Why do so few succeed?

[SOCRATES]

I actually agree with your overall premise here Soc, some people are not suited to trading.

What I disagree with is your assertion that the reasons are many and varied. I also disagree with your assertion that some can not be a success at this business because of some force beyond their control.

The unsuitability comes down to one thing in my opinion. Those who are not willing to do the work necessary to be successful will not succeed. All else is incidental. Each man and woman must make their own choices. If something is holding them back from success at trading they can choose to quit or choose to work out what that something is and correct it. That is how it is with anything in life and trading is no different.

The work necessary to be successful will differ amongst people. Some will need specific technical knowledge. Some will need to develop discipline or patience. Some will need to work on every aspect of trading. To others it will all come easy. Whatever the case may be, if one is not willing to do the work, one will be unsuitable to the business of trading.

The idea that one must have some inborn ability, character trait or other such thing is hogwash. As is the idea that some others may be born with some trait that will exempt them from success in this business. It is spouted by some successful traders as a way of making themselves feel special for having proven a success at this business. To the successes in this business I would say be proud of having done the work to be successful. There is no need to try to raise yourself up onto some pedestal as some example of specialness.

Cheers,
PKFFW

The points you raise interest me I am bookmarking your post and will expand later when I have some time.

\Ok, I have a few minutes..

You agree with my overall premise that many people are not suited to trading. I can show you that there are many people, not a few, who are not suited to trading.

You disagree with my assertations that the reasons are many and varied.

You also disagree with my assertation that some can not be a success at this business because of some force beyond their control.

Well I can tell you it is not about the work at all. It has to do with inabilities.

You will be horrified at the variety and quantitiy and intensity of inabilities that a lot of people suffer from. Some of them are really surprising. They have this effect because they are unexpected. And they are unexpected because the individuals are effectively able to hide them until an occasion arises in which they are tested. Then the Inability reveals itself.

Here are some for you to consider :~

I cannot follow the movement of the bars.

I get confused by all the colours.

I am not interested in sitting there doing nothing, I just want to get on with it.

I hate wasting time, I really do.

I wish there were some sounds, as I cannot relate to movement visually, but to sounds..yes.

I dont have the patience to sit there, I think I will go and mow the lawn ( with a position open, and without a stop)

I fall asleep in front of the monitor.

I don't understand it, please explain it again...I don't understand....please again...I don't understand ....please again...I do understand .....(he does not really at all)

I am not going to use a tight stop, I am going to use a wide stop, 60 points...

I have my own ideas which are better.

I get so emotional about this, I find it very stressful.

I have to make money every day.

If I cannot make £5000 a week then I am not interested in trading (Capital £12000)

I cannot do mental arithmetic at all, I need a calculator.

......................................and other patent inabilities.

Therefore it is inabilities that cause people to doom themselves not an inability to work.

If they have never tried trading I would suggest it is premature to condemn them to being unable to trade successfully.

To me your analogy simply shows someones inability to work on themselves. To use a trading reference they would be unable to admit their analysis was incorrect and hence cut their losses quickly. Instead they would stubbornly hold onto the trade thinking they were right. For this person, the work they would need to do would be on their own inability to reconcile their map with the territory. What is causing them to be this way? How do they fix it? To answer these questions takes work. They can either do the work or choose to quit. If they truly want to be successful, they will do the work.

It is within each of us to change who we are. If an alcoholic or drug addict can change their habits, why is it so hard to believe someone can change themselves when it comes to trading? Maybe it isn't hard to believe at all. Maybe for some it just feels good to believe someone else can not achieve what they have achieved?

Cheers,
PKFFW

Again this viewpoint you express also interests me and I will be expanding later when I have time.

You say above, and I quote you " Maybe for some it just feels good to believe someone else can not achieve what they have achieved ?"

You are absolutely right but not from the angle that you percieve.

What is absolutely horrific is the way people can be capable of behaving.

A few years ago I used to do seminars for people who wanted to learn about this business and were interested in becoming traders.

