Why 90% of traders fail.... an alternative outlook

90% of traders fail… everyone knows it… but WHY?
Most people put it down to psychology, or system chasing etc … but I propose there’s another reason, one that probably applies to most new traders:


Without Fundamentals you are gambling… trading on the CHANCE that a pattern if traded enough will eventually win…

With Fundamentals you are INVESTING… there;s a big difference… sure you enter and exit markets technically as you need a consistent method for actually trading, BUT if you do so BASED on fundamentals when choosing a pair you will do far far better!

In fact ill make a controversial statenment:

You simply cant make a regular, long term, sustained profit from Forex without some basic fundamentals being applied to at least choosing your trading pairs and direction. Today’s blog explores this statement in more detail: What do Fundamentals Mean to Trading, and WHY are they so VITAL?

In the blog I included a Youtube video that’s shows you how and why the moves following last nights Aussie news were 100 pips stronger on the EURAUD compared to the AUDUSD…

Its entry level stuff that will make a big difference.

I think this whole " x% of traders fail" is nonsense in itself. 90%+ of everyone fail at most things that they try. Millions of people want to play sports or be musicians at the highest level, and never get far enough to make a living off of that.

As far as your point, I do think that you’re right. IMO, fundamentals drive currencies in a direction. Patterns and percentages are just representations of past price levels that are open to different interpretations.

Take my opinion with a grain of salt though, I’m still a newbie haha.

Without Fundamentals you are gambling… trading on the CHANCE that a pattern if traded enough will eventually win…

I totally disagree with this, fundamentals are not required at all in SOME trading systems, and yet they can still be profitable. So you are not gambling just because you are not adopting ‘fundamental analysis’, rather you are playing a game of statistics - this is how you create your edge. Chance does not exist when you have an edge, this is not a casino.

With Fundamentals you are INVESTING… there;s a big difference…

Yes there is a big difference, but FOREX IS NOT INVESTING - we speculate on something called a derivative, which is a non physical asset.

Let me ask you, how do you think algorithms work, they use statistics based on market structure and order flow - nothing to do with fundamental analysis - the last time I checked Wall Street still made money using these for past decades.

So I appreciate your post, but it’s slightly biased and as you quite rightly said it’s controversial

We fail because we don’t know what it is we are doing. Its that simple. Fundamentals, what a load. Although I’m acutely away of what news is filling the market at the moment, where I play it has no role.

Another salesman hard at work, coming soon paid signal service. Let me fill your head with the same old same old. You guys make me laff and make me sick!

“Fundamentals” is just another data stream, one that does not offer entries or exits in terms of prices but in terms of events. Saying that losses in trading are the result of the failure to adopt the usage of those sorts of entries and exits is just the same as saying “you are losing because you are not taking entries and exits on the 20 day moving average” or “you are losing because you are not entering and exiting against the net retail position indicated by this sentiment index” or “you are losing because you are not trading MY METHOD”.

[B]Jack Schwager was asked[/B]: “[I]How do great traders go about finding their approach to the markets? What would you say sets them apart?[/I]”

[B]His answer:[/B] "Novices tend to believe there’s some answer out there, that it’s a matter of finding the right formula, the single right technique. That’s why books like, “How I made a million dollars trading in the markets,” always sell well.

The truth is it doesn’t work that way. There is no single way that works continuously. If it did, it would stop working anyway because everyone would follow it.

It’s really a matter of finding a method that is right for the person. It varies all over the place because there are people like… [Jim] Rogers who have complete disdain for technical analysis. He’d say that the only people he’s met that make money in technical analysis is those that sell their technical analysis services, that’s his take on it.

On the other hand, you’ve got people like Martin Schwartz who’ve done phenomenally well. He’d say: ‘I spent a decade as a fundamental analyst, but I got rich as a technician.’

Believe me, Rogers could never make money using technical analysis and Schwartz could not make money using fundamental analysis. Yet, they both do terrifically well.

The very first thing to get across to people is you’ve got to figure out what is the right method. [B]It’s not just fundamental versus technical[/B]. Either you are short-term, or you’re long-term. Do you want to trade stocks? Do you want to trade futures? Do you want to trade currencies? On and on with the variations.

It’s a discovery process, an evolutionary process. [B]Nobody can tell you that[/B].

I get emails from people sometimes. They’ll say, “What trading method would you recommend?” To me, the question is a lot like “I’m going to buy an expensive suit. What size should I get?”

How would I know? I don’t know if you’re six-six or five-five, so you can’t answer that question. There is no answer to that question. There is no right sized suit for everybody, and people need to think of trading the same way. There is no right size trading method for everybody."


Some fail because they don’t understand how the big money moves the market. They don’t see the traps that are intentionally set to catch them in a move the wrong way.

They cannot read what these big establishments are doing.

If you learn how to spot the above you will be profitable

I also disagree that fundamentals are vital, they can be as tricky as any chart pattern. However reading both, chart and fundamental patters should greatly improve your trading performance.

Depends on what you mean by fundamentals though

umm… the use of planned pre-scheduled news announcements, and the trading of unplanned news after the event. But im looking forward to your definition too

You make a good point, Ben. Even those who primarily use technicals should have some understanding of fundamentals that could impact their trade such as when major economic data are released.

