95% of traders lose... This is nothing more than a myth.

[toposwope]

Losers perpetuate this myth because it legitimizes their loserishness...as in "oh well I'm not a thicko cos 95% of the population is a loser like me, I'm just normal really"

Winners perpetuate the myth because it places them in the elite..."oh yes, 95% are losers didn't you know old chap, poor dears should just give it away and leave to the real pros"

 

[scose-no-doubt]

I read an Andrew Lo paper on this but can't remember the title. They did quite a bit of research and the team said it was about right. Good enough for me.

 

[the hare]

Losers perpetuate this myth because....

Winners perpetuate the myth because.....

Its not a myth. There's perfectly good academic research thats backs this up. There's perfectly good statistical models that explain exactly why the latest broker data shows what it shows.

Take a look at any of the audit sites, they quite clearly show this is the case.

If you must, take a look at the monthly T2W competition data !

Take a look at CTA performance data

Take a look at survivorship data for funds.



There's no end of industry insiders who've let the cat out of the bag too.

Look at the published accounts from bucket shop brokers who trade against their clients, and a back of a fag packet calculation bears this out.

Even the numskulls working for brokers shilling their wares here at the zoo occassionally let the odd nugget of info slip, and when the do, it substantiates that the failure rate is well above 95%

Now start looking at some of the pro's, and look where their profits are originating from, trading, or fees ?

Now start comparing long term performance against what you might expect purely by random chance.... thats right, on average traders as a group perform SIGNIFICANTLY worse than a chimpanzee would !

The only myth is the myth that its not a myth.

As for the 95% failure figure, its an underestimation, and by a large margin. If people had little more tenacity and didnt give up so soon, the figure would be higher !

 

[scose-no-doubt]

Now start comparing long term performance against what you might expect purely by random chance.... thats right, on average traders as a group perform SIGNIFICANTLY worse than a chimpanzee would !

Is that dart monkey outperforming hedge funds consistently not a myth?

 

[The Leopard]

Is that dart monkey outperforming hedge funds consistently not a myth?

If the monkey has got sound money management and some balls between his legs for the drawdowns, I'd back the monkey over the average hedge fund.

 

[Dommo]

Is that dart monkey outperforming hedge funds consistently not a myth?

No - it's not a myth, as this little fellah demonstrated:

Rally Time Rally Monkey - YouTube

 

[the hare]

If the monkey has got sound money management and some balls between his legs for the drawdowns, I'd back the monkey over the average hedge fund.

I'd certainly back a small troop of money's over a small pack of hedge fund traders every time.

Management of the two species wouldnt be much different, but the monkeys would easier and cheaper, and probably a lot more profitable.

 

[The Leopard]

I'd certainly back a small troop of money's over a small pack of hedge fund traders every time.

Sorry, you are quite right - multiple moneys vs multiple hedge fund managers, as I should have said.

If that is the case, then I think a simian victory is pretty much assured.

 

[Dominator4fx]

Sorry, you are quite right - multiple moneys vs multiple hedge fund managers, as I should have said.

If that is the case, then I think a simian victory is pretty much assured.

Most of the traders who are loosing the money in the Forex trades are due to the fact that they are making some or the other mistakes.

 

[ega2freedom]

Question:

Hi,

I'm doing some groundwork before I decide to throw money into trading.

Having read through a few topics I just wanted to know how it's possible for 95/100 traders to lose money?

And what influences price fluctuations?

I know two questions, thanks in advance for any answers/info.

Ega

 

[Rhody Trader]

Having read through a few topics I just wanted to know how it's possible for 95/100 traders to lose money?

The losses of the many aggregate as gains to a select few. Plus the brokers and market makers take a slice out of all market participants.

And what influences price fluctuations?

Many, many different things that continuously change.

 

[ega2freedom]

The losses of the many aggregate as gains to a select few. Plus the brokers and market makers take a slice out of all market participants.



Many, many different things that continuously change.

Thank you very much.

The market seems to be huge and the theory that 95% do not make a profit is baffling given that people enter the markets to make money.

Does the amount of money you have to trade influence whether you make money from the markets or not?

Ega

 

[tar]

http://www.trade2win.com/boards/general-trading-chat/105956-95-myth.html

 

[Event_Horizon]

If 95% percent lose their money, then I can give you an easy way to earn money. Plan your trades, and then as you are about to enter them, enter the reverse. You can actually program your trading software to do the reverse.
As silly as this sounds, this might actually work. If not making you profitable, it is likely to decrease your losses.
There are of course commissions to consider, as well as some other factors that work against you.

 

[Splitlink]

If 95% percent lose their money, then I can give you an easy way to earn money. Plan your trades, and then as you are about to enter them, enter the reverse. You can actually program your trading software to do the reverse.
As silly as this sounds, this might actually work. If not making you profitable, it is likely to decrease your losses.
There are of course commissions to consider, as well as some other factors that work against you.

I must say that, sometimes, I think that you are right! I, always, believe that I have my calculations correct, though. I cannot do the opposite of what I think. It's like standing on the top floor of a skyscraper, deciding that it is not possible to jump from one roof to another but doing it anyway.

Come to think about it, that is what a lot of traders who try to spot the tops do, isn't it?

 

[new_trader]

If 95% percent lose their money, then I can give you an easy way to earn money. Plan your trades, and then as you are about to enter them, enter the reverse. You can actually program your trading software to do the reverse.
As silly as this sounds, this might actually work. If not making you profitable, it is likely to decrease your losses.
There are of course commissions to consider, as well as some other factors that work against you.

Yes, it might work...perhaps...maybe...

The flaw in your theory is that it assumes traders are consistently doing exactly the wrong thing at exactly the right time, which is often far from the case. Most traders who lose probably experience what I experienced in the early days where you would swear the market knows exactly what you are doing and where your stops are and just waits for you to enter so it can take your money. Like Jesse Livermore said, the market fools most of the people most of the time.

 

[the hare]

As silly as this sounds, this might actually work.

If you think about it, it should become obvious why it wouldnt / does not work

 

[Event_Horizon]

If you think about it, it should become obvious why it wouldnt / does not work

And why is that?
This is not as obvious as you might think, as I see valid arguments to both sides.

 

[Rhody Trader]

If 95% percent lose their money, then I can give you an easy way to earn money. Plan your trades, and then as you are about to enter them, enter the reverse. You can actually program your trading software to do the reverse.

The 95% losing has much less to do with getting the trades wrong than you seem to think. The figures I've been running suggest over 60% of trades are actually winners. The problem is the losers are significantly bigger than the winners. This strongly suggests traders are cutting their winners and letting their losers run. That won't be corrected by trading in the reverse direction of what your system signal says.

 

[new_trader]

The 95% losing has much less to do with getting the trades wrong than you seem to think. The figures I've been running suggest over 60% of trades are actually winners. The problem is the losers are significantly bigger than the winners. This strongly suggests traders are cutting their winners and letting their losers run. That won't be corrected by trading in the reverse direction of what your system signal says.

I don't know about the 60% winners but I'd say you are 100% correct on the losers. It's nigh impossible to get newbies to understand the importance of keeping stops tight. They will argue that stops depend on volatility and the need to give the market room to breathe and other silly ideas that just lead to catastrophic losses.