Now I am going to tell you something very interesting relating to the question you ask.

The obedient and disciplined ones went away and worked and became successful.

The disobedient and undisciplined ones gathered in a group to grumble about their lack of success, convenenienly for them by, you know, overlooking their own inabilities. They then proceeded to pester the successful ones.

The successful ones at first were sympathetic and helpful....but ....found themselves having to suffer unwelcome and distracting invasions to their privacy and mindset.

This situation became progressively worse as with increasing insistence the unsuccessful ones tried to invalidate, damage and impair the successful ones and to try to convert them to their attitude, which was their reality and the opposite of the other group. What happened ?

The successful ones in order to get rid ot the nuisance, now pretend they are not successful and as a consequence, finally get peace and quiet to get on with their progress.

The successful ones now disconnect totally and make more and more progress while the others who have succeeded in totally corrupting themselves and anyone who will listen, fall behind fast and eventually fail.

They do not achieve satisfaction at the expense of the failure of the others, they achieve satisfaction at their own achievement which is something very diffferent to what you imply.

I have a different view than this. I have met many a person that will never be able to trade successfully (not that they ever considered it mind you). The limiting factor has nothing to do with a willingness to work, but with an inability to adapt themselves to reality. Some folks are just so in love with their map that they are unable to reconcile it with the territory. The fact that the map says 'there should be a lake here' is more important than the fact that they are standing in front of a mountain.

JO

The same, I am bookmarking your post and will be expanding later when I have time.

Yes you are right, there are many individuals who persist in following their own beliefs in the face of patent reality to the opposite. The curious thing is that some of these are very highly educated (or should I say miseducated ?) individuals who ought to know better. The "highly educated ones" or rather the ones who percieve themselves by virtue of having obtained a degree or some other irrelevant qualification (from the point of view of being a real trader and having to confront) are the ones on which the levelling effect of the market has often the greatest and bitterest impact. This is because their perceptions both of their environment and of themselves are totally incorrect.

Isn't this the long way of saying that 97% of day traders lose money? One is statistical the other is philosophical.

My view is not philosophical, it is one of practical reality.

Incidentally, in conversation with a member via PMs who is a psychologist in the US and whose mission it is to help traders overcome their problems, the question of falilure rate arose.

He confided to me that a broker told him that the average newbie futures traders have a statistical probability of wiping their accounts clean within the first 6 months.

He is a pal of yours but because I respect PM confidentiality I cannot reveal his identity but have no reason at all to disbelieve him.

So some people are cut out for it and some people aren't.

Profound, Bertie. Profound.

Yes, and the brutal truth.

I have only touched on the whole topic lightly, so far as an introductory preamble.

Later on I will be delving into the topic in more depth because I can see there is interest also in the idea of preserving professional advantage and not teaching it.

It is not as a direct result of teaching that that the giver of the knowledge is likely to impair his advantage, it is because people can not be trusted not to proliferate valuable and incisive knowledge.

It is therefore the risk of this proliferation existing that prevents the information being released at all to anyone, under any circumstances.

I will be expanding on this aspect of the discussion later as well, when I have some time.

Soc,

You are describing why so many people are likely to fail, I am interested in knowing what the % is. Do you think there is any correlation between success and IQ or EQ?

Things are moving here and I have to put my full attention on what I am doing, so I will deal with your question later, I promise.

It is definitely intelligence, but it is not mainstream intelligence.
What I mean is that it is an uncommon kind of intelligence, intelligence of a very special kind.
This kind of intelligence is a natural attribute.
It is a brand of heightened common sense not everybody has.
Whereas very low levels of stupidity are commonplace and very high levels of intelligence are rare, rock bottom basic common sense itself, is not that common.

 

[new_trader]

My view is not philosophical, it is one of practical reality.

Incidentally, in conversation with a member via PMs who is a psychologist in the US and whose mission it is to help traders overcome their problems, the question of falilure rate arose.

