Why are people attracted to trading?

[arabianights]

So an average loss of 1% a day which is a lot less than I would have imagined for new accounts.


Paul

nope... you're falling for a fallacy, but I can't remember what it's called...

 

[DashRiprock]

if you lost 1% for 90 days you would have 40% at the end of it.

And ive never heard the 90/90/90 thing before either. sounds to me like something someone made up a while ago on a messageboard or chat room and has become an old wives tale tbh.

 

[brewski1984]

Even when losing money they, still, believe that success is within their grasp.

That's me right there.

 

[Triggerfish]

Emotion over Logic!
GREED is the driver.

 

[andycon]

a 10% chance of winning is still massively higher than the lottery, so the dream is still alive. Most of the population waist a few quid on the lottery but people accept this gambling as fun. The risk reward in trading is huge because of leverage. Unfortunately human emotion wreck most peoples chances of success. Van Tharpe's work gives an excellent persceptive.

 

[futuresforex]

If the failure rate is so high (90-95%) why is trading so popular? It seems like providing service or products for traders has a higher chance of profitability. Any thoughts on this?

Yes failure rate is that high. Just like there is a 90-95% failure rate with starting a small business, and accomplishing many of the things in life.

Trading is alluring because you have the ability to place trades from the comfort of your own home, use a little bit of leverage, and potentially make a massive amount of money while you sleep.

The ability to place a swing trade, set your stop loss and take profit, and if the trade is successful have your take profit get hit a few days later is very alluring and gratifying. You can have the market move in your favor and make pips every day while you sleep and are doing other things. You could have a trade on, making you money, while you hold down a day job, getting some more money from there as well.

You could also be your own boss and ditch your current job/career if you are successful. Obviously most don't make it. But even while many people know that 95% fail, many people are still willing to risk large sums of money and a large amount of time, to try it out.

Also in an ideal situation you could trade from anywhere in the world that has an internet connection. So you could potentially be sitting on a beach and place a quick trade, and enjoy the rest of the day. Obviously most people do not reach that level, but many people will most certainly try it out.

 

[kimo'sabby]

You are correct, there are more people making a living snakeoil vending to traders than there are traders making a living by trading.

I started a thread on this subject about a month ago, you can find some of my thoughts on the subject there:

http://www.trade2win.com/boards/gen...all-failed-traders-should-become-vendors.html

It's easier to go to work. Besides, if a person has any 'disposable' cash knocking around...why bother with derivative type products??<gambling>

 

[monotonetuba]

I would love to comment on this but considering i am in the 90% bracket...i can't!

 

[andycon]

I wonder if the 90-95% failure rate is true, or maybe this is just put out by the brokers and spread betting companies and system vendors. If you told most people they had a 10% chance of changing there life they are likely to give it a go i.e buy the course, and lose some money with the brokers, they have also been pre-warned that they are likely to fail so when they do fail they accept it and say "only 5-10% of people make it, never mind I gave it a go ". Perhaps the real stats are 99.9% of people fail and the real winners are the brokers and the system sellers, but if people were told that 99.9% of people fail I think people would probably give it a miss.:?:

 

[Wile E Trader]

I wonder if the 90-95% failure rate is true, or maybe this is just put out by the brokers and spread betting companies and system vendors. If you told most people they had a 10% chance of changing there life they are likely to give it a go i.e buy the course, and lose some money with the brokers, they have also been pre-warned that they are likely to fail so when they do fail they accept it and say "only 5-10% of people make it, never mind I gave it a go ". Perhaps the real stats are 99.9% of people fail and the real winners are the brokers and the system sellers, but if people were told that 99.9% of people fail I think people would probably give it a miss.:?:

that is a very good post.
i wonder what the failure rate is per market like Shares, forex, Options, Futures.
It cannot be 95% in all areas. It would be interesting if one of those areas has a higher survival rate and why.

 

[kimo'sabby]

that is a very good post.
i wonder what the failure rate is per market like Shares, forex, Options, Futures.
It cannot be 95% in all areas. It would be interesting if one of those areas has a higher survival rate and why.

Shares probably win over, index etfs that kinda stuff. Forex and spreadbetting are less sensible than shares, at least to the unsophisticated trader. It's probably why most only use a few hundred quid to satisfy a side of their own personality.

A leveraged product like spot fx gives the layman a hope or a dream, nothing wrong in that, in the end reality prevails. Enter the sales people.

 

[Splitlink]

I think that 95% fail rate is put out by interested parties and that it is self generating, by which I mean that, as people fail, so do they justify their losses by becoming one of an imagined majority.

Those who are successful are, either, not believed or do not publicise themselves.

Personally, I believe that the minority take money from the majority. That has always been the case in other forms of business and I don't see why trading should be any different.

If we, as traders, are going to proceed it does not pay us to dwell too much on the fate of others. Lack of optimism leaves us fearful and seeking the advice of those who know less than us and, in many cases want to charge us for their knowledge.

Thus, he who believes himself to be one of the 95% puts his trust, and money, into someone whom he believes to be one of the 5%.

 

[andycon]

I think that 95% fail rate is put out by interested parties and that it is self generating, by which I mean that, as people fail, so do they justify their losses by becoming one of an imagined majority.

Those who are successful are, either, not believed or do not publicise themselves.

Personally, I believe that the minority take money from the majority. That has always been the case in other forms of business and I don't see why trading should be any different.

If we, as traders, are going to proceed it does not pay us to dwell too much on the fate of others. Lack of optimism leaves us fearful and seeking the advice of those who know less than us and, in many cases want to charge us for their knowledge.

Thus, he who believes himself to be one of the 95% puts his trust, and money, into someone whom he believes to be one of the 5%.[/QUOTE

A paradox then, until somebody is successful it is unlikely they are going to put them self in the 5% category, and by not putting them self in the 5% category they automatically put them self in the 95% category and there trust in people they believe to be in the 5% category and this action in itself probably keeps them in the 95% group.

 

[trader-john]

A paradox then, until somebody is successful it is unlikely they are going to put them self in the 5% category, and by not putting them self in the 5% category they automatically put them self in the 95% category and there trust in people they believe to be in the 5% category and this action in itself probably keeps them in the 95% group.

Very hard explanation but I got the point. Easier to say: when you think you are unsuccessful you will be unsuccessful.

 

[andycon]

Very hard explanation but I got the point. Easier to say: when you think you are unsuccessful you will be unsuccessful.

I don't think it is as simple as mindset, if you are not successful then by definition you are in the 95% category regardless of your beliefs or confidence. To be unsuccessful at trading and believe you were in the top 5% would be extreme over confidence (very dangerous when dealing with financial markets) and perhaps slightly mad. Perhaps the answer is to have confidence in your ability to get to the 5% category and stop trusting your money with the vendors who say they are in the 5% category but are liars. This would mean self teaching which is not something many people are used to.

 

[trader-john]

I don't think it is as simple as mindset, if you are not successful then by definition you are in the 95% category regardless of your beliefs or confidence. To be unsuccessful at trading and believe you were in the top 5% would be extreme over confidence (very dangerous when dealing with financial markets) and perhaps slightly mad. Perhaps the answer is to have confidence in your ability to get to the 5% category and stop trusting your money with the vendors who say they are in the 5% category but are liars. This would mean self teaching which is not something many people are used to.

I would say to put our sell in one of this groups is a mistake. You should put a tab on yourself.

Make wise decisions and place good trades.