How Many Traders Fail?

[lbranjord]

Contrast this by TWI who started at a prop firm and is at a hedge fund now

Many people think if you make 20-30% a year that you are doing brilliantly well. Many here will make 50-100% per month. It is not a methodology you could apply to large amounts of capital such as fund trading but for individuals accounts it cannot be bettered.

and this incredible guy here

55000 % in ONE month !

and TWI again

I have seen many many people try to do their own thing over the years and I am convinced that there are actually not too many people who can be consistently successful at it. The success does not seem to lie in the method so much as the discipline. I think the most common thing I have seen is for inexperienced traders to lose discipline when thier "bulletproof" method has a few consecutve losses. No matter how much testing and paper trading and pledges to stick to it occured before, real losses can really throw all that into the dustbin and so begins the path to failure. The reality is plan the trade and trade the plan, no exceptions.

with

The focus of this study is the habitual speculator in commodity futures markets. The speculator's activity broadens a market, creates essential liquidity, and performs an irreplaceable pricing function. Working knowledge of the profiles and motivations of habitual speculators is essential to both market theorist and policy makers. Responses to a 73 question survey were collected directly from retail commodity brokers with offices in Alabama. Each questionnaire recorded information on an individual commodity client who had traded for an extended period of time. The typical trader studied is a married, white male, age 52. He is affluent and well educated. He is a self-employed business owner who can recover from financial setbacks. He is a politically right wing conservative involved in the political process. He assumes a good deal of risk in most phases of his life. He is both an aggressive investor and an active gambler. This trader does not consider preservation of his commodity capital to be a very high trading priority. As a result, he rarely uses stop loss orders. He wins more frequently than he loses (over 51% of the time) but is an overall net loser in dollar terms. In spite of recurring trading losses, he has never made any substantial change in his basic trading style. To this trader, whether he won or lost on a particular trade is more important than the size of the win or loss. Thus he consistently cuts his profits short while letting his losses run. He also worries more about missing a move in the market by being on the sidelines than about losing by being on the wrong side of a market move; i.e., being in the action is more important than the financial consequences. Participating brokers confirmed that for the majority of the speculators studied, the primary motivation for continuous trading is the recreational utility derived largely from having a market position.

and it's pretty obvious why most lose more than they make from markets, they wanna be right more than they wanna make money, that's then the loonies spending their entire trading careers spouting off on forums about holy grails and trading being really complicated yada yada just cause that makes em seem even cleverer yet again, an appearance of success which is really all they care about with their high winning percentages and whatnots, irrespective of the fact they're overall net losers lol !

Great post, I like the way you explain the business.

 

[BSD]

Thanks

 

[montmorencyt2w]

That cat is the image of ours.
And if it was our cat, he would be looking that p****d off to be that near a dog!

 

[BSD]

Well then must say you have one gorgous looking cat at home there !!!



Our lil fella is just sleeping the whole day now what with this heat wave lol !

 

[Xeno]

Great thread. I do think it's very important to define what fail means. In fact it's not that different to a trade. I hear a lot about entries being successful or not, well every entry is pretty much a win or a loss depending on where you exit.

So I think many traders don't even know how to define their own success. I guess most think if you've made a profit each month that's success, but really it means little if you have no idea what you're measuring against.

So, the 90% figure could easily be, of all the people on our books for the year 90% were net losers. That's perfectly possible and includes all those who drop by the wayside.

However, I suspect the figures are skewed. 80/90% of people attracted to trading each year are gamblers/greedy-buy a system for 200 quid and retire types. Right? This means that a large proportion of the 90% are totally unsuitable for trading anyway, and tell you little about decent traders' chances.

Which is good for those who have a decent personality for trading. I think with that, and a year or two minimum experience (and of course the capital) the chances are much higher.

As for the 50/50, 80/20 split on trades - let's not forget that each trade, with a fixed exit, is roughly 50/50 win/lose. But that does not equate to traders, since the big clever player can take the other side of 20 small retail traders trading one lots at roughly the same price, meaning the traders win/lose ratio is around 95/5 for those players.

Yes, measurement of performance is everything. I occasionally pop in to the Is System X any good threads to ask how you would know whether it was any good or not, but if you're asking the question of whether system x is any good, you're unlikely to be concerned with difficult things like measuring performance. And I usually get no reply.

 

[meanreversion]

Yes, measurement of performance is everything. I occasionally pop in to the Is System X any good threads to ask how you would know whether it was any good or not, but if you're asking the question of whether system x is any good, you're unlikely to be concerned with difficult things like measuring performance. And I usually get no reply.

This is a good point. There are many ways to look at a system; what I tend to look at first is annual return divided by expected drawdown, this to be preferably 1 or higher. But the absolute level of drawdown is also key.. preferably something below 40 pct.

Exposure to the market - how much of your account is on the line at any point.

Then there's the frequency of trading -- if a manual system, the lower the better.

I'd also look at pct winners.. not that this is necessarily material to the profit, but below 25 pct winning trades will lead to a high number of consecutive losing trades at some point, which will test the trader's faith in said system. You can't ignore the psychological side of it.

 

[jazzidee]

Every fracking trader fails, it's just that 95% give up before they become successful. Trading attracts a lot of lazy *******s and bums that mistakes it for another get rich quick scheme, but doesn't realize that this is probably one of the hardest jobs to learn because you pretty much have to reinvent the wheel(which requires a lot of time, energy and brain cells).

 

[lbranjord]

Right. Look at all the training every other field of employment goes through and remember - you are going to have to do the same, and usually without a teacher.

 

[oildaytrader]

Right. Look at all the training every other field of employment goes through and remember - you are going to have to do the same, and usually without a teacher.

Other fields did not learn in a shark tank.This field is in a shark tank getting bitten and killed by poisonous snakes

Arabian nights " You go first , I,m just old far bitten by snakes"

 

[lbranjord]

Bulls/Bears/Snakes/Sloths

snakes sell EA's

sloths are the d-bags that never put in effort but keep flooding boards with dumbazz comments

 

[oildaytrader]

Bulls/Bears/Snakes/Sloths

snakes sell EA's

sloths are the d-bags that never put in effort but keep flooding boards with dumbazz comments

You are right , they hang around forums selling EAS, mentoring or scamming noobs.

 

[lbranjord]

You are right , they hang around forums selling EAS, mentoring or scamming noobs.

That's why I offered to teach some people for free. It was rewarding to know I was offsetting one of the *******s out there scamming them.

Two of the students are doing really well, they already knew everything they needed, just a little reinforcement is usually all that's left when people are frustrated.

The others thought it wasn't for them and went their own way, but that's fine too. I like to start by having them trade without a stop loss or a target for a few weeks and then work that part of the system in later.

Most don't like to do that, but it helps them understand how often they are actually *right* but just squeezed their trade too tight and got stopped. Or how often they close early and chop the bulls head off before he got out of the pen lol.

Anyway, to heck with the scammers.