Doomberg
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B
Black Swan
"If you're playing a poker game and you look around the table and and can't tell who the sucker is..."
TheBramble
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3% seems to tie in with the only empirical research that has been done on the subject. Dean, Barber, Li et al.
At any given time, the division of "account in profit" versus "account in loss" traders is approximately equal.
6 months later is will still be approximately equal, but the constituents of both camps will have changed dramatically. Hardly any of those in the profitable accounts group will be the same and virtually none who were in the unprofitable accounts group will be in either group.
The distribution of capital among the two groups seems to remain fairly static. Those in the losing group will lose on average 98% of their capital with the ‘smart’ losers taking just 2% of their starting capital back home with them.
In the winners group the majority do not stay winners for long and on average rack up a high of only 15% on their starting capital before giving all that back, slipping back into the losers camp, one or more times before exiting stage left for good. Or until the next time.
There is a core of profitable traders who seem to remain consistently profitable and this represents about 3% of the trading community at any given time.
Interestingly, though even less empirical research available on this issue, the percentage of profitable traders DOES seem to follow the number of traders participating. Which means even if twice as many traders are in the markets in 5 years time than there are now, it’s still going to be around 3% who make it. So twice as many as now. Seems there’s always room for those with the right combinations of skills and faculties.
At any given time, the division of "account in profit" versus "account in loss" traders is approximately equal.
6 months later is will still be approximately equal, but the constituents of both camps will have changed dramatically. Hardly any of those in the profitable accounts group will be the same and virtually none who were in the unprofitable accounts group will be in either group.
The distribution of capital among the two groups seems to remain fairly static. Those in the losing group will lose on average 98% of their capital with the ‘smart’ losers taking just 2% of their starting capital back home with them.
In the winners group the majority do not stay winners for long and on average rack up a high of only 15% on their starting capital before giving all that back, slipping back into the losers camp, one or more times before exiting stage left for good. Or until the next time.
There is a core of profitable traders who seem to remain consistently profitable and this represents about 3% of the trading community at any given time.
Interestingly, though even less empirical research available on this issue, the percentage of profitable traders DOES seem to follow the number of traders participating. Which means even if twice as many traders are in the markets in 5 years time than there are now, it’s still going to be around 3% who make it. So twice as many as now. Seems there’s always room for those with the right combinations of skills and faculties.
barjon
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Struck a chord with something I saw recently about the performance of fund managers against the S&P over a five year period and then how they fared over the next five years. The numbers aren't important, just the distribution and it looked something like the pics below. In essence it suggested that you might just as well pick your fund manager from a random number generator than from their past performance.
There were many more fund managers in the actual study, but I got fed-up after doing 40
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TheBramble
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Jon, they're all hot, until they're not.
enragedcow
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myth
based on unreliable data and cognitive bias as well as a conspiracy to make people think trading is hard so they pay for "training" etc
based on unreliable data and cognitive bias as well as a conspiracy to make people think trading is hard so they pay for "training" etc
better forget to use term "trader"to describe all of us
we are simply gamblers and forex is modern days casino
by the way...my guess that 99.9% of casino goers are losers
(and general public is well aware of such outcome....)
but the flow of visitors does not stop nevertheless
and this industry exists and quite prosper...
are all people going to casino complete idiots just throwing money away?
we are simply gamblers and forex is modern days casino
by the way...my guess that 99.9% of casino goers are losers
(and general public is well aware of such outcome....)
but the flow of visitors does not stop nevertheless
and this industry exists and quite prosper...
are all people going to casino complete idiots just throwing money away?
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BeginnerJoe
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I prefer the odds in a casino better. At least you wouldn't expect the house to deliberately bust your stops.
TheBramble
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It’s amazing how often that one comes up. The belief that someone is coming after your stops personally. If you plonk your stops where all the other muppets place theirs, and the person you’re making a book with has the facility to push the price there, well, wouldn’t you?
Get into a market where the prices aren’t so easily pushed, get a bona fide trading platform and broker and use sensible stops – or none.
It depends on the house.
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TheBramble
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Actually, do you know the optimum betting strategy for playing roulette?
Put all your loot on either Red or Black. In you win, walk away. If you lose, walk away.
Even smart lads who know the basis for that piece of advice still fail to do it.
Personally, I'd prefer the odds better if I was the Casino.
BeginnerJoe
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I use no stops. But the market always revers exactly at my point of exit. Unless the market is psychic, I say something is going on. I deal and chart using different sources. So I can tell these kind of moves are not to do with the dealing platform or the dealing broker. It is true there are times when the momentum in the price doesn't allow manipulation. But the risk at the rest of the time is too high.
I am seriously considering opening a Casino account for better odds. I have already worked out my winning strategy:
1. Bet £1 on red or black
2. If I win, I put winning and original bet on red or black
3. Repeat 2 until satisfied, or until money lost
4. Begin at 1 again
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TheBramble
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Yeah, same here. Doesn't hurt when I fall over either.
Hey, anyone catch that? A whiff, a whiff of, oh, I don't know what.....
brewski1984
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If you seriously think you've got more chance of winning money by opening a casino account and trying any system on any casino game at all then I think you should consider giving up trading.
BeginnerJoe
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Yes, I see what you did there.
I need high activity levels. So I scalp by eyeball only. The market doesn't move fast enough to hurt you.
BeginnerJoe
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I am giving up trading. I now do equity spread betting using a pruning strategy. No funny business with that so far. I still don't use stops, and sleep very soundly. I just don't like stops.
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