What is the average age of a consistent trader?

Nope according to forex magnates it's 20 percent of accounts are profitable spanning a year. This tallies with my broker and they have just under 200k customers so roughly 40k traders are profitable. That is a good sample size. Who makes a living off trading, type of trading, education is irrelevant, its about profitability of each account spanning 4 quarters reported.

Actually not, given the millions of traders worldwide. The only entity that knows whether traders are profitable or not, at least in the US, is the IRS, and they don't provide that information. Therefore, all the "data" regarding success rates is anecdotal.

Even so, a 20% success rate is, as I said, hardly a ringing endorsement. And with no definition of "success", the individual is left to rely on his own account statement. The success or failure of anyone else is of no importance except among the "misery love company" contingent which is so common among trading forums.

Db
 
I suspect that number can be broken down into traders making a few percent a year and traders making much more making the real number of truly successful traders a much smaller percentage of that group.
 
The failure numbers are more a function of badly educated traders than it is difficulty.
 
I suspect that number can be broken down into traders making a few percent a year and traders making much more making the real number of truly successful traders a much smaller percentage of that group.

For that particular brokerage, or any particular brokerage, it might. But then the brokerage would have to determine whether or not the client trades more than one account with that brokerage and/or also trades with another broker. But, again, it would also have to define "successful". And even if this particular brokerage went through all that, there is also the matter of extrapolation.

The failure numbers are more a function of badly educated traders than it is difficulty.

I suggest again the study to which I linked earlier. Education is only part of it.
 
Given the number of brokers, one is a nearly infinitesimally small sample. Then there is the matter of defining "successful". IOW, what are the characteristics of these allegedly successful traders? Of the 21%, how many are break even? How many are successful enough to make it worthwhile? How many make a living off their trading? How many are daytraders and how many are longer-term? How old are they? How educated? How intelligent? Which gender predominates? In any case, a 79% failure rate isn't exactly a ringing endorsement.

You might be interested in this 2011 review: The Behavior of Individual Investors.

Db
Just noticed the vast majority of the source material for this uni study is based on data from 90s to 2000.
 
Very interesting document and thanks for providing link.

The abstract alone would put anyone on the road to success - 5 really good principles to follow.

And it's not nearly as long as it appears to be: only 37 pages out of 54 after subtracting the references.

But if you're interested in this sort of thing, pay attention to dates. 1997-2000 represented a sea change with regard to costs. Before then, each trade might cost over a hundred dollars. Perhaps much more. So covering costs was far more difficult. But when internet trading became popular, discount brokerages followed, and proliferated, and trades could be transacted for less than $5. Naturally this encouraged losers to trade more but they continued to lose. They just lost faster.

Nothing much has changed since then. Losers lose for the same reasons they lost a hundred years ago (or two hundred, or three hundred), and the reasons are provided in the link I provided.

I never have understood why traders care about this so much. If one is losing, what difference does it make how many others are also losing? If one is winning, what difference does it make how many others are also winning? Unless, of course, it's all about keeping score, which is yet one more reason why traders -- particularly men -- so often do poorly.

And so this stuff gets passed around, like the 10,000 hour thing, which had to do with mastering the violin, or the seven years thing, which doesn't take into account all the time and effort wasted stumbling into blind alleys and dead ends. If one takes the time to develop a trading plan (which apparently few beginners and not-so-beginners know how to do), it shouldn't take more than six months. Less than that with replay.

Db
 
'If one takes the time to develop a trading plan (which apparently few beginners and not-so-beginners know how to do), it shouldn't take more than six months. Less than that with replay. '

Haha..

Utter bollux of course.
 
"If one takes the time to develop a trading plan ... it shouldn't take more than 6 months"

Well, it depends on your starting point.

A lot of traders started like me. I googled "Day Trading". I liked the concept of making money from the stock market, but I had zero idea what it was all about. I didn't even know what a candlestick was... When I started, I went to Amazon and put "Day Trading" in the search bar. And I went from there.

I didn't know any other traders. My knowledge of the financial markets came from the BBC website. I didn't know spreadbetting existed. I soon found this website and was reading abbreviations such as "MAs", "DOM", "TA" ... I had no idea what it all meant.

For me, it was always going to take longer than 6 months. It was going to take 2 years before I even had a decent grounding.

I have been learning for 11 years now. For most of that time, I have studied one market alone, on one timeframe.

It was only after about 8 years (a couple of hours a day) that things started to click and it was at that point that I could develop and implement a trading plan.

FXX and DB - you are both clearly experienced traders. However, FXX you admitted having access to insitutional traders from the offset. And DB, I don't know your journey, but I suspect you were in a similar position.

Go back to my story. You honestly think it would be realistic to say "6 months"?
 
"If one takes the time to develop a trading plan ... it shouldn't take more than 6 months"

Well, it depends on your starting point.

