Hi,
A question for the more experienced traders.
How long do you think, beginners last at trading?
Do they on average last less than a year? Or even shorter span than that?
Do you think they realise that it isn’t a get rich quick scheme and under estimate the level of learning and dedication?
Willie
I think most are gone in half that time. Its down to inability to handle risk, which is down to fear because of a lack of familiarity in how to manage risk.
A more precise question would be how long after going live. I think quite many newcomers do work with demo accounts for quite a long time before going live. But that is the point where the “the rubber hits the road”. It is a different world when it is real money, one’s own money, sitting there on the screen. And that is where the problems start to creep in: the irresistible urge to take profits (prematurely) before they disappear and running losses in case they might turn around, trading microscopically on short term charts thinking that is somehow easier, taking too large exposure risks, etc, etc.
All brokers that are obliged to provide such info seem to confirm that 70-90% of traders lose money. Some traders have told that they persisted for some years before finally reaching consistent profitability, but I suspect the vast majority of those that actually quit do so within a year of starting.´One of the main reasons probably being a lack of capital. If one starts with a very small balance then even a few losses reduce it to an unworkable level. However, dare I also add that probably very many fail because they have about as much knowledge and understanding of trading financial markets as a tourist in a casino.
Interesting how you mention the lack of funds, being part of the issue. I was originally planning to go live in 12 months time with an initial deposit of £500.
From what I am reading, perhaps it is best to have a bigger deposit for when I do actually commit myself to a live account!
i guess 50% of them lose within a couple of months. as one does not have patience to bear the loss and they enter the market thinking about the profit.
I think the main reason is lack of a profitable system.
If you lack capital you can find it.
Finding a profitable system is much more difficult.
If you make 1000 pips per year is will work with 500 … 5000 … 500.000 .
Wannbe traders lose pips , lose money and time and than give up.
That is about the minimum that I would personally consider suitable for starting a trading career. It gives sufficient room to survive a short string of losses whilst allowing an exposure risk with a profit potential worth the effort.
There appear to be a number of newcomers trying to get up and running with only $50 or even less, and clearly with no other source of capital. And with the risks involved it would be even worse to borrow funds from elsewhere!
But even with £500 it is important to remember that trading is a high risk business that works in both directions, gains and losses. And so managing risk exposure and equity control are even more important than deciding what, where and when to enter. As has been said many times in these forums, concentrating on not losing is more important than how much you hope to win.
Term “beginner” needs defining some more. There are a lot of people at the “beginning” who are chancers and want a get rich quick scheme and they are thinned from the herd very quickly. Then you have those who really want to have a go at trading but lack discipline to stick to proper risk management and a few hefty losses will shed those off too. It’s a brutal business but it rewards patience and discipline.
Finding a sustainable strategy is indeed another major reason, especially on very short TF’s that beginners seem to inhabit.
When talking of insufficient capital, I was referring to those hoping to trade, and even become self-sufficient on $100 or less. That is surely a non-starter. But to borrow money that you cannot afford to otherwise repay in order to trade as a beginner is going to lead to disaster that extends even beyond the end of their short trading career.
I am sure that trading “will work with 500 … 5000 … 500.000” …but with less than $500? Well, maybe, sometimes, it is not totally impossible, but…
for sure
most beginners never actually develop a true edge
there are reasons - most beginners never acquire the necessary math skills to be able to determine with a high degree of confidence whether or not they actually have an edge
especially the ones who want to use an EA
we used to refer to “the 90/90/90 law” - 90% of new traders lose 90% of their initial deposit within 90 days of starting
this was in the days before brokers were required by regulators to publish any account statistics, so i don’t know for sure whether it was true, but it certainly “felt right”
As has been said many times in these forums, concentrating on not losing is more important than how much you hope to win.
Exactly. Tattoo on your forehead.
This has turned out to be an interesting discussion for sure. Appreciated!
I’m an Engineer so my maths isn’t a problem, but I’ve not applied any calculations to my demo accounts so far. Just went for gut feeling and a novice reading of the Candlestick graphs. (I use these graph types as part of Sigma Six, so I interpreted the patterns, that were being produced.)
I definitely of the mind set, that I want to protect my money and not lose it like the 75% of traders or whatever the current % is.
That in itself is an interesting issue. Those brokers that actually (have to) include this statistic on their websites due to regulatory requirements are also those brokers that had to restrict maximum leverage to 30:1 compared with a previous 100 -1000:1 or more.
As a result, I suspect many small balance newcomers select brokers “regulated” elsewhere, where higher leverage is still available (and such brokers do not need to report their percentage of losing traders).
The consequence of this might logically be that the ESMA type brokers are seeing a drop in their number of losing traders since these have migrated offshore. In other words, the actual number of overall losing traders has not diminished, it is just redistributed with a bigger percentage of them invisibly offshore!
It depends on their risk tolerance and bank account. Simple as that.
I think once people realize it’s not going to give them $200 guaranteed profit/day or whatever other goal they have and learn that it takes far more time and effort than just entering trades and looking at chart patterns, they’re out. I’d say maybe a few months. Only people who truly enjoy the process will stick around. Or people who are patient.
I traded demo for 14 months,with $1000
Start trading live with $1000 USD.
Then, after 2 weeks,I decided to trade with $500.
I quickly learned to let the winners run and even after a week,my profit iwas doubled/tripled with half the money.I wait for the best opportunities to start trading and I trade aggresively within my risk tolerance.As my profits are bigger and losses smaller,I don’t worry like before.
I hope it helps you a bit.
Really varies - I think this site does a really good job of painting realistic expectations, the problem is - most people land on Forex from these influencers on Instagram flying around dubai in lambos.
Well. I think it all depends on the specific context of your question. A beginner can last vey long on demo, but be out in just a few days when they go live. My demo account accumulated good profits for more than 6 months, only to be out of the market in just 2 days when I went live. At one point I had more than doubled the account, trading gold, only to blow it all the next day.
Hi,
A long time ago, I paid a decent sum of money to attend a formal 3 day Forex course. At the end of the course, the tutor said “statistically, more than half of you will never even place a trade after having spent about a month’s wages”. I formed a group of 8 attendees and agreed to have weekly teleconference calls to encourage each other. First week we had 5 attendees and 3 apologies. Second week, 4 attendees and no responses from the other 4. Fourth week, there was two of us left. Then he blew his account, so just me left. I managed about 150 trades before I knew my actual results were nowhere near my plan. So I “quit”. That was in 2011. Since then I came back for 2 years in 2014/15 and am now back since May 2019 - overall profitable during the past seven months, but still unsure I even have a reliable edge. I stopped counting the hours of study, strategising, planning and entering trades in 2015. Since 2019 it is probably fair to say I have spent over 1,000 hours in total on “trading”. But I still thoroughly enjoy it - I do not consider it a chore or boring in the slightest. Like other pursuits I do it because I love doing it. So my own anecdotal evidence shows that about half won’t get past the hurdle of even putting a trade on, and four out of five of those who do will stop between a month and a year. Great results - more for the rest of us.
I think it depends. If they have realistic expectations and put effort into learning before jumping into a live account, it really increases their chances of being successful. Those that never open a demo and that are looking to make a quick buck usually don’t last long.