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And has this fact EVER been substantiated by anyone other than vendors selling the grail? And has this fact EVER been broken down by years of trading, size of account, etc.?
My point is that a $5000 account for a newbie will probably 'fail'. A $10,000 account for someone that thinks they can just wing it will probably 'fail'.
There's a distinction to be made by those that treat this like a real business and those that just wing it.
And if the 'well known fact' could be substantiated and broken down by types of traders, I think the numbers would tell the REAL story. But since this 'almost all traders fail' has been created by vendors and now a part of every day trading, most believe this unproven myth.
Who knows, it could be that 98% of all traders (wannabes and biz owners) fail or it could be that those that actually treat this like a business fail 25% of the time. If there's anything out there suggesting otherwise, I have yet to see it.
In my years trading, I've learned a few things and one of them is that numbers can easily be manipulated to suit your agenda. Unless YOU perform the analysis, or it's being done by an unbiased 3rd party, take it for what it's worth. It's like the drug trials that show a certain drug helps with weight loss and it turns out that the maker of the drug funded the multi-million dollar study. I wonder how that study will turn out... Or how about that many of the muscle magazines out there are actually run and operated by the supplement companies. I wonder why there's so many ads and articles about how great those supplements are... You see where this is going. When trading VENDORS have created this scare tactic of failure, it serves their agenda perfectly.
The best example I have is that while I was a stockbroker, we had brokers broken down into 4 segments. And we tracked this way b/c IT MADE SENSE. Segment 1 was the newbies. We knew that at least 80% of them would fail within 12 mo's. As you can imagine, the further up the segment scale you went, the more likely you would make it as a broker. Actually, by segment 3 it was a matter of how much $$$ you would make.
Trading is no different - every trader can be broken down into segments based on profitability. Let's say segment 1 is those that net out less than $50k per year. Well, I would guess that a good portion of Segment 1's fail. Is it fair to group segment 2's, 3's and 4's with the segment 1's? Of course not. But, as soon as you break traders out based on profitability (like a real business would), those numbers do not suit the vendors as much anymore. Vendors prey on new people and selling the grail. As long as they have you believe that most fail, that just helps them sell their product to you.
As a new person to trading car, you need to realize this. It's similar to sports betting - I'm sure you've seen plenty of junk services out there selling the 'best picks' and you just sit there and laugh b/c you know what they are actually selling. And you see their marketing ploys as well - best picks in all of 2006, big weekend this weekend, etc. Again, preying on people like me that know nothing about betting, but interested in it. Trading is no different. This 'fact' that you quoted has never been proven by anyone. It's simply a marketing ploy that has worked beyond belief. It's like Nike - Just Do It. Trading - 98% fail, so buy my product that will make you part of the 2%! |
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Great post Brownsfan, funny thing is I was thinking about that statistic for trading failure the other day as I was playing poker.
I jumped online after playing for less than one full day and was placing consistently in the top 5-10 out of 50+ people.....of course it was play money, and of course I am sure a lot of the people playing were beginners or weak players...but then again, so was I and had probably been playing less time than them....I think just going in there with a trader's attitude and playing the probabilities was responsible for the high rankings I was getting.
Of course, as the stakes get higher, etc then things will be a little different, but you have to remember this was literally my first day playing...I didn't even know how to play at all at the beginning of the day. I can see tons of potential.
Once again, the key was to treat it like a business. It seems cliche, but it is true...so many people fail to do this, or make ignorant decision because they want to win it all up front. My approach in poker is to let Natural Selection run its course...and help out when I see a good chance to attack.
Point is- approaching anything, whether trading or poker, is 90% about the attitude and having the backbone to treat it as a probabilities based business. Technique serves to improve this, but as I saw with my own eyes being a totally raw beginner......starting with the right attitude can give you a huge advantage.