95% myth

[brettus]

Sure the failure group is larger than the successful group. But you have to put the numbers in context. Retail traders cannot hit the floor running. It takes years because we have to filter out 95% of the bull5h!t information out there. Let's look at the facts. What education is available to us? How many scammers are out there leaching off the hopes of others?

The failure numbers reflect a snapshot In time and not a long term reflection of the environment. If a retail trader can persist the endless shovelling of 5h!t there is going to be the inevitable clarity at some point.

The old cliche, Rome wasn't built in a day is true in trading. The only difference between trading and any other occupation, is that trading from a retail perspective comes with a mandatory mountain of 5h!t that needs to be removed before rome can be built.

The longer a retail trader survives, the better the odds are they will make it to success period.

Actually a large factor that isnt account for is ridiculously large spreads and ib charges certain countries can get away with. Specially Italy and Hong Kong. Hong Kong EURUSD spread is like 6 pips with 75% paid away to the IB!!

 

[TheBramble]

Odean definitely and from memory possibly also Barber (although ISTR that was a geographically small Asian subset) et al. Don't have the specific references and realised at the time I should have saved them as this comes up so often.

Methods used were horribly simple - ask the brokers. They are the only ones that know how many accounts they have active during any period of time, how many are inactive etc.

I've written to both the CFTC and the NFA suggesting as part of their new regulations on disclosure they consider excluding inactive accounts from the profitability assessments. No point insisting on 'transparency' when the data is skewed...

Just had a phone call from the Director of Compliance at NFA regarding this issue.

Guidelines covering the directive for disclosure of account profitability were issued on September 30th last year in which the use of inactive accounts (had not traded) were to be excluded from their data. Which is heartening.

Less so is the response from OANDA where they told me they did include non-active accounts as this was within the current regulations. When I asked them to give me a percentage of the number of inactive accounts from the total they had disclosed they told me under current regulations they were not required to do so.

I’ve popped OANDA’s response over to NFA.

I’m sure there’s a reasonable explanation somewhere and it’s all just got a bit confused.

 

[TheBramble]

LOL

Seriously funny.

I've just been informed that the NFA's FDM Advisory Committee is chaired by, wait for it, Michael Stumm.

Left hand, I'd like to introduce you to right hand...

 

[wackypete2]

Ok, so basically everyone on t2w is full of sh1t?

I'm only full of sh1t 95% of the time.

Peter

 

[Shakone]

Around 95% of people who begin education, fail to get a first class university degree. Does this statistic tell you it is incredibly hard to do? Or does it tell you that there are all kinds of people, some who don't even want to do a degree, some who don't take it seriously, some who have been taught badly, some who give up after a while because it is not for them, some who run out of money and get a full time job instead, and a small number who are dedicated to getting that first and work hard at it. And how does this stat or the trading one help in any way?

 

[tar]

Just had a phone call from the Director of Compliance at NFA regarding this issue.

Guidelines covering the directive for disclosure of account profitability were issued on September 30th last year in which the use of inactive accounts (had not traded) were to be excluded from their data. Which is heartening.

Less so is the response from OANDA where they told me they did include non-active accounts as this was within the current regulations. When I asked them to give me a percentage of the number of inactive accounts from the total they had disclosed they told me under current regulations they were not required to do so.

I’ve popped OANDA’s response over to NFA.

I’m sure there’s a reasonable explanation somewhere and it’s all just got a bit confused.

http://forexmagnates.com/oandas-high-profitability-numbers-explained-include-interest/

 

[TheBramble]

Around 95% of people who begin education, fail to get a first class university degree. ?

According to ONS (UK) only 6% (2005/6) of UK population hold a degree and of those, only 10% have a first. So, that’s 0.6%. Therefore, of the 100% who began education (compulsory for all in the UK) only 0.6% ended up with a first.

Does this statistic tell you it is incredibly hard to do? Or does it tell you that there are all kinds of people, some who don't even want to do a degree, some who don't take it seriously, some who have been taught badly, some who give up after a while because it is not for them, some who run out of money and get a full time job instead, and a small number who are dedicated to getting that first and work hard at it.

Of those who commence compulsory education, only 44% (2008) choose to go for a degree. No data on drop out for all those reasons you state or of how many who do go to uni actually really want a first. But this is where your analogy breaks down. Less than half the people who commence education have any desire to get a degree, let alone a first.

I think it’s realistic to assume 100% of those who start trading really want to make it.

And how does this stat or the trading one help in any way?

It doesn’t. It’s not intended to ‘help’. It’s a statement of the probability of achieving success.

 

[Pazienza]

According to ONS (UK) only 6% (2005/6) of UK population hold a degree and of those, only 10% have a first. So, that’s 0.6%. Therefore, of the 100% who began education (compulsory for all in the UK) only 0.6% ended up with a first.

Of those who commence compulsory education, only 44% (2008) choose to go for a degree. No data on drop out for all those reasons you state or of how many who do go to uni actually really want a first. But this is where your analogy breaks down. Less than half the people who commence education have any desire to get a degree, let alone a first.

I think it’s realistic to assume 100% of those who start trading really want to make it.

It doesn’t. It’s not intended to ‘help’. It’s a statement of the probability of achieving success.

You make fair points, but I think it's important to define "want". I think that a lot of people want to make easy money, not have to work etc. In the same way that a lot of teenagers want to be footballers or to be married to footballers. It's not really valid to include such people in the statistics in my opinion.

 

[TheBramble]

OK. You've beaten me into submission.

