Why do so few succeed?

[Millano]

I often hear that only a very small percentage of traders actually make it.
Could anyone explain why this is?

I mean, do most of them not make an actual positive monetary gain?

Or is it usually an oppurtunity cost issue?
I mean, where the trader makes money, but they just don't make enough money to warrant spending as much time as they do on trading.
And if that is the case, I'm guessing the chances for success are exponentially higher for those that have more starting cash... is this true?

Or is it common for the individual to simply come to dislike the type of work too much, that they quit?

Pardon my stupidity! I'm interested in the subject... trying to get an idea of which causes for failure are common.

 

[Directional]

lots of reasons why so few succeed, but the main reasons being:
1. no "edge" - or ability to consistently pick good entries
2. poor money management - ie: bad use of leverage
3. insufficient capitalization
4. unrealistic expectations

interesting short article here:
http://www.trade2win.com/knowledge/first-steps/articles/general_articles/what-can-i-make-trading/

 

[SOCRATES]

I often hear that only a very small percentage of traders actually make it.
Could anyone explain why this is?

I mean, do most of them not make an actual positive monetary gain?

Or is it usually an oppurtunity cost issue?
I mean, where the trader makes money, but they just don't make enough money to warrant spending as much time as they do on trading.
And if that is the case, I'm guessing the chances for success are exponentially higher for those that have more starting cash... is this true?

Or is it common for the individual to simply come to dislike the type of work too much, that they quit?

Pardon my stupidity! I'm interested in the subject... trying to get an idea of which causes for failure are common.

Simple, survival of the fittest.

 

[fxmarkets]

hmm, looking outwards in at your question, I would nudge towards knowledge, or lack of as with any pursuit of an objective. do we set off thinking of objectives with trading? so knowledge of the "The nature of the beast"

Then, probably the biggest challenge we face, is ourselves, having gained knowledge of o.k. so I see whats going on in the market, you still have to condition or rework perhaps or go against ingrained beliefs which are likely to exist within most people, example........ being conditioned with being right and wrong since birth is a possible/likely area that most need to work against.

I note that seeing birthdays pop up on this board from time to time the average member is over 35-50 ish.

Thats a very big chunk of life conditioning we bring to the market which is perhaps not best suited to the market environment, that appearing fluid,dynamic, we arrive rigid, inflexible. Its no great surprise then that the cull is swift and relentless.


Make any sense Milano?

hmm "douglas" wrote "we need to trust ourselves to act in our own best interests" however when no ones looking its only you holding the responsibility of action to carry out which will be in your best interests (relating to trading). but ,especially when new to the business of trading it can take some time to even become aware of what behaviour is required of ourselves which will result in our best interests being maintained/ reinforced continually.

knowledge, knowledge,knowledge....

Also remember there is a lot of business out there pumping out the ease of it all..... \in short they want your cash, they know your number better than you do , that is what we need to change maybe.

Fx.

 

[Finlayson]

Simple, survival of the fittest.

simple.....most people quit while focusing on the failure...as above

 

[SOCRATES]

simple.....most people quit while focusing on the failure...as above

No, survival of the fittest.

Like the gladiators in antiquity, survival of the fittest.

Gladiators do not choose to fail and get killed, they try to win and survive.

Hence nowadays, the same.

Simple, survival of the fittest.

 

[TheBramble]

Millano - biggest two factors traders fail is the same biggest two factors mose people fail in any business.

1. Undercapitalised.
2. Incompetent.

hth

 

[SOCRATES]

Net and Trident ~ Gladio and Shield.

Blood and Sand.

No excuses.

Loser Dies.

Winner Wins and Survives, despite Wounds.

Simple, Very Simple.

Survival of the Fittest.

 

[barjon]

mmm, in my humble opinion trading is no different to any other field of human endeavour. In any field there is but a small number who truly excel, then there is an upper band who are consistently successful and then the mass who strive and very occasionally have their five minutes of fame.

To consistently make decent money by trading is not an easy task and - to move to a sporting analogy - one might say it's equivalent to playing golf off scratch. Of the millions who play golf there are only a few thousand who can play that well. Many of those become professionals but, even then, it is only a narrow band of around 20 - 50 players who truly excel and who take most of the prize money cream.

I am an amateur golfer (not a very good one) and an amateur trader (not a very good one). On the trading side it has always bemused me how totally inexperienced people think that it is possible to compete and win against the top professionals. On the golfing side, I saw an advert yesterday for a new golf club that would guarantee that I could hit the ball straight as a die over 250 yards every time.........................................

good trading (and golfing)

jon

 

[wasp]

I think Arbitrageur summed it up perfectly.

 

[Finlayson]

Soc.....I agreed with you

but most people quit before succeeding......as in most things in life. too difficult.

gladiators & traders ...... sounds good but i think your cup is full

best regards...no offence intended , keep smiling
Jay

 

[SOCRATES]

I think Arbitrageur summed it up perfectly.

Yes, agreed.

But arbitrageur in his wisdom as a market professional prudently confines his comment to the gladiator's dressing room, etc.,

I am not.

I am referring to the gladiatorial arena and the reality of mortal combat, for real.

Hence, the absolute reality, which is :~

Survival of the Fittest.

 

[peto]

No, survival of the fittest.

Like the gladiators in antiquity, survival of the fittest.

Gladiators do not choose to fail and get killed, they try to win and survive.

Hence nowadays, the same.

Simple, survival of the fittest.

Just for a change i'm going to agree with him! He is spot on, 'survival of the fittest'.

