5% of traders make it?

[Lee Shepherd]

Hi everyone,

I’ve been doing my usual Sunday reading whilst sat in my spa with a glass of wine and contemplating positions for market open later tonight and I pondered on the following:

I keep hearing/reading about the 5% or there about who are successful traders. The figure usually bounces around a few percent or commonly referred to as 95% of traders lose etc. It makes me wonder why so many believe this statement. To be honest I’ve heard it so many times I started to believe it myself. It’s as if people wish to believe that if they beat the markets then they must be part of some elite club of special people and only a few succeed so you must be really clever. The real figures as published* show typical percentage figures bouncing around 24% succeed over a period of a year.

So with this in mind and presented with figures from a well established broker, it always makes me wonder why so many struggle. In principle, if I meet 4 people who wish to be a trader and then sets about opening an account and starts trading, it stands to reason that on average 1 of those will succeed in being profitable over a period of a year. From here on in, should that person continue as they have done over the 12 months, there is no other reason (with some exceptions) that the trader will continue to be profitable moving forward.

However, it’s easier to accept that if a person loses, don’t worry, everyone loses. Unfortunately that’s not the case though. Trading profitably is easier than you’re led to believe..... but, many will have you think it’s imposible.

NOTE: There will always be people who can screw up a cup of coffee, that being the case, don’t open a coffee shop and don’t even bother working for Starbucks. But I’m not talking about the exceptions, I’m talking about the majority of everyday people that want more than just a wage to work 9-5 Monday to Friday till they retire. I’m specifically aiming at those that take it serious and appreciate the work and effort that goes in to such a business.

Again it is with my conclusion that it is only ever the individual who prevents their own success.

So what to do?

Well for starters stop listening to mainstream fed news and take everything with a pinch of salt at the very best. Get genuine facts, figures and statistics, get behind the scenes, listen to all sides of the equation or argument (however absurd it may seem at first glance), build contacts, pay for the best news feeds and data packages and make a trading plan based around this. Then trade it until your plan fades out or, you are where you want to be in life. By that I mean financial freedom, work when you want to and have success in wealth. What you then do is entirely up to you.

*Based on IG figures for EU account holders for the period of 2017. EU account holders at 378,100. Figures presented from IG to ESMA page 21 on the 5th February 2018
Link: https://replytoesma.trading/src/assets/IG_Group_response_to_ESMA_call_for_evidence.pdf

All the best for the coming week.

Lee

PS: There is a traders meet up this coming Wednesday evening in central London. At present around 50 are in attendance. It’s always a great crowd consisting of new and old, successful or not and wannabe traders. It’s held in a private bar just for us and is hosted by Paul Wallace. There is no commercial set up or speakers selling. I’ll post up a link in another thread at some point with further details for those serious about being in the game and having a few drinks and a laugh with like minded positive people.

 

[Dowser]

I think of the '95% who lose', most of them haven't been in the game very long and give up after a few months when they decide they can't afford to lose any more money and this is what skews the statistic. If we were to only look at traders who have more staying power, lets say they been trading for at least 2 years, I think we would see quite a different picture. Basically, what I'm saying is; if you want to be a successful trader, you need to be well funded, patient and tenacious - whereby every time you get knocked down, you can and will get back up again.

 

[Quantt]

I stated hearing the “95% losing” after the dot com bust, so maybe it was true then and maybe it will be true again one day (after the token bust for example)...

 

[new_trader]

Less than 1%

It all depends on how you define ‘successful’. If being profitable at the end of a 12 month period makes a person successful then yes, I agree, the figure could be much higher than 5%. A simple mechanical strategy could remain profitable for longer than that.

I’m sure there are many penny-betters who regularly take a punt on the markets and at the end of a year have amassed a few hundred quid more than they started with. Does this make them 'successful'? Possibly...does this mean they are ready to resign from a job that pays them $50K p.a and trade full time? I doubt it.

Most people who enter this profession don’t just want to have a profit after 12 months, they want to make trading a full time profession and in that case I’d say the number of people who make it that far is less than 1%.