A lot of traders started like me. I googled "Day Trading". I liked the concept of making money from the stock market, but I had zero idea what it was all about. I didn't even know what a candlestick was... When I started, I went to Amazon and put "Day Trading" in the search bar. And I went from there.

I didn't know any other traders. My knowledge of the financial markets came from the BBC website. I didn't know spreadbetting existed. I soon found this website and was reading abbreviations such as "MAs", "DOM", "TA" ... I had no idea what it all meant.

For me, it was always going to take longer than 6 months. It was going to take 2 years before I even had a decent grounding.

I have been learning for 11 years now. For most of that time, I have studied one market alone, on one timeframe.

It was only after about 8 years (a couple of hours a day) that things started to click and it was at that point that I could develop and implement a trading plan.

FXX and DB - you are both clearly experienced traders. However, FXX you admitted having access to insitutional traders from the offset. And DB, I don't know your journey, but I suspect you were in a similar position.

Go back to my story. You honestly think it would be realistic to say "6 months"?


I agree with you. People with no access to information that can shortcut their journey are likely to take years if they are resilient enough to handle the journey. My point was really in context to quality of information and the time needed to learn to apply it. Reduce that quality and the success horizon extends. I have come across people who are still trying a decade later with only moderate success. This is likely related to the amount of tosh information available to retail traders and lack of guidance to navigate to quality as well as bad habits developed along the way (this is just my opinion of it, not factual).


I am not very experienced by the way. I just had luck on my side to have access to quality early and have learned to apply it successfully and continue to evolve.
 
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"If one takes the time to develop a trading plan ... it shouldn't take more than 6 months"

Well, it depends on your starting point.

A lot of traders started like me. I googled "Day Trading". I liked the concept of making money from the stock market, but I had zero idea what it was all about. I didn't even know what a candlestick was... When I started, I went to Amazon and put "Day Trading" in the search bar. And I went from there.

I didn't know any other traders. My knowledge of the financial markets came from the BBC website. I didn't know spreadbetting existed. I soon found this website and was reading abbreviations such as "MAs", "DOM", "TA" ... I had no idea what it all meant.

For me, it was always going to take longer than 6 months. It was going to take 2 years before I even had a decent grounding.

I have been learning for 11 years now. For most of that time, I have studied one market alone, on one timeframe.

It was only after about 8 years (a couple of hours a day) that things started to click and it was at that point that I could develop and implement a trading plan.

FXX and DB - you are both clearly experienced traders. However, FXX you admitted having access to insitutional traders from the offset. And DB, I don't know your journey, but I suspect you were in a similar position.

Go back to my story. You honestly think it would be realistic to say "6 months"?

Depends on what you're trying to learn. If you're trying to learn how to trade price, yes. If you're trying to learn to trade indicators, candlesticks, patterns and so forth and have wasted time on videos and courses and blogs and trading rooms and chat rooms and any of the tens of thousands of trading books that have been generated over the past twenty years, then it could take years, if ever.

There is an enormous amount of money to be made by selling picks and shovels to newcomers. And even oldcomers. But all one needs is access to a chart and the ability to observe it, formulate hypotheses on the reasons for its movements, and devise tentative rules for entry, management, and exit. Dow, Wyckoff, Livermore, Baruch, Schabacker and so forth didn't learn what they learned by hanging out in chat rooms or reading what somebody said about the market; they studied what the market said about itself.

The vast majority of traders spend years learning what not to do, during which time new and unsuccessful traders become old and unsuccessful traders. And the longer they waste their time on irrelevancies, the less likely they will be successful because of all the "information" they have to unlearn.

So, going back to your story, no, six months is not realistic. But you didn't begin by studying the market. The sooner you had begun to study the market, the sooner you would have been able to profit from your study. And this is the case for most if not all who spend years trying to squeeze money out of the market: they never study the market itself. In their cases, six years is not realistic. Nor ten. Nor fifteen or twenty. But none of that is the market's fault. Nor is it the market's problem. But if one understands the scientific method and applies it to price movement, which is what the market is all about, then, yes, six months is more than adequate.

Db
 
Does anybody know if there is any research into the average age that a trader becomes consistently profitable?

Somebody on another thread stated that a lot of people start in their mid-30s and hit their stride by mid 40s. (sorry, I can't remember the exact quote or person who said this)

I know it's a difficult question to answer, but it got me thinking....

- Are you more likely to succeed if you start later in life? (perhaps because you might take a more mature approach?)

- Or perhaps your chances of suceeding are greater if you sit down infront of a chart at 14 years old? (you then get your 10,000 hours in early)

- In today's society, perhaps the older generation are more geared to succeed because the younger generation get bored more easily? (I admit, a sweeping generalisation)

- Or perhaps a kid out of school with no qualifications is more hungry for success?


Any thoughts?


I think the key thing especially in trading is experience. Getting more information about reality is not something you can find in books it builds your intuition, market sense. Simply imagine that traders that entered the floor after 2007 crisis when massive QE were launched still has no clear notion about recession, its signs. No books can teach you about that, you have to experience it in person.
 
