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Why does forex have a bad rep?

  #50 (permalink)

Boston, MA
Posts: 264 since Apr 2014

michaelleemoore View Post
Regarding @Neo1's statement, which has also been an alleged "fact" that Rand Paul has thrown around. Maybe it's true somewhere else in the world, but in the US, it's patently false...

ďAbout half of all new establishments survive five years or more and about one-third survive 10 years or more. As one would expect, the probability of survival increases with a firmís age. Survival rates have changed little over time...Ē

...I'm guessing the rate of trader failure is higher than that

But what is the definition, at the US SBA, of the failure of a business?

I have heard that statistic thrown around as well... (90% of small businesses fail within the first couple of years of operation, yada yada. Sounds like trading, yeah?) But what constitutes a failure of a business? Is it their failure in the third year to file taxes? Is it the actual owners filing an official form to the SBA that says they are closing their business?

And what if that business in their 3rd year of losses, then posts a profit in the 4th year? Does the SBA take that into account, or are they only looking at their own return rate on the small-business loans they dole out and receive interest income on? How is the SBA calculating the difference between a failed business venture and a successful one?

The SBA gives out loans. That was their original charter (mostly), when the US Congress created the thing in 1953, after the fallout of some other organization formed by Herb Hoover during the Great Depression of the 1930s, which became something else, which became the SBA, etc. But like any other US governmental reporting agency, you need to take their reports with a grain of salt.

The USG just ain't that good on their own data, man. They know not what they got, lol!

Back to the point... with this small-business failure rate in context, what constitutes a failed trader? Is it someone who blows up a 10K account once? Twice? On the third try he/she succeeds and makes millions. Does he/she now count as a success? Or are they still counted as one of the 95% that failed? What is the context of that failure rate?


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