Look at the number of people who have been a member of this forum for years, almost all of whom probably hoped to become a full time trader when they first joined. How many of them actually are? (And I mean bona fide self made and self sufficient traders who were so profitable they gave up a full time profession to trade full time).

 

[NVP]

95% is a generalisation......intended to indicate this is a hard business to pursue....

if you were to take 100 people who actually opened up a funded live account and look say 5 years later I would tend to agree with it.....and that perhaps only a small percentage will still be trading and profitable ....25% seems way way to high if you are looking for profitable traders over 5-10 years


so its all about survival bias.....stay capitalised for as long as you can and eventually the penny will drop ...........as long as you have followed the things already discussed in this thread

all of the excellent profitable traders i have ever worked with over the years have all definitely displayed one outstanding trait

dogged and unflinching belief that they would make it despite all knockbacks......

grit, bull headedness, determination, balls, focus , .....whatever you want to call it ....there was never a moments doubt that they would make it happen.....

I've never felt i fitted this category but others tell me they feel i do........Ive been lucky in that I grew up with professional gamblers in my family so it was normal to emulate and do what they did to be successful in trading .....i have always loved the challenge and buzz of winning in gambling/Trading environments and the tougher the puzzle the more fun i have had trying to solve them .......

still learning something every day .....

N

 

[NVP]

It all depends on how you define ‘successful’. If being profitable at the end of a 12 month period makes a person successful then yes, I agree, the figure could be much higher than 5%. A simple mechanical strategy could remain profitable for longer than that.

I’m sure there are many penny-betters who regularly take a punt on the markets and at the end of a year have amassed a few hundred quid more than they started with. Does this make them 'successful'? Possibly...does this mean they are ready to resign from a job that pays them $50K p.a and trade full time? I doubt it.

Most people who enter this profession don’t just want to have a profit after 12 months, they want to make trading a full time profession and in that case I’d say the number of people who make it that far is less than 1%.

Look at the number of people who have been a member of this forum for years, almost all of whom probably hoped to become a full time trader when they first joined. How many of them actually are? (And I mean bona fide self made and self sufficient traders who were so profitable they gave up a full time profession to trade full time).

that last bit is an interesting caveat as well .............sucessful traders dont have to be full time ..........ive probably only been deemed a full time trader (ie no other income sources) for no more than a handful of years in total .....mainly trading F/T between jobs and other consultancy contracts ....

im full time again at the moment and bored to death so am ressurecting some of my trading coaching and mentoring work .......

i dont play golf , i dont cut lawns much , i dont collect stamps and i dont have grandchildren to dote on .........my hobby and vocation is Trading / Gambling .....from the moment i used to sit in my grandads betting shop back in the 1960's helping him add up the takings and making the odds ........i fell in love with it

so thats it ....warts and all

N

 

[piphoe]

I wonder what the %win was prior to the injection of every market by algo's circa 2007?

Am I wrong that algo's have made these markets "jumpy", or erratic for daytrading?

 

[NVP]

I wonder what the %win was prior to the injection of every market by algo's circa 2007?

Am I wrong that algo's have made these markets "jumpy", or erratic for daytrading?

hey P

my feeling is some of the big spiky moves have been caused by these....but i think things are less volaile than they used to be due to better "safety's" on algos and much more manual intervention always ready for meltdowns

N

 

[donaldduke]

The real figures as published* show typical percentage figures bouncing around 24% succeed over a period of a year.
*Based on IG figures for EU account holders for the period of 2017. EU account holders at 378,100.

The stat you want is 'Of all of the accounts ever opened at IG (in the last 44 years). How many of those made an overall profit'

My guess is that figure is closer to 5% than 24%.

 

[Lee Shepherd]

All interesting comments and replies. I wonder how many have read the paper published in full (not that you have to), in length and most of all fully understood it. It's more probable that people will likely believe what they have installed in their minds already and simply give replies such as 'why should I bother to read/investigate or even believe' The opening post was long enough and I didn't really bother to read that properly

Is this what holds people back? Knowledge is power after all, research is king and to achieve, you have to believe - Don't shoot me, I'm just asking and stating lines - If you've read the paper in full and fully understood it or have seen other evidences and published papers and you are a full time successful trader then this does not apply to you as you would be one of the 24%. You'll also understand that trading and making money is not difficult. If you are not, and struggling/unprofitable/account topper upper, you may take easy offence and become either hostile or at the least defensive about this fact.

