Only 95% Of Traders Are Unsuccessful. - Forex Forum

Hi guys,
You've probably heard that infamous phrase that only 5% of traders are successful in the forex market.Unfortunately It is true.I believe it could even be less.Now this may not sound too encouraging, especially to the newbie trader but it is a fact.In many circles forex is known as a zero sum game.In other words it has no gain.For you to make money someone somewhere has to lose his/hers.True. But forex also takes your money.So if you are a good trader you could stay at break even for a while.
I started thinking about these things the other day especially the 5% of traders who 'do' make money.What do they know that the other 95% dont? Think about this for a moment......The answer is nothing.These guys are no better than any other trader.ITS NOT WHAT YOU KNOW BUT WHAT YOU DO that matters. I ve made and lost money in forex but when I started asking myself why I wasn't profitable consistently I realized some very important facts.
No one knows where the market is going?(absolutely no one)
If any thing is a fact it is this one.You may have an idea of where the market is headed but its just a probability.The 5% know this.Not everyone trades for the same reason.You do it for profit,others do it to hedge and some do it to influence/stabilize prices etc.
Retail traders have an advantage.
Did you know that it is not easy for an institutional investor to exit positions? Institutional investors build positions over time.If they aggressively exit positions they may influence others to do the same and cause a panic, thus rendering some of their positions worthless. As a retail trader you can go long short entering and exiting the market with ease thus getting the price you see.
Emotions & Biases will kill your account.
Human beings are emotional.We cant escape that.We need to remove the emotional component from our trading.One big contributor to emotional trading is Bias. For example If you 'feel' the dollar should be trading at a particular level you may not want to trade against your bias.While you sit there procrastinating, the 5% are entering positions and making profits. I know a trader who was long the euro from 1.49 this year all the way to 1.60 without taking profits. At 1.50 he was adding longs.He is still waiting.....In the meantime the 5% have been exploiting EUR/USD's 2000 pip range going long and short and taking their profits.We all know the dollar is not worth its salt.Look at the fundamentals theres nothing good coming out of there.But the big money influences the price and big money has vested interests.You need to follow the big money.The only way for small traders like you and me to do that is through technicals.
Technicals Rule
Fundamental traders will have my head for this.I believe in technicals because they reflect what the big money is doing and they dont lie.Dont get me wrong I always track fundamental issues.Dont do it at your own peril! Technicals completely eliminate emotional trading.Thats why I love em'. After a while it becomes impossible to be biased you just follow the movements.But thats just me....
Please post any comments you may have on this topic

This post has been edited by dave4x: Sep 19 2008, 12:43

I'm agree. You try to find a trade that has the best probability to succeed.


Yes and an institutional investor may have a regulation to follow.



Just follow the movements... It's quite simple

We all have our poison and the main difference between good and bad traders is that the good ones have found their weaknesses and worked on them with time and effort. whether it is overly complicating our trading system or bad risk management, (very good section on risk and position sizing on this site) over trading or self destructive thinking, it is the inability to put enough time and effort into fixing these problems that is the ultimate downfall of many traders.

My personal belief is that you CAN be a systems trader, a technical or a fundamental trader, a discretionary trader or a complete mix of all these things with the right money management, risk management, trading probabilities correctly yet you could still fail at this game.

This is not a negative post it would be my sincere wish that everyone who reads this merely looks at the odds against them and knows that with persistence, the right trading tools and mentality, and above all the honesty to self evaluate yourself and work on your trading flaws you can most surely succeed as one of that small 5%.