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The statistic that is most often quoted is 95% not profitable. This number has been bandied about for 25 years. It originates from a single study done by a single brokerage house in the mid nineties! It means absolutely nothing. It is based on an extremely small data set that is very old.
If you have been around this game for a long time (I started trading in 1984), you know that education and resources for learning have exploded over that time! There is no comparison between today and even the 1990's.
I think a lot of people make money trading for a living. You will not hear from the majority of them because they are busy doing their jobs: trading!
Persistence! Nothing in the world can take the place of persistence.
Talent will not ... nothing is more common than unsuccessful men with talent.
Genius will not ... Unrewarded genius is almost a proverb.
Education will not ... The world is full of educated derelicts.
Persistence and determination alone are omnipotent! Calvin Coolidge
I agree. There are thousands of profitable traders working for hedge funds, banks, brokerages, private trading firms all over the world. No one knows the real numbers for individual retail traders. You would have to have access to data
from dozens of brokerage and prop firms which no one has.
Everyone "fails" in the beginning. That's the learning curve. But like every other profession, if trading doesn't suit you, get out and do something else. And that's what most people do. The ones who stick it out have found an edge
and are probably profitable.
You are absolutely right in that everyone fails in the beginning. Most who blow out their accounts, close them and go off and lick their wounds and never trade again. But some of us are stubborn enough (or stupid enough as some would see it) to return again and again! My older brother, over 20 years ago, called what myself and my other brothers were doing "day trade gambling in the stock market"! Given our results at the time, I had no comeback to that!
Persistence! Nothing in the world can take the place of persistence.
Talent will not ... nothing is more common than unsuccessful men with talent.
Genius will not ... Unrewarded genius is almost a proverb.
Education will not ... The world is full of educated derelicts.
Persistence and determination alone are omnipotent! Calvin Coolidge
Edge and strategy are everything in this business. There are enough tools to develop one. But people don't like to study and practice. There have been a number of people I've tried to help along the way but when you tell them they have to spend at least 15 hours over the weekend developing their strategy using market replay and they have to be up BEFORE the market opens to know what's going on, I can think of only one person who actually did it. That person followed my instructions and developed their edge eventually. The others were not willing to work. And you can always tell who's working by the questions they ask. I actually stopped helping people who contact me because either they don't have the background or the discipline to follow instructions and do the homework.
Trading: Primarily Energy but also a little Equities, Fixed Income, Metals and Crypto.
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Regarding @Joseph Connors comment that this all comes from a single 1990's study, I believe that many FX shops are required to report how many of their accounts make money, and if I recall correctly the numbers are very similar to the 1990's study (which was Refco I believe?).
I think there's several things at play here. First its not a zero sum game. Fees of all types (trading, software etc) mean that if everybody was a 50:50 trader, almost everybody would be a loser because of the fees. Second I think you will find that there are a lot of small(er) losers and a few big winners. Retail/newbees lose money to market makers and the other (small) group of people who have a real edge.
Not sure if it was here or somewhere else but recently saw a similar discussion where making money was defined as making $20k/month. If your making $20k/month that's $250k/year. If your making 10% return on your money, then that means you have $2.5M to trade with. The type of person trading with $2.5M is very different than the retail trader who is looking for the broker who allows the greatest leverage on MES because they only have $1k in their account. (which is something @Kefkas Laugh said earlier in a round about way). With regards to "144 people here that are consistently profitable enough to do it for a living", I'm not sure where the 144 number came from, but I would be very surprised if there that many people here that make enough to live off.
I'm not sure that "hedge funds, banks, brokerages, private trading firms" are what the original OP meant, but I do agree with you. Again big difference between the few individuals making 20k/month off of 2.5M than the people trading with 1k. The latter of which is what makes up the 80%/95%/99.9%n (take your pick) loser number.
Does anyone know where those FX numbers are published nowadays? I have some old ones. The problem is they only show profitability in one quarter. I'd like to see profitability over one year, which would likely be less than in one quarter.
144 people on FIO make enough to live off of? I'd be surprised if there are 144 active real money traders on here! I'm joking a little, but not much.
@bobwest @Big Mike maybe the next poll should be something on the lines of ....
Are you a profitable trader? (Please make sure you include all trading related costs, including things like software fees, trading related subscription fees (be they signals, trading rooms, or just website subs etc)
1 No, I'm a net loser
2 I'm breakeven
3 I lost money for a long time but have finally turned the corner and think I am now profitable, only time will tell.
4 I'm profitable but trading isn't my primary source of income.
5 I am profitable for multiple years and trading is my primary source of income/I make enough money trading to live off.
I'll just add here that while polling the FIO members can give some interesting numbers, and hopefully discussions too, it probably won't settle the question of what percentage of traders in general are profitable. There are too few in the sample (or any sample we would have, probably), and the methodology only captures (1) members of FIO, (2) who are willing to answer the poll. I don't know anything about scientific polling, but that's probably not how they would do it.
Which doesn't mean that this kind of poll is necessarily valueless, just that it really has another focus.
I left some comments about that in the "Next New Poll Ideas" thread you mentioned:
Bob.
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Edit: discussion thread for this poll, if anyone hasn't seen it and wants to know what others have said about it, is here:
This is a great qualifier. I also think there's a bit of a distinction between trading the larger contracts (ES, CL, etc) in the hopes of making actual money and trading the micros with the goal of achieving enough consistency to be able to trade the larger contracts successfully. I am in the latter camp trading MES and didn't even consider my trading platform and datafeed costs as I was merely focusing on P/L minus commissions/fees. If I take out platform and data fees I would come out negative.