What percentage of daytraders fail?

Answer 1

The easiest answer I could give you is "all of them." It wouldn't be true, but it also wouldn't be far from BEING true.

The most famous study of day-trading was done by Ronald L. Johnson for the North American Securities Administrators Association. He chose 30 accounts from a retail trading firm. Four of the accounts examined had very few transactions, so were excluded. Of the 26 remaining accounts, 18 of them lost money, three-quarters of THOSE accounts were headed toward a 100-percent loss. Of the eight accounts that were profitable, five of them had a very high risk of ruin. The most successful account of all belonged to an investor who didn't day-trade.

The book "Day Trading for Dummies," which I think is an oxymoron, claims 80 percent of all day-traders fail. That sounds a little low to me. The internet is covered up with "99 percent success rate" daytrading systems. I look at all of them like this: if I had a system for daytrading that was GUARANTEED to make $10 million a year, I wouldn't be selling it for $99 with free phone support for life. I'd be sitting in front of a SOES terminal daytrading my ass off.

I'm not going to sugar coat it. It is difficult to make money day trading, but it's certainly not impossible. What trader's need is enough experience with the markets so that they can really judge the conditions they are trading in, and that takes a lot of time, at least many months if not a couple of years. They also need an outrageously good mentor, a tremendous amount of self discipline, (self knowledge), and they need a very high level of emotional maturity. They should also be pretty adept at computing, software and hardware, troubleshooting, programming, etc. If the trader can put all of this together, he or she can trade successfully and make money day in and day out.

Different Answer Here:

Trading is a profession, like any other. Whether it's law, medicine, accounting, social work, construction, education, or trading the markets, it really doesn't matter. You don't walk in knowing everything. You need training. There is no magic system. Is there a magic system to law? Of course not, that's totally ridiculous. You go to law school, you put in your three years studying then you go out into the professional world and cut your teeth. Trading is no different. The barriers to entry are so few that way too many people jump in and lose everything before they really ever have a chance to learn anything of value.

If you want to succeed, you can though. It's like anything else. Passion will drive the process. Passion will create persistence, consistency, knowledge acquisition, and will generate a lot of courage. Traders need emotional self control, and they need to keep greed in check. They need a unique combination of the ability to adhere to a very specific rule set, but the flexibility to entertain various outcomes as a result of adhering to those rules and they need to be ok with that. A very flexible mind is what is required and don't forget that passion. If you have all of this, then the world is your oyster.

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