direction then it could go against you,so do you regard that as a correct deduction.
Yes you got me man! If you trade for a pip at a time maybe its not a 50/50 chance that price goes up or down. But it’s a 100% chance u will lose your money. ROFL
D-pip is right, I am moving on from the thread
Simply he was wrong. Like coin can spin 5-10 times in air. Who cares what happened while it was in the air? The most important thing is what happens when it hit the ground.
At the end of the day who cares we’re just playing with maths ,Im with Bitterseatrader here, time to move on to more important things like making some cash:54:
No it is a fact that there are 95% of failures in the forex market out there and this is true because mostly there are people to try forex and they are new and have less capital therefore they gets their account wiped out and in forex if you wins 5$ then it is a fact that some has lost that 5$ so yes it is a fact.
Most business start-ups fail, so “95%” of traders failing is no surprise since trading is a business as well.
I think Chris is also correct. A dumb trader who trades randomly will win 50% of the time. By default, random trading should show a normal distribution between winners and losers. Throwing in trading costs will skewer this normal distribution in favour of the losers, but there will still be a sizable portion of winners well in excess of 5%.
That’s what I did when I first time discovered Forex. I made some profits in beginning, just by pure guessing. I was like: well, this is too easy.
But then I suffered loses. It was a good slap in the face and reality check.
“A banker is a fellow who lends you his umbrella when the sun is shining, but wants it back the minute it begins to rain.”
-Mark Twain.
No, it is not fact. There are no studies or stats that I am aware of that back up this assertion. It is a number that has been pulled out of thin air. The same 95% losing number floats around on stock trading sites as well but again, there are no stats that actually back this up. There isn’t even an agreed upon definition of what a “trader” is let alone what percentage are so-called losers.
5% is actually 5000000 person making money … the other 95 million person is not making money …