Why do 95- 98% of retail traders fail

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Old Jun 25, 2014, 1:20pm   #1
Joined Jun 2006
Why do 95- 98% of retail traders fail

HI,

if you know it or not a survey carried out by FXCM concluded that 95 - 98% of retail traders fail. so why is this? So how do you become one of the select few to succeed?

Before I continue and discuss the why's. a bit about me I have been trading since 2006 initially part time and spent time on this forum, before going full time which meant I stopped contributing to concentrate on my trading. I feel that now is a good time to come back and may be discuss, share some insights into what is a successful trader.

what I trade
when I trade
how I trade.

I guess I am aiming this more at newbies rather than seasoned traders as I expect most seasoned pros to already have the experience.

I will leave it for now with the opening statement , if anyone out there is interested to discuss post or message me.

In the mean time feel free to view some of my old posts.
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Old Jun 25, 2014, 10:06pm   #2
Joined Aug 2006
Since trading is essentially just competing amongst traders to take each others money most will fail. Most traders will end up giving their trading capital to the few highly skilled traders. When you think of it like that, you kinda realise that the market has to do whatever it takes to make most traders wrong, most of the time.

If that doesn't make sense, imagine any competition where 100 people were all playing against each other to take each other's cash.

This article http://www.forextradingforbeginners.org.uk/?page_id=67 explains that this manifests it's self as the right thing to do is the thing that feels wrong to most people.
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Old Jun 25, 2014, 10:20pm   #3
Joined May 2014
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Originally Posted by Davidee View Post
Since trading is essentially just competing amongst traders to take each others money most will fail. Most traders will end up giving their trading capital to the few highly skilled traders. When you think of it like that, you kinda realise that the market has to do whatever it takes to make most traders wrong, most of the time.

If that doesn't make sense, imagine any competition where 100 people were all playing against each other to take each other's cash.

This article http://www.forextradingforbeginners.org.uk/?page_id=67 explains that this manifests it's self as the right thing to do is the thing that feels wrong to most people.
Yes I agree with you but I would also add that most retail traders are not trading the market they are trading against a market maker who are easy prey for them. Yes the ones that do trade in the market are in essence in a competition. You are correct with your statement about the market having to move to make most of the traders wrong over time.
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Old Jun 25, 2014, 10:34pm   #4
Joined Nov 2013
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Originally Posted by SpreadDoctor View Post
Yes I agree with you but I would also add that most retail traders are not trading the market they are trading against a market maker who are easy prey for them. Yes the ones that do trade in the market are in essence in a competition. You are correct with your statement about the market having to move to make most of the traders wrong over time.
What if the market maker is easy prey for the trader.
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Old Jun 25, 2014, 10:48pm   #5
Joined May 2014
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What if the market maker is easy prey for the trader.
Well I suspect you already know the answer you little tinker. For the sake of completeness winning customers are identified and hedged.

for a more complete explanation see 1m48s into this video

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Old Jun 25, 2014, 11:12pm   #6
Joined Apr 2014
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Originally Posted by keithh View Post
HI,

if you know it or not a survey carried out by FXCM concluded that 95 - 98% of retail traders fail. so why is this? So how do you become one of the select few to succeed?

Before I continue and discuss the why's. a bit about me I have been trading since 2006 initially part time and spent time on this forum, before going full time which meant I stopped contributing to concentrate on my trading. I feel that now is a good time to come back and may be discuss, share some insights into what is a successful trader.

what I trade
when I trade
how I trade.

I guess I am aiming this more at newbies rather than seasoned traders as I expect most seasoned pros to already have the experience.

I will leave it for now with the opening statement , if anyone out there is interested to discuss post or message me.

In the mean time feel free to view some of my old posts.
Hi, Keith H,

Well, most traders fail for several important reasons:

1. Lack of focus - too distracted, too easily swayed to change opinions/trading actions.
2. Lack of trading plan with statistically-backed trading edge.
3. Inability to focus on winning trading plan (if have one really?) due to lack of experience in dealing with anxiety, fear, stress, of dealing with uncertainty and random distributions of outcomes.
4. Insufficient bankroll (again related to insufficient trading plan).
5. Bet sizing too large for trading edge.
6. Trading for status, "action", attention, etc.

In summary - there is a very appropriate phrase attributable for retail traders:

"...they do not get what they want (profits)...they only get more of who they are (distracted, low standards, no discipline, no skills)..."

Sorry to be so direct/blunt on this very important topic you have raised.

If only more traders/newbies have the focus, courage, and will power - to raise their Standards to trading...

W/o the necessary Standards and Skills, chance of trading success is < 1%!

Thx for at least bringing into awareness a critical issue/study/discussion topic of interest to all traders!

WklyOptions
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Old Jun 25, 2014, 11:15pm   #7
Joined Jun 2014
You need DMA/ECN to make sure you're trading against other market participants and not your broker. If you broker has a vested interest in getting you then you really are toast.

But even with true level 2 DMA most traders will have to fail. A big poker game would work exactly the same way, most would lose their money and a few would make a lot of money. The few highly skilled would take everything. Since traders are moving the market the market will HAVE to do whatever it takes to make most people wrong.
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Old Jun 25, 2014, 11:38pm   #8
Joined Apr 2014
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Originally Posted by Piman78 View Post
You need DMA/ECN to make sure you're trading against other market participants and not your broker. If you broker has a vested interest in getting you then you really are toast.

But even with true level 2 DMA most traders will have to fail. A big poker game would work exactly the same way, most would lose their money and a few would make a lot of money. The few highly skilled would take everything. Since traders are moving the market the market will HAVE to do whatever it takes to make most people wrong.
Hi, Piman78,

I don't really think most retail traders have to worry about having aggressive stalking broker orders against the retail traders' own positions/orders.

Retail traders need to worry about themselves doing more damage to their own accounts than by brokers, etc.

If a retail trader is able to learn to "see" big money trends and momentum biases, for example, and then bet size accordingly and get on the big money trends, then the brokers actions will not be effective.

As I've mentioned before - it is the lack of focus, trading plan, standards, and skill sets, that really destroy a retail trader's longevity and $$$ bankroll.

Regards,

WklyOptions
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