Probably close to if not precisely 100% of those who are currently successfully trading, really wanted to trade.

That’s a really feckin useful statistic.

As to those who start out and maybe want to trade, but perhaps don’t really or really do, but unconsciously would rather be footballers or studying for a first or sort of want to, but change their minds and everyone else not currently successfully trading, we have absolutely no idea what the numbers or percentages are so we’re just going to leave it because it’s too much trouble to work it out.

As we can never know, then the 95% myth is probably a myth, but we’ll never know for sure and clearly, stats are a waste of fuggin time anyway. And so, this thread has served its pointless fuggin purpose and we can all go home.

If I get any updates from NFA or OANDA on their profitability disclosures I’ll start a new thread. This one has the smell of death about it – Brain Death.

‘nite…

 

[DashRiprock]

a better question to ask is: "From the 100% of people that start out in trading, what percentage of these actually do what is necessary to become successful? How many of these suceed?"

As a kid I wanted to be striker for Man United... just never got round to training. Do I count as a failed professional footballer?

 

[Shakone]

I don't agree that close to 100% 'really' want to make it trading. Perhaps 100% want to make money as Pazienza said. If you asked people how many of you want to commit to losing some (or maybe a large portion) of your money, want to have a year or two (more/less) of mental suffering, where you have to put hours matching a full time job or beyond, endure stress, all for very little financial gain, to have the chance that maybe one day, you'll be able to make a comfortable living from this, then I think you'd find not that many want to trade at all. Not really anyway. Same way, you ask people, 100% might want a nice highly paid job, but how many are willing to go through the exam pressures, the degree and revision, the boring classes along with the interesting ones, the interviews and the hard work once in the job to advance to the decent job they wanted all along? It is still comparable, and yet it ISN'T actually that hard to get a first class degree. You don't need to be super intelligent. You need some intelligence, and a lot of hard work.

I take your point though theBramble, that it is far from a perfect comparison. My point was more that the statistics not only don't help, but they may actually hinder by making it appear that it is less likely than it really is.

 

[meanreversion]

Is it possible that some traders actually want to lose money, subconsciously? I've not been to a casino that many times, but the attitude is usually along the lines of "I've got £500 to blow". A mate of mine turned his £500 into a couple of g's on blackjack over an hour or so.. a few minutes later he was stood by the roulette table, spunked the whole lot in a couple of minutes. I think he actively wanted to "donate" to the market.

 

[Pazienza]

Is it possible that some traders actually want to lose money, subconsciously? I've not been to a casino that many times, but the attitude is usually along the lines of "I've got £500 to blow". A mate of mine turned his £500 into a couple of g's on blackjack over an hour or so.. a few minutes later he was stood by the roulette table, spunked the whole lot in a couple of minutes. I think he actively wanted to "donate" to the market.

Yes, you do see a lot of that kind of behaviour. And I've seen it countless times that once people are playing with "the house's money" they will not walk away until they give the house its money back, with some of their own on top.

The main reason for going to a casino though is free tea and cheese and ham toasties. I've never actually played a casino game in my life - never appealed to me. Maximum payout 36 times and 37 holes for the ball to land in? No thanks (worse if it's an American wheel).

 

[montmorencyt2w]

If I get any updates from NFA or OANDA on their profitability disclosures I’ll start a new thread.

One of those (to me) highly irritating flashing T2W adverts, this time for OANDA, was talking about profitability. It flashed off again before I could take it in (old "lightnin'" strikes again...). It just seemed though, that perhaps T2W's publicity department wished to join this debate.

 

[DashRiprock]

I'm the same, I've never been to a casino in my life. I can't see what the attraction is at all, what is entertaining about losing money?

My own personal theory is that some people do subconsiously want to lose money. My "pop-psych" idea is that it is usually these types of people who spend the time looking at fancy houses, or can't decide between the walnut or the cherry for the inside of their Aston. For these people, trading is like a little "dream machine" - you put your money in the slot, and in return you get to daydream about how you are going to spend all the money you are going to make in your imagination.

I think it's got something to do with protestant work ethics and the old saying "you don't get something for nothing".

 

[Shakone]

It's not just in the casino meanreversion, even on an everyday scale, there are a lot of people who if you give them something challenging to do, they will intentionally not try very hard, so that if they fail, well that's ok, because it's not really THEM failing, they didn't even try. Self-sabotage.

 

[Pazienza]

the old saying "you don't get something for nothing".

Not so. Here's what you do.

You go round town getting p1ssed. Then you roll up up at the casino 2 or 3 in the morning, with a stupid friend. He drops money on the tables, in the slots, whatever, because he's a stupid @rse. You get free tea and toasties.

 

[DashRiprock]

It's not just in the casino meanreversion, even on an everyday scale, there are a lot of people who if you give them something challenging to do, they will intentionally not try very hard, so that if they fail, well that's ok, because it's not really THEM failing, they didn't even try. Self-sabotage.

There are loads of tricks that your mind will play on you that stop you making money.

 

[meanreversion]

Ok so what we need to know is

% traders who make money on a 3 year rolling basis
% of traders who subconsciously want to lose money who do lose money
% of traders wanting to lose who actually make money
% of traders who just want free tea, or equivalent

etc etc

statistic schmatistics

 

[Pazienza]

Ok so what we need to know is

% traders who make money on a 3 year rolling basis
% of traders who subconsciously want to lose money who do lose money
% of traders wanting to lose who actually make money
% of traders who just want free tea and toasties, or equivalent

etc etc

statistic schmatistics