He confided to me that a broker told him that the average newbie futures traders have a statistical probability of wiping their accounts clean within the first 6 months.

Soc,

You are describing why so many people are likely to fail, I am interested in knowing what the % is. Do you think there is any correlation between success and IQ or EQ?

 

[dbphoenix]

Every once in while, just now and again, just enough to make this thread worth the continued effort of reading...a post that actually addresses the thread topic. And in my LTHO, addresses the very essence of not just trading successfully, but doing everything successfully.

Stand up that mod and take a bow.

I'll have to go with PKFFW on this one. JumpOff's post assumes that the "work" is confined to reviewing charts and making plans and so on. This is not the case.

I find it fascinating that so many people are so insistent that trading is impossibly difficult. I assume that they believe this so that, when they fail, they will be able to blame something other than their own unwillingness to do the work. Or perhaps that if they manage to succeed, they will be able to make much more of it than there is. Either way, we're talking about ego issues.

 

[dbphoenix]

Incidentally, in conversation with a member via PMs who is a psychologist in the US and whose mission it is to help traders overcome their problems, the question of falilure rate arose.

He confided to me that a broker told him that the average newbie futures traders have a statistical probability of wiping their accounts clean within the first 6 months.

Now that's what I call hard data . And an excellent example of how nonsense is disseminated and perpetuated.

 

[FXSCALPER2]

You are right, I can’t provide any real evidence but inductive reasoning supports the premise. Frankly, I would be more surprised if the figure is less and utterly shocked and astounded if it was near the 55% -60% mark you quote. This means that just under half of the people who attempt day trading become successful!? This would make me feel like even more of a failure. Most people I know would rather watch “Desperate Housewives” or “Big Brother” than Bloomberg Television and I work in a professional field with skilled, educated people.

I don't think the success rate is irrelevant. People are more likely to become complacent and fail if they remain ignorant.

I reckon you will do better watching 'desperate housewives' than Bloomberg. Those guys haven't got a clue.

 

[ZDO]

Re;

...As has been mentioned on this website and many others, the "turtles" experiment catagorically showed that anyone of moderate intelligence can be taught to trade effectively. Having read extensively about this experiment I am yet to find much talk of hidden somethings and trials by fire and secret knowledge the trainees had to find for themselves.

Actually not anyone - Selection of the Turtles was really far from random. Dennis could discern in one conversation how long each applicant’s list was and how many items on that list had been ‘cleared’.

Not all of us have to go through 'painful esoteric somethings' . Many come to the game strong genetically and developmentally in those areas. Just because these 'frequencies' are not in your experience (yet), doesn't mean they shouldn't be on your list. Anyone who dismisses them out of hand and leaves them off their list is in danger!!!

 

[TheBramble]

I'll have to go with PKFFW on this one. JumpOff's post assumes that the "work" is confined to reviewing charts and making plans and so on. This is not the case.

I find it fascinating that so many people are so insistent that trading is impossibly difficult. I assume that they believe this so that, when they fail, they will be able to blame something other than their own unwillingness to do the work. Or perhaps that if they manage to succeed, they will be able to make much more of it than there is. Either way, we're talking about ego issues.

JO's post was nothing to do with charts and plans. Simply a statement that few posses the ability to adapt effectively to reality and are therefore not going to succeed. Possibly at anything which requires a solid grasp of what's really happening, right now.

I agree with you fully that some seem to gain pleasure from making it seem much more difficult that it need be, with this, as with all things. But you yourself in previous posts have indicated it was a long journey for you personally. Not necessarily difficult or complex, but something requiring experience and exposure.

Perhaps some equate lack of immediate, perhaps instantaneous success, with failure. I'm sure for some, without the proper risk and money management, anything less than "immediate, perhaps instantaneous success" does mean failure in a quite literal sense.

Unless the passion is there, and the empowerment that comes from confidence born of research and experience, then the task is difficult to impossible. But you're right, all this has been said - more than once!