Depends on what you're trying to learn. If you're trying to learn how to trade price, yes. If you're trying to learn to trade indicators, candlesticks, patterns and so forth and have wasted time on videos and courses and blogs and trading rooms and chat rooms and any of the tens of thousands of trading books that have been generated over the past twenty years, then it could take years, if ever.

There is an enormous amount of money to be made by selling picks and shovels to newcomers. And even oldcomers. But all one needs is access to a chart and the ability to observe it, formulate hypotheses on the reasons for its movements, and devise tentative rules for entry, management, and exit. Dow, Wyckoff, Livermore, Baruch, Schabacker and so forth didn't learn what they learned by hanging out in chat rooms or reading what somebody said about the market; they studied what the market said about itself.

The vast majority of traders spend years learning what not to do, during which time new and unsuccessful traders become old and unsuccessful traders. And the longer they waste their time on irrelevancies, the less likely they will be successful because of all the "information" they have to unlearn.

So, going back to your story, no, six months is not realistic. But you didn't begin by studying the market. The sooner you had begun to study the market, the sooner you would have been able to profit from your study. And this is the case for most if not all who spend years trying to squeeze money out of the market: they never study the market itself. In their cases, six years is not realistic. Nor ten. Nor fifteen or twenty. But none of that is the market's fault. Nor is it the market's problem. But if one understands the scientific method and applies it to price movement, which is what the market is all about, then, yes, six months is more than adequate.

Db

Db,

I agree with you. Once an individual studies price movement (and I'd say volume as well) and ignores everything else, then the timescale to becoming profitable is far reduced.

However, I would still argue that even if that individual :

1) Had full access to a live market for 8 hours a day
2) Had zero other commitments/ distractions (financial or otherwise)
3) Watched price action and volume alone
4) Approached their study in a mature, logical and structured way

... it would be incredibly impressive to become profitable within 6 months, if going it 100% alone.

I'm not saying it is impossible but it would be misleading to suggest that the above rules are all that one would need.

Can I ask, did you achieve profitability within 6 months with the approach you suggest, without guidance from a mentor/ institutional trader?

The reason for this question :

If the answer is yes, then it adds weight to your argument. (And I have no reason to disbelieve you)

If no, then I'd gently suggest that you are looking at the learning curve to trading with hindsight.
 
Db,

I agree with you. Once an individual studies price movement (and I'd say volume as well) and ignores everything else, then the timescale to becoming profitable is far reduced.

However, I would still argue that even if that individual :

1) Had full access to a live market for 8 hours a day
2) Had zero other commitments/ distractions (financial or otherwise)
3) Watched price action and volume alone
4) Approached their study in a mature, logical and structured way

... it would be incredibly impressive to become profitable within 6 months, if going it 100% alone.

I'm not saying it is impossible but it would be misleading to suggest that the above rules are all that one would need.

Can I ask, did you achieve profitability within 6 months with the approach you suggest, without guidance from a mentor/ institutional trader?

The reason for this question :

If the answer is yes, then it adds weight to your argument. (And I have no reason to disbelieve you)

If no, then I'd gently suggest that you are looking at the learning curve to trading with hindsight.

My answer wouldn't mean much as we're talking forty years ago. There was no daytrading, there were no discount brokers, there was little to no talk of indicators (and I wasn't impressed by what little I saw), there were no candles, there was no Google, no Amazon, no home computers. So all I had to go by was common sense. And the primary consideration, why does price go up and down? And as commissions were many times what they are today, the temptation to overtrade just wasn't there. So, with all that in mind, yes, I was profitable within six months, which was no great trick as I wasn't trading all that much. And my first reading with regard to the markets -- How to Make Money in Stocks (which you can pick up for a dime at Amazon) -- reinforced everything I had observed up to that time. When the internet came along, I just wasn't tempted. I watched many beginners throwing themselves off cliffs, but I have had the opportunity to work with several whose views were similar to mine but who were much younger and they followed more or less the same course: relatively quick profitability. Unfortunately I rarely encounter people like this online because they almost invariably want it quick, they want it easy, and they want to daytrade, and that's three strikes right there.

Db
 
There are traders from all ages - starting from people having just become legal adults to people who have retired from their jobs - and from all walks of life. As to what the average age is, I don't think there is much point in trying to guess, the only thing that could provide a correct answer is a wide-spread survey.
 
Stock market gives you so many opportunities to earn profit. However, at the same time it is very risky too. So, there are chances to loose money at some point if you invest in stocks.

What do you think the average age of a consistent trader is though?
 
People are really so different that it will take some a few months and at the other end some that never get it.
Maybe they should teach trading at Uni ? A lot more useful than most of the cr*p they teach.
 
I agree that people are different. Different individuals need different time to learn, but there are patterns, I think. A statistics survey should be able give a definite answer to that question.
 
I reckon trading is something that is easier with experience and with more capital. Therefore I think the most successful traders are going to be older.
 
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