However, if you have a full time job working 40+ hours for a firm (or even yourself), then you go to work then get paid your worth (or not). All a trader/investor does is come along, see's how hard you work then invests/buys/sells a part in the business you work for.

Self investment is the most powerful thing one can ever do, investing in others is the second.

Regardless of this and that, the following statement is true as published (as verified by Investment Trends LTD (UK): irrespective of the value, amount of trades, full time, part time or no time, its this:

"The actual proportion of profitable accounts across IG’s European clients for the calendar year 2017 was 24%"

This is not 5%, 10% or any other figure..... it's 24%..... believe it or not - it's your choice. The world around you is what you shape it to be, as are your friends and contacts.

Meaning as stated - very simply - that the actual proportion of profitable accounts across IG's European clients for the calendar year 2017 is 24% - hang on, thats what they said. Sorry, there is however no other way to say this or skew it or make it anything more or less than it is. It's really that simple. 24% of IG's EU clients were profitable in the calendar year 2017. More importantly though, were you one of the 24% or one of the 76% ?

PS: I check through my contacts on my phone and see almost 30 odd numbers straight off the back that are successful traders, and for whom I can call upon. In fact, I have not 1 number of a person that is not a successful trader. (maybe 1 but I won't talk about that) Of course I have friends and family members but they are not traders, do not proclaim to trade nor want to be a trader. When I was at the PSE I was surrounded by hundreds of successful traders. Relevance? Build your contacts and choose your friends wisely, they will either hold you back or have your back. As what was once stated to me years ago - hang around sh1t and you'll smell like sh1t. If you want to smell like roses, you know what to do.

Hang around the people you want to be like, learn from them, listen to them and if you like, mimic them. If you want that expensive car or house or financial freedom, listen to those who have them already - not your mate who says it can't be done.

On top of that, I hope all have had a successful day. Lets all get some rest and up fresh for tomorrow. I'm off Wednesday and Thursday as will be in London for the Traders meet up. I look forward to meeting with some of you there. Happy trading.



Lee

 

[barjon]

Lee,

It seems to me that it doesn’t actually matter a toss what the “true” percentage is or what is “successful”. What does matter is whether you are satisfying your own aspirations or not. If you are then you’re a 100% winner, whether that aspiration is to have a bit of fun and not blow your account too often, or to make millions, or wherever in between. If not, then you’re on the losing side whether or not you are actually losing money regularly.

Cheers

 

[Lee Shepherd]

Lee,

It seems to me that it doesn’t actually matter a toss what the “true” percentage is or what is “successful”. What does matter is whether you are satisfying your own aspirations or not. If you are then you’re a 100% winner, whether that aspiration is to have a bit of fun and not blow your account too often, or to make millions, or wherever in between. If not, then you’re on the losing side whether or not you are actually losing money regularly.



Cheers

Hi Jon and good morning,

As this is a trading website I would imagine a lot on here want to be traders and hence the website name, trade 2 win. I respect you don’t give a “toss” about the precentages (many people won’t) but I do respect your passionate response.

I also respect the fact there are a lot of older retired people on this board who flutter on the markets to have fun then come here to discuss. If one is blowing their account or losing money but having fun, then this would fall into a different catorgory than trading for a living and having financial freedom. I’m specifically aiming at those working 9-5 Monday to Friday that want more in life so they can be satisfied and be able to spend more time with friends and loved ones. With respect Jon, this is something you can already do. I want people to fulfil their dreams and not work to fulfil someone else’s.

It’s purely to give understanding to all that come here is that trading is not as difficult as is made out to be and these percentages show it’s easier than what is sold to the masses in the media and (most) vendors/sellers.

I’m all for freedom of information and most importantly, the correct information. These percentages indicate we’ve been lied to on a constant basis.