 

[JumpOff]

I'll have to go with PKFFW on this one. JumpOff's post assumes that the "work" is confined to reviewing charts and making plans and so on. This is not the case.

These same individuals will probably fail at being scientists, preachers, politicians, farmers, PR hacks, etc.. It's not only about 'reviewing charts and making plans.' It's about a stunning lack of curiousity; If the sun came up in the West tomorrow morning, these are the folks who could somehow fit it into their worldview without calling into question everything we think we know about our solar system.... They have yet to seriously question the core statements expressed by their parents, pastors, government adminstrators, teachers, etc... (I don't why they are this way - it seems almost antihuman to me. )

I find it fascinating that so many people are so insistent that trading is impossibly difficult. I assume that they believe this so that, when they fail, they will be able to blame something other than their own unwillingness to do the work. Or perhaps that if they manage to succeed, they will be able to make much more of it than there is. Either way, we're talking about ego issues.

Although I have met many of these 'uncurious folk', I don't find them to be in the majority. I hope you are not lumping me in with those who insist that 'trading is impossibly difficult.' I think trading is about as difficult as playing the violin. Lots of folks could learn to play without great difficulty; few want to.

JO

 

[dbphoenix]

JO's post was nothing to do with charts and plans. Simply a statement that few posses the ability to adapt effectively to reality and are therefore not going to succeed. Possibly at anything which requires a solid grasp of what's really happening, right now.

Which, as I said, is part of the work. JO suggests that perceiving reality in a certain way is apart from the work.

In any case, to suggest that all of this is not nearly as difficult as some believe is not to say that one can become a successful trader by tomorrow afternoon. But traders do make it far more difficult than it is. New Trader provided one reason, but there are plenty others.

 

[dbphoenix]

These same individuals will probably fail at being scientists, preachers, politicians, farmers, PR hacks, etc.. It's not only about 'reviewing charts and making plans.' It's about a stunning lack of curiousity; If the sun came up in the West tomorrow morning, these are the folks who could somehow fit it into their worldview without calling into question everything we think we know about our solar system.... They have yet to seriously question the core statements expressed by their parents, pastors, government adminstrators, teachers, etc... (I don't why they are this way - it seems almost antihuman to me. )

The first question that comes to mind, then, is why these people would want to become traders in the first place, if they do. The studies that are done on success and failure have to do with those who are in the market, not with the world population as a whole.

 

[ZDO]

JO,

Thanks. That was a good post.

re “so in love with their map” I agree. That’s why I emphasized ‘expand’ / redo the ‘list’. Tear up the old ‘map’ and reset it (at least quarterly if not more often)

and

“adapt effectively to reality” says the same to me as “clearing the list”

zdo

PS Pringle: re “... Meanwhile on Planet Earth”
Thousands of processes go on outside normal awareness. That doesn’t mean we can’t bring them into awareness. Generally, we have a scale of proficiency in any given area and a scale of awareness that crosses / mediates the first scale. ie It is possible to be extremely proficient at an activity but to be completely out of touch with that proficiency, etc. This is not about ‘spacey’ AT ALL! If you find yourself going ‘bah’ …

 

[ZDO]

new_trader,

re:

Do you think there is any correlation between success and IQ or EQ?

No one answered your question - yet. Here's an answer
Most traders are ABOVE average IQ
Most traders are even ABOVE average EQ
Unfortunately, most traders are ADHD ( whatever that is ) like
:idea: :idea: :!: :idea: :idea: :-0

zdo

 

[dbphoenix]

new_trader,

re:


No one answered your question - yet. Here's an answer
Most traders are ABOVE average IQ

In fact, one might say that half are above average IQ . . .

 

[fxmarkets]

The first question that comes to mind, then, is why these people would want to become traders in the first place, if they do.

hmm, yes indeed.... they are sold the idea? as with all selling, the image,money etc.... talking here about the mass population targeted as opposed to those who know people or relatives friends in the biz and are perhaps introduced to the idea that way.

personally for me it seemed a natural extension from investing in small cap growth stocks... and to be honest i was starting to trade them on T +25 back then... (ooops )


The idea of trading is generally touted as up there and doable as a basic weekend flower arranging course with attitude.....

then theres a profile ive read about generally middle aged, bored types, want a new challenge, very conditioned by this point.


