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90/10 Statistic the Obvious- For New Traders
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90/10 Statistic the Obvious- For New Traders

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90/10 Statistic the Obvious- For New Traders

Iím going to state the obvious for new traders.

Iíve been pondering the 90/10 percent success rate statistic. Currently, we donít even know if that is accurate. I can see why most traders fail at trading; itís because of your emotions. Itís your thinking and your psychology. Can I really do this? Do I really have an edge? Do I know what Iím doing? Am I reading the market right? If you want to succeed you need to have a plan, understand risk, be disciplined, and have an edge. What works for one might not work for another. Once youíre able to get past the thinking of 100 percent solutions you'll be closer to where you want to be. In general, you canít look at trading as sprint you should look at it as a marathon. There is much rewiring that needs to be done internally to align your beliefs with the market. The more time in the market, not the action of trading but observation will also be crucial to your success. If you want to cut your learning time down, seek a professional mentor/coach. Mistakes are crucial to growth and being able make them and learn from them is important. Overall, this is your journey, you might be able to find someone to help you, but in reality traders feel like if itís taken them years to learn it, so it should take you years to learn too. You have to go through the trials of learning, handís on experience is the best, people can tell you, but if you havenít experienced it for yourself you really donít know. Remember it takes time and once youíre done fighting yourself youíre one step closer.

"Small disciplines repeated with consistency every day lead to great achievements gained slowly over time."
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In my experience mentors only help so much you're journey and learning must be self driven. Sometimes these things can cost a lot of money too so I'd advise anyone to do a lot of research before shelling out cash.

Regarding the psychology personally I think it only really comes into it because people don't know how to trade mechanically and don't have a trading plan or they don't follow their plan. Journalling both our mistakes and successes is also a lost art - but helps enormously in tuning and improving setups/procedures, I think the technique is becoming more used however in no small part due to sites like this one and being able to pool knowledge as retail investors have never been able to previously.

In the end there are no short cuts to this journey, again a major reason why people fail because they want a miracle indicator or a guaranteed easy route to money and there's no such thing really as most people around here will say too. But certainly it all helps us to learn and understand the market and that's not something someone can teach, we can only learn my being in many many many positions (but that doesn't necessarily mean many years I'd add).

In my view only if we apply these techniques can we then distinguish ourselves from the people that are in fact 'gambling' and not trading.

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sands View Post
In my experience mentors only help so much you're journey and learning must be self driven. Sometimes these things can cost a lot of money too so I'd advise anyone to do a lot of research before shelling out cash.

Regarding the psychology personally I think it only really comes into it because people don't know how to trade mechanically and don't have a trading plan or they don't follow their plan. Journalling both our mistakes and successes is also a lost art - but helps enormously in tuning and improving setups/procedures, I think the technique is becoming more used however in no small part due to sites like this one and being able to pool knowledge as retail investors have never been able to previously.

In the end there are no short cuts to this journey, again a major reason why people fail because they want a miracle indicator or a guaranteed easy route to money and there's no such thing really as most people around here will say too. But certainly it all helps us to learn and understand the market and that's not something someone can teach, we can only learn my being in many many many positions (but that doesn't necessarily mean many years I'd add).

In my view only if we apply these techniques can we then distinguish ourselves from the people that are in fact 'gambling' and not trading.


You statement is very true regarding mentors and costs. Mentors can show you techniques, but they can only help so much. Itís the individual that need to make the decisions. I agree with your statement it doesn't take many years. It will take only as long as it takes you to align your beliefs and understand yourself which equates to emotions and thought process.

"Small disciplines repeated with consistency every day lead to great achievements gained slowly over time."
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You know I've never seen a true source. I think it's just assumed that there are more people that fail than succeed.

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Classic "proofiness" -- somebody pulls numbers out of their ass and just because they are numbers people believe them.

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Yeah, I start making gains and then I take a few losses then I get focused on the losses. It's a back and fourth cycle. Then my focus turns to being right and not thinking in probabilities.

I agree if you have the mindset walking into this you're going to fail you're doomed right there. It's like saying that 90 percent fail the test and only ten percent pass. Well if you study you should pass right? or if you study you pass or you can second guess and still fail. When I first started on this journey I thought it was going to be hard from an intellect standpoint, boy was I wrong. It's like anything else, I think once you get past looking for the 100 percent answer or indicator, have the can do attitude, along with patience, confidence, and the so called disipline, opportunities are limitless. It's just working into that trader you want to be and going through the growing pains we must face.

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phyrb View Post
Does anyone know where this 90 % fail rate actually comes from ? Is there a publication or something that states this?

thanks!

Russell

I started working at the CBOT in 1987....I traded on floor and screen...In Chicago you were always surrounded by good traders and there was an edge. There even was an edge to scalp on the screen (until late 2008)....hence I always thought it was 50/50 whether or not you were successful. If you worked hard and had some capital you would make it. You really did not have to be that good.

Since the HFT's took over (2007ish) and the financial crisis of '08 I think the % is now 90/10. The markets have changed and it is much harder. You have to be very, very good now.

The Market is Smarter than You Are
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I think part of the isuse we as people seek validation and approval. When we were children we might of sought approval from friends and family. The only validation or "good job" we receive from the market is profit after good trades and following the set trading plan. The market doesn't provide us with good job or encouragement. Everything is taught as a concept and your edge is developed from that concept. If you practice TA a higher high is a higher high, a channel break is a channel break it doesn't matter if it an HFT or an institution it's still viewed the same. Trading the trend up down or sideways. Once you know you can do that it becomes eaiser. I think that's the hard part knowing what you see and lack of the validation until it's confirmed and done.

So what does it take to become very very good? It takes time, it takes practice, it takes learning from mistakes, and wanting to improve upon the skillset. When you get beat down get up and do it again.

I should follow my own advice.

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From reading "Reminiscences of a Stock Operator" I got the impression that the 90/10 rule was in operation likewise back in 1900, in the bucket shops, everybody in there was losing money, except the Boy Plunger. And that was because the typical person was not disciplined, did not have risk management, did not have money management, and was ruled by fleeting emotions like a bait fish.

How many of those 90% are properly capitalized and actually do all of the above, and then demonstrate the grit to fight their way up the learning curve over the considerable period of time it may take to be a success?

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