As some folks here are aware, I’m doing a PhD at the moment. My broad focus is on trader performance, seen mainly from a Behavioral Finance perspective, though necessarily it will only be some fairly narrow aspects in terms of my dissertation. Along the way, though, I’ll have some opportunities to go down a few paths of my own choosing. Since the whole question of whether 95% of traders actually fail is such a hot button topic, I figured I would take that on and share what I find. I’ve posted results from some initial work on my blog in the post Starting to detail forex profitability data. It’s just a beginning at this stage (as the title suggests), but hopefully I’ll be able to expand on it to provide some interesting insights. There’s a lot of data and a lot of ways to slice and dice it. Give it a look and let me know what you think. Constructive criticism is both welcome and encouraged.
Ohhhhhh, interesting. What I’d like to know is what % of traders finish in profit from “start to finish” in your 8,000 account sample.
I think about 30% of traders in the population show as having made a profit - meaning at least $0.01. That’s a really rough figure, though, as it includes folks who made 1 trade or only traded for a month and that was it. Eventually I’ll get down to looking at people based on some minimum activity threshold.
Good stuff. If you could get info on account size and eliminate everything below a certain level that might present your findings in a different light. One guy who is blowing his fifth $100 account will certainly drag down the “legitimate” traders’ stats. Someone opening a $50K account most likely has trading experience of some kind, even if from other markets, and is probably not as likely to lose in successive quarters. Just a thought.
I had some feedback that a certain part of the post was a bit unclear, so I’ve gone in and made a few edits and added a bit more info to hopefully sort that out. The bottom line of it all remains the same - the broker-reported data belies the reality of the actual profitability rate of traders, especially when it comes to consistency.