What Percentage of New Traders Fail? (Part 1)

I have been interested in the title topic ever since I started trading. I recently stumbled upon an academic paper that analyzed futures day trading in Brazil. The results were fascinating.

What follows are excerpts from a forum discussion I found on a Forex website back in 2013. Forum content is never scientific and always open to scrutiny. Do your own due diligence and buyer beware.

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Here is the initial post:

• Post #1, Wpr:

     > Often, I hear mentionined how 95% – 99% of all new
     > traders fail. This type of misinformed information
     > in my opinion is very misleading and damaging to the
     > psyche of those trying to learn how to trade forex.
     >
     > First the facts.
     >
     > Brokers inside the USA are now required by the CFTC
     > to release the percentage profitability rates along
     > with the number of active traders. While the
     > following numbers focus on USA, traders worldwide
     > should be the same.
     >
     > The true percentage of profitable traders
     > • Oanda has ~50,000 active traders
     > • IBFX has 18,579 active traders
     > • FXCM has 15,023 active traders
     > • Gain has 11,344 active traders
     > • GFT has 10,358 active traders
     >
     > 51% of Oanda traders were profitable in Q3. Others
     > are far lower: GFT at 33% and the rest 21% – 29%.
     >
     > These numbers destroy the myth that 95% – 99% of
     > traders are not profitable.
     >
     > Why this matters to those trying to learn to trade:
     >
     > If you are told ahead of time that your odds of
     > success are extremely rare (knowing that you are
     > competing against some of the brightest minds in
     > the world), your chances of success are greatly
     > diminished compared to if you believed that others
     > have succeeded and that you can too.
     >
     > You can become a profitable trader. A large
     > percentage of others have proven it and are doing
     > it on a quarterly basis. Believe in yourself:
     > many before you have done this and you can too.
     >
     > Collectively, let’s change the consciousness to a
     > positive light enabling more to succeed.
     >
     > Your thoughts and opinions are welcomed friends.

• Post #2, Fnuts:

     > For starters, what metrics do these brokers use to
     > rate profitability? What specs? What accounts? Mere
     > % is not going to convince anyone here. And
     > profitable forex trading takes time and a lot of
     > effort on the part of a trader, it’s not slam dunk as
     > you make it sound..
     >
     > Either way, seeing how brokers tend to fudge details
     > and have been doing so for some time now, not going
     > to trust any % cruncher the brokers may have set up…

• Post #3, XTr

     > Were Q1, Q2, and Q4 profitable?
     >
     > 50% is a breakeven number. You are also getting this
     > info from the party itself not an outside source.
     >
     > Maybe not 95%, but yes 90% of new FX traders FAIL.
     >
     > FACTS:
     >
     > 1. Not enough experience trading live money
     > 2. Undercapitalization
     > 3. Over-leveraging
     > 4. Overtrading
     > 5. Shady broker practices
     > 6. Insufficient understanding of markets let alone FX
     > 7. No detachment from emotion and money
     >
     > Ask any experienced trader on this forum if they have
     > HONESTLY ever blown up an early account and the answer,
     > nine times out of 10, will be YES.
     >
     > What makes you think that these “profitable traders”
     > aren’t just dumping more and more money into their
     > accounts after losing?

To be continued…