All the best,
Lee

 

[kalott]

"NCAs’ analyses on CFD trading across different EU jurisdictions shows that 74-89% of retail accounts typically lose money on their investments, with average losses per client ranging from €1,600 to €29,000. "

https://www.esma.europa.eu/press-ne...ns-and-restrict-cfds-protect-retail-investors




"The winnings can be large. Peter Hetherington, IG’s chief executive, says some 3,000 customers*— about two per cent of its total — generate about half of the company’s non-US revenue. These high-earners will typically pay £85,000 a year in transaction fees to the platform, meaning they pocket many multiples of that.*"

https://www.ft.com/content/7a1cd446-f16e-11e7-ac08-07c3086a2625


2% make money?

74 -89% lose money?

and the rest break even? (not counting workhours)

 

[barjon]

Lee

Yeah, I probably came over a bit strong .

My point is that “success” is very much a personal thing - even for professionals. Similarly all that really matters is whether one, personally, makes money or not - if you do it doesn’t matter if you belong to a 5% or 24% club other than from an ego point of view. Similarly, if you lose it’s small comfort to know that most do.

As to whether it’s hard or easy, that, too, is a personal thing. Funny thing is that trading is easy until there is real money down when it becomes much more difficult.

 

[Lee Shepherd]

"NCAs’ analyses on CFD trading across different EU jurisdictions shows that 74-89% of retail accounts typically lose money on their investments, with average losses per client ranging from €1,600 to €29,000. "

https://www.esma.europa.eu/press-ne...ns-and-restrict-cfds-protect-retail-investors




"The winnings can be large. Peter Hetherington, IG’s chief executive, says some 3,000 customers*— about two per cent of its total — generate about half of the company’s non-US revenue. These high-earners will typically pay £85,000 a year in transaction fees to the platform, meaning they pocket many multiples of that.*"

https://www.ft.com/content/7a1cd446-f16e-11e7-ac08-07c3086a2625


2% make money?

74 -89% lose money?

and the rest break even? (not counting workhours)

Hey Kalott,

Good research mate. Thanks for the links. I can't open the FT link as I figure you logged in to you subscription to access. Can you post up more info on this?

Without making my assumptions, with spreads and commissions I would find it unlikely that 'the rest would break even'. That's quite a high number of people with many hundred different factors included.

Looking at the quote though and as you've written it does indicate that:

2% produce around half their revenue in comms/spreads, so that leaves 50% shared around the other accounts that don't lose.

The figures you found though relating to losing accounts being in the region of 74-89% is interesting. (on CFD's)

Lee

 

[Lee Shepherd]

Lee

Yeah, I probably came over a bit strong .

My point is that “success” is very much a personal thing - even for professionals. Similarly all that really matters is whether one, personally, makes money or not - if you do it doesn’t matter if you belong to a 5% or 24% club other than from an ego point of view. Similarly, if you lose it’s small comfort to know that most do.

As to whether it’s hard or easy, that, too, is a personal thing. Funny thing is that trading is easy until there is real money down when it becomes much more difficult.

Hey Jon,

lol, I thought you were having a bad day. I don't usually hear such profanity coming from you.

I do agree with you that some will find it harder than others and that success comes from within, in other words what you find/call succesfull, some others may not.

But.... and here's the but...... I'm solely getting at those that want to succeed - and to be clear I'm talking success in finance/wealth which can lead to having more time to do the things they love before they are grey and old with a worn out body - we all have 24 hours in each day, its how we spend them that really count. Trading may also be for those that want to follow the path at buying and selling, make it a career and leave their current line of work for whatever personal reasons they may have. When we were all at school, we never thought let alone dreamt that we would be working so dam hard to achieve a very basic 'normal' lifestyle. If we're lucky we might have some money left over after paying all the bills to go on an international holiday once or twice a year. So we spend our time watching other people on telly with their lifestyles or hit up Facebook to see what our friends are doing. What do we see? Whatever we want to, that's selective.

The bottom line is this, if one is earning from the markets and never topping up then they are by default and whether they like it or not, part of the 24% club. (that's what I'm going to call it from now on ). To be honest there is less ego and kudos being in a 24% club than a 5% club. (but its not a club, just a statistic) That's whats I'm conveying here. In simpler terms, trading is not as difficult as it's made out to be, and therefore you don't have to be some special brainy guru type of person. For anyone who's met a trader will tell you, we're all dumb as f**k. Usually very strange people that believe in conspiracy theories and always talk about what if's. But usually put the world right after a few beers.

