Why do so Few People Attain Trading Success

By | August 14, 2014

It’s been well-known for years that around 90-95% of those who start trading will fail to achieve any meaningful success. And I’m not talking here about people who paid $99 for the latest forex robot that promises to turn an $1k account into $20k in one year. Or about people who paid thousands for courses and seminars to slick marketers. Their failure rate is 100%. I’m talking about people who approach trading with the same level of seriousness that made them successful in their primary careers: teachers, doctors, lawyers, entrepreneurs and so on.

So why is that so few people, 5-10%, attain trading success ?

I think the reason for this is due to a fundamental difference in what it takes to succeed in trading compared to other professions. A couple of quotes from Reminiscences of a Stock Operator comes now to mind:

There is the plain fool, who does the wrong thing at all times everywhere, but there is the Wall Street fool, who thinks he must trade all the time. No man can always have adequate reasons for buying or selling stocks daily or sufficient knowledge to make his play an intelligent play.

The desire for constant action irrespective of underlying conditions is responsible for many losses in Wall Street even among the professionals, who feel that they must take home some money every day, as though they were working for regular wages.

Right there you can see the difference, spelled out by Jesse Livermore over 90 years ago: To be successful in almost any field, you have to be extremely productive, as you’re being paid either by the hour or by the finished product or service.

However, there is no product or service in trading. You can’t force a winning trade like you can force yourself to finish a project. You can’t get more winning trades in a dull market like you can get more clients if you’re a lawyer.

The most common response to unsatisfactory trading results is to ‘work harder’. Change the trading system, do more back-testing, change from forex to stocks or commodities. Change the trading frame to 5min, where the ‘real action’ is. That’s just a sure way to disaster because we can’t force the market to behave the way we want it to, when we want it to.

The sooner you accept the fact that you can’t control the market and that you can’t make money every day or week in trading as in most other professions, the sooner you’ll be out of the 90-95% group and into the 5-10% group of successful traders.

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