Having an understanding of what news is due to come out, such as “market moving events” in my view is within the ‘knowledge’ section of trading; just like realizing what day of the week it is. It forms no reasoning as to why you should or should not enter a market at a given price. My point, and to reiterate a key phrase i used in my original post was that fundamental analysis “[B]is not required at all in SOME trading systems[/B]”. Therefore it would be logical to assume that it is not a variable that is going to make a trader of this named system more successful and/or profitable.

A simple example could be to suggest the crash in late 2008, look at GBP/USD (and others) and you can see price tanking to great lows over months at a time - and yes I am sure fundamentals agreed with this. But how is this useful to perhaps a day trader, a long term trader would benefit greatly trading with this downward trend, but equally so a day trader could have had the same success buying on the numerous bull pullbacks (or corrections in price - whatever terminology you want to pick)

So to try and make it simple. Trading Fundamental analysis by means of quantifying the actual news figures (not by just having knowledge of what news is due to come out) is more useful for long term traders who want to be bang on trend. Short term traders will still find buying opportunities which prove to be profitable in the most severe market crash, the opposite also being true, and these opportunities will have been found using technical analysis.

As always there are two sides to every trade, which means there are always going to be people who agree and disagree. I’m however just chipping in with my points

Thats madness and dumb by its own definition. “Big establishments” don’t care one little bit about you and me. And why should they? The markets doesn’t exist for you and me to speculate over. Supply vs demand. Thats fundamentals 101. Understand that and you will be profitable.

Agreed that forex isn’t investing - at least not when one is simply playing exchange rate moves.

Disagree on the derivative thing. You could make the technical case that what we [I]trade[/I] are derivatives. What we speculate on, however, is the ratio between the value of two assets, which itself is not a derivative any more than a long position in GM stock paired against a short position in Ford stock would be.

There’s a simple fact here.

Retail forex trading is a zero sum market before accounting for costs. That means on average about 50% of traders will win and 50% will lose. When you add in the bid/ask spread in exchange rates and in carry interest (yes, there’s a bid/ask there too!) then you start shifting the bias toward more traders on average being net losers than winners.

From there it’s a question of relative skill. Just as in poker, those who have the most skill will end up with all the money in the long run.

Thanks a lot for the thread here. Very interesting information

While this may indeed be true, it is not necessarily true. It is possible for the retail traders to be net winners. From whence then will those winnings come? From the hedgers through the interbank market. The reason this is not the usual case is simply because retail traders are very bad at winning not because the overall game is hard set as a zero-sum game.


Absolutely i mean when you think about is its so blindingly obvious and logical…
I always put it this way to the non believers:

"Would you go and buy a racing horse because it looks pretty? Of course not, you’d be and idiot and have as much chance of a return by going on red or black at the casino… It would be more logical to find our about the horses genetics, breeding lines, training, and health… currency is the same… why anyone would buy a currency based on some pattern or background algorithm is beyond me - but at the same time I get it because I did the same. (Thankfully I was luckily to grow up with another trader who was actually ranked as one of the worlds best, so i was LUCKY that he helped me learn from my mistakes, otherwise there is not a chance id have made it)…

To those picking up on the fact i have educational business based on Forex - so what - i dont go blarting about it on these forums, but if you are good at something, and can make money from it WHILE helping others than who wouldn’t…

Any information i provide on here is genuine help - if you dont want it than by all means take no notice…

I really appreciate FXCMs input, so thanks for taking the time to comment guys!

No one asked you to look at my site - the link went straight to my blog. Doesnt seem like hard salesmanship to me - results talk, i let that and my rep do the selling for me, and chose to provide helpful posts to those that can make use of them… maybe spend less time witchhunting/trolling and more time listening and you mnay just pick up on a thing or two :slight_smile:

I wish you the very best ,


Interesting stuff indeed and a great input to this feed.

My response would be that my mentor Jarratt Davis clearly states that Technical trading on its own without some background fundamental input is completely useless in the long term…

He has been verified by the Barclay’s currency index as the 2nd best performing trader in the world for several years in a row - so you simply cant argue that he doesn’t know what hes talking about…

There are many verified funds out there that have completely ignored fundamentals and have profitably traded a simple price triggering system for decades. Dunn Capital and Chesapeake Capital are two examples that are easy to get information on. These funds have traded very profitably over the long term. I do not know who Jarratt Davis is, but he evidently did not get a chance to examine the performance of these funds and those that employ similar systematic trend following approaches. As Jack Schwager mentioned, there are strong examples of fund managers that have profited terrifically over the long term from both purely fundamental and purely technical implementations.

The conclusion that can be drawn from this empirically verifiable information is that a purely fundamental, a purely technical, or a combined method cannot be shown to prove superior to the others.

The frustrated trader who has accumulated losses while trading a technical system will therefore be just as likely to improve his performance by switching to another technical implementation as he is by adding fundamental parameters to his current implementation. The combination that truly matters is that of the trader and the strategy and its implementation. The assemblage of parameters, although profitable for a given trader, will not profit every trader. Some traders should stick to fundamentals, others to technicals, and others to some combination of the two. The difficult task that faces us all is to find the parameters with which we as individual traders are naturally capable of earning profits over the long term.