But as I've said in previous posts, this is part and parcel of trading. If someone presents a different side to a story, listen to it, however absurd it may sound at first glance. 2 ears, 2 eyes, one mouth, used in that ratio I'll always be learning. Whats comes out of my mouth is what I put in using my ears and eyes.

Of course the figures matter, they matter greatly. Percentages is what we deal in as traders. I want to know with high certainty that a trade will pull off, of course, sometimes they don't, this is percentages for you - as you may know by my recent large loss in one day. (£16.5k)

So, if a trade has 5% chance of winning would I accept that or would I prefer to know that the trade had a 24% chance of winning. This is the bit that people feel uncomfortable with. If you only have a slim chance of success but yet fail, then that's better than failing at something whereby you have a greater chance of success. It makes people feel uncomfortable knowing they fail at something easier than they have been told, this can make them defensive and even hostile without them knowing (on the subconscious level)- this is not their fault but it is their responsibility. Due diligence should always be at the helm. It all boils down to research.

Investment in oneself is the most powerful thing to do.

Regards,

Lee

 

[kalott]

Hey Kalott,

Good research mate. Thanks for the links. I can't open the FT link as I figure you logged in to you subscription to access. Can you post up more info on this?

Without making my assumptions, with spreads and commissions I would find it unlikely that 'the rest would break even'. That's quite a high number of people with many hundred different factors included.

Looking at the quote though and as you've written it does indicate that:

2% produce around half their revenue in comms/spreads, so that leaves 50% shared around the other accounts that don't lose.

The figures you found though relating to losing accounts being in the region of 74-89% is interesting. (on CFD's)

Lee

about FTs article i did a google search for

The winnings can be large. Peter Hetherington, IG’s chief executive, says some 3,000 customers


another thing about this that can make things look worse than it is

in other countries i know that some using CFDs to hedge long positions they have in stocks instead of stops

so a loss on CFD can be a profit on stocks on another account

 

[barjon]

Lee

As I understand it your trading style is sort of set and forget. It either comes off or it doesn’t. That sounds easy peasy, but many without your iron discipline find it hard. I’d say that the process is easy, but that execution depends on what’s going on inside your head and can be easy or hard accordingly.

Don’t really think we’re on different pages

Cheers

 

[new_trader]

What came first?

It’s purely to give understanding to all that come here is that trading is not as difficult as is made out to be and these percentages show it’s easier than what is sold to the masses in the media and (most) vendors/sellers.

I’m all for freedom of information and most importantly, the correct information. These percentages indicate we’ve been lied to on a constant basis.

All the best,
Lee

Is this the way you think it all started? The 'industry' just brainwashed people into believing that trading is harder than it is?

 

[Lee Shepherd]

Is this the way you think it all started? The 'industry' just brainwashed people into believing that trading is harder than it is?

Hey new_trader,

I'm quoting what I and you and everyone else see's printed on a constant basis. Therefore the common belief is that 95% (or thereabouts) fail at trading. Although I very much welcome your input and question, please be a little more specific for the basis of the conversation.

How do you think it all started? I would welcome your further input.

It stands to reason that if people think that something is difficult, they will either gracefully fail at it knowing that its a high rate of failure or worse still, will never attempt it. This is what ultimately holds people back from doing what they want to in life.

They can't/won't quit their job because they have a family, a mortgage, a responsibility etc. They won't open that coffee shop because they've heard its at saturation point, too hard to get finance, the big boys have it all etc etc or worse still my mate says don't bother.... so I keep doing the same things day in day out until when... at what point do I expect a different output from my input. If I do the same each day, the results will be the same, so... to change the result, I have to change my actions....... TODAY.

If people knew how easy it is to start following their own dreams then would this be good for big businesses, corporations and legislation? Of course not. So, who holds us back? I don't know, but ultimately it is our responsibility to ensure we give it our best, whatever that is. Only one life mate.