I'm sure there are many types but roughly i'd say you get those who become aware early mid twenties on about trading possibilities

And the bored exec's/everyone else with a few quid to blow likely aged 35/50 perhaps when they start to look into it....... being sold it like a business franchise idea or something...

 

[dbphoenix]

hmm, yes indeed.... they are sold the idea? as with all selling, the image,money etc.... talking here about the mass population targeted as opposed to those who know people or relatives friends in the biz and are perhaps introduced to the idea that way.

personally for me it seemed a natural extension from investing in small cap growth stocks... and to be honest i was starting to trade them on T +25 back then... (ooops )


The idea of trading is generally touted as up there and doable as a basic weekend flower arranging course with attitude.....

then theres a profile ive read about generally middle aged, bored types, want a new challenge, very conditioned by this point.


I'm sure there are many types but roughly i'd say you get those who become aware early mid twenties on about trading possibilities

And the bored exec's/everyone else with a few quid to blow likely aged 35/50 perhaps when they start to look into it....... being sold it like a business franchise idea or something...

This is a far cry, however, from claiming that all of these people have warped perceptions of reality. In fact, if they retire from the field quickly, one might argue that they have a better perception of reality than those who keep throwing themselves against the wall.

 

[Kunal]

To do anything successfully, the first step is acquiring knowhow, after which comes the application in following it. There are plenty of workable systems posted here and at Wealth Lab and the Yahoo groups.
The problem really is, that most people are searching for a system with a huge edge, and if it exists, nobody is going to hand it to you.
There are 90% systems, but the win/loss ratios are ridiculous. Anything above 65% at 1:1 is excellent.
Trading isn't nuclear physics, no matter what people may try to push it as.

The major problem affecting people, is what psychiatrists refer to as "denial". In everyday life we see it as the boozer who refuses to stop because it isn't affecting his job, finances, health or family.
The smoker who refuses to accept the effects of smoking.
And a zillion other categories where people refuse to face reality by bullsh*tting themselves everyday that it's "OK".
The 100% cure is brutal honesty with yourself in admitting what needs to be changed and changing it.
An excellent book on this by Dr. Phil McGraw titled "Getting Real".

Talent, ability, luck, perseverance, and all the other BS come into play ONLY after knowhow has been acquired.
A losing system will lose money no matter who trades it.

 

[charliechan]

so,

anyone found the answer yet?

i know at least one other here knows - maybe 3 others.

 

[CityTrader]

Trading isn't nuclear physics, no matter what people may try to push it as.

.

Of course it isn't -It's harder!. There is no right or wrong. No black nor white. It's intangible.

CT

 

[dbphoenix]

so,

anyone found the answer yet?

i know at least one other here knows - maybe 3 others.

You're spending WAY too much time with Bertie . . .

 

[travllr]

New Behavioral Market Theory

Based on research. Anyone who's interested can start with Odean's work if they like. However, rather than perseverating on some number, the individual who wants to succeed will focus on the reasons for success or failure, which are essentially the same as they were a hundred years ago a la Wyckoff and Livermore: don't overtrade, sell your losers, keep your winners.

As to being "heartening", it shouldn't be. Or disheartening, for that matter. If one truly wants to be a trader, the success or failure of others, regardless of how one defines it, is completely irrelevant.

Good research on our dag-blamed irrationality, here . . .

2/12/2005 (Memorable Analysis) Recent studies in behavioral finance show, in fact, investors are "often - if not always - irrational, exhibiting predictable and financially ruinous behavior," according to Andrew Lo, Harris & Harris Group Professor and director, Massachusetts Institute of Technology Laboratory for Financial Engineering in Boston.

http://www.investing-news.com/artman/publish/article_447.shtml


trav