The probability of being a successful day trader is as follows: Through my time working for a proprietary trading business for the past six years, as well as from interactions with other proprietary trading firm operators, this data is derived. When a proprietary trading firm provides traders with funds, the firm receives a portion of their profits in return (business models vary, but that is the basic idea). Given training, money, and experienced traders to help them out, the day trading success rate for trainees becoming consistently profitable traders was extremely low. The odds are likely to be substantially lower or the journey even longer for traders with little money, little aid, or little time.
Trading requires a lot of effort, but most people aren’t willing to put in the effort. A few months down the road, they hope they’ll be able to relax on the beach all day. If, on the other hand, you’re a trading enthusiast, you’ll want to trade today and in five years. Beaches aren’t as bad as you think they are compared to trading (after the trading day, of course). At least you look forward to Mondays, or at the very least despise weekends when the markets are closed. People like them are the ones that succeed in this industry.
If you’re only interested in trading for the excitement of it or because you think everyone else is, then this post is for you. The other 95 per cent of traders lose money rapidly. You’re almost certainly doomed to failure. While statistics like “95 per cent of traders lose money” are frequently cited, rookie traders anticipate they’ll be in the 5 per cent because they believe they’re more knowledgeable than the average trader. Trading isn’t about having a good head on your shoulders. Discipline and adherence to a trading plan are the keys to success.
Because they see so many individuals boasting about how much money they’ve made in online forums or on social media, many novice traders assume that these facts (that just 5% or fewer of traders win) are a hoax. Many folks appear to be doing really well! There’s a term for this: availability bias (see The Art of Thinking Clearly on this trading book list). What we see most frequently, and what we don’t, is viewed as emblematic of the entire universe. Take a look at the empty areas.
Only a small percentage of the hundreds & thousands of people who belong to these organisations often brag about their financial success. Hundreds or even thousands of individuals are losing money as a result of these schemes, but no one is speaking out about it. Counting the number of individuals who have succeeded does not tell you how many people have failed, and those who have failed tend to be much less outspoken. According to the data provided in the preceding section, only a small percentage of persons achieved success.
However, the company made no mention of this; instead, it simply showed new hires how well the traders who were successful were doing. For the most part, new traders are only witnessing the glitzy, rosier side of the market.
What about the brokers who claim that just 70% of their clients lose?
European regulators compel brokers to disclose the number of customers who have lost money while trading with them. When it comes to the percentage of clients that lose money, I’m used to seeing numbers in the 70s. You’ll notice it in their marketing materials or on their website. This was probably done to scare people away from trading, but it really gives the impression that it’s a piece of cake!
It’s considerably better than the 4% (living) to 10% (side hustle) that I’m talking about for traders to win 30% of the time (and lose 70% of the time). Again, we’re skewed by a lack of resources. Brokers report a figure based primarily on their current customers! No one on this list has experienced a loss of funds and has consequently had to liquidate their accounts. Only 6% of persons who set out to become professional traders succeed in their endeavour.