The Gladiator analogy is apt. The gladiator may have all the tools (swords & armour = capital and fabulous charts, top brokers, multimegagig computer). He may have a positive attitude and sound emotions. He may have a burning will to succeed.

But the other gladiator has all that too. And they can't both win. Trading is even harder. At least the gladiator had a 50% chance. In the markets there is only the money there to win that the participants put in, and the brokers and exchanges take a sizable %ge of it as it goes round and round

Of course the winning gladiator then has to do it all again with another motivated and full equipped opponent. And another; what chance now of long term survival? In the markets the few survivors who double their accounts now double their stakes, taking out twice as many smaller traders as they double their accounts again. And so on until some big accounts, (assuming they can maintain their winning edge) grow exponentially to a size where they have to be absorbing an awful lot of small accounts every day to keep winning.

So to succeed and make it big you need to be very very good indeed.

Another analogy occurs to me, the little fish that swim around with a shark and grab the crumbs that waft their way sometimes. There might be strategy equivalents in the markets, but remember the little fish never grow very big, and probably get swallowed by mistake now and then!

pete (bit depressed today, sorry)

 

[fxmarkets]

I ,over the last few days, have managed to see some of the winter olympics ,remember talking with family whilst watching speed skating, that all of those people (probably) spend day in day out, 8/12 hours daily for the last 4 years, training for this moment which will be judged in the next couple of minutes.

With trading its probably no different..... that level of commitment..

steve redgrave? no surprise is it........ result known already, perhaps.

 

[FXSCALPER2]

Net and Trident ~ Gladio and Shield.

Blood and Sand.

No excuses.

Loser Dies.

Winner Wins and Survives, despite Wounds.

Simple, Very Simple.

Survival of the Fittest.

That is a truism and a bit trite. 'The fittest in what' is, presumably, the question. The people who try to point out the specifics of where you need to be fit to survive know what you say, they just go beyond saying 'you have to be good' and try to address 'good in what'?

 

[Matt321]

Gladiators depend 80% on physique for survival traders depend 80% on money management,what do they depend onto win ?

 

[dbphoenix]

That is a truism and a bit trite. 'The fittest in what' is, presumably, the question. The people who try to point out the specifics of where you need to be fit to survive know what you say, they just go beyond saying 'you have to be good' and try to address 'good in what'?

Arbitrageur put it in a nutshell, though fxmarket's comment is also important to note.

Millano,

If you're only exploring the subject, browse the Knowledge Lab. That will give you some idea of what's involved in order to enhance the odds of your succeeding. If you decide to take the next step, be prepared to do the work, to study, to prepare, to put in the time. If you don't love it, if you don't find it fascinating, you'll most likely be happier doing something else.

 

[peto]

Gladiators depend 80% on physique for survival traders depend 80% on money management,what do they depend onto win ?

What?

 

[Charlton]

I often hear that only a very small percentage of traders actually make it.
Could anyone explain why this is?

I mean, do most of them not make an actual positive monetary gain?
.

It is difficult to say, because on a site like this most people are anonymous and they can say what they like whether its true or not. The only way to tell would be to look at their accounts.

Or is it usually an oppurtunity cost issue?
I mean, where the trader makes money, but they just don't make enough money to warrant spending as much time as they do on trading.
.

It depends upon what you mean by "warrrant". They may or may not make more money at trading than at working a some other part-time or full-time job (depending on whether they trade part-time or full-time).

They may, however, be treating trading as a hobby with the bonus of making money, so the answer depends on your reasons for becoming a trader

And if that is the case, I'm guessing the chances for success are exponentially higher for those that have more starting cash... is this true?
.

This does not follow necessarily. If you have more starting cash then dealing costs, financing costs, equipment, books etc form a lower % of your trading capital outlay and running costs, so your profit % can be greater.

However a bad trader with more starting cash can lose more

QUOTE=Millano]
Or is it common for the individual to simply come to dislike the type of work too much, that they quit?
[/QUOTE]
Now you have hit the nail on the head ! Many see trading as a way to make quick money without working. People with this attitude:
(a) will lose money on trying to buy the latest get-rich quick scheme/methodolgy or course
(b) are unwilling to put in the work to throughly understand the market and develop a system to trade it successfully
(c) get bored quickly when they don't make money quickly
(d) take unnecessary risks

They might be lucky. They might get away with it for a time, just as you might be lucky at the casino for a night, but long-term they will not.

There have been many posts on this site about whether a trader is born or can be trained. You may wish to search for these threads for further ideas around the question you posed

Charlton

 

[Charlton]

hmm, looking outwards in at your question, I would nudge towards knowledge, or lack of as with any pursuit of an objective. do we set off thinking of objectives with trading? so knowledge of the "The nature of the beast"
.

Quite agree

Then, probably the biggest challenge we face, is ourselves, having gained knowledge of o.k. so I see whats going on in the market, you still have to condition or rework perhaps or go against ingrained beliefs which are likely to exist within most people, example........ being conditioned with being right and wrong since birth is a possible/likely area that most need to work against.

Yes - its our internal psychology that really sorts out successful traders from those who pass in the night

I note that seeing birthdays pop up on this board from time to time the average member is over 35-50 ish.

Thats a very big chunk of life conditioning we bring to the market which is perhaps not best suited to the market environment, that appearing fluid,dynamic, we arrive rigid, inflexible. Its no great surprise then that the cull is swift and relentless.

This can work both ways. The young tend to rush in wanting everything immediately and not willing to put in the work required. They are apt to take more risks.

However it's not so much an age thing it is a character trait. Certain characters are better suited to trading.

Charlton