Topic: Who are the 1% of traders who earn with trading? - page 3. (Read 1034 times)

There are some people who have been trading for decades, and there are some people who literally do this as a business outside of crypto as well as doing it in crypto. I have a friend who is in finance world, he was in finance world before he met crypto as well and he was earning a decent amount of money, it wasn't insanely high, but it was a pretty decent and a good income, more than double what I am earning right now.

Three years ago he got involved, got a bit of help from me even though not much, and after that he got into crypto and technical analysis and things like that. He got into crypto at around 10k back in the day and had 7 bitcoins, now bitcoin is over 20k and he has over 50 bitcoins. Dude was just good, he didn't became like this by studying after he met with crypto, he was already like this for 2 decades and just used that info on crypto.

I think the 1%(or whatever percentage) should applied to traders who make consistent profits betting on the price of crypto... Or people with strategies that can be overall profitable when repeated multiple times.

Not difficult to learn, but hard to implement in reality. Typical example would be (I don't mean you, but the average trader) - you keep $100 for long-term, and have $100 for active trading ("gradually buying dips/lows, and probably selling high"). Then you put the second $100 into something, and price moves not how you expected. You sell (if smart, others will continue to keep - increasing the loss). Then you decide that it's time to re-enter and you are confident about that, so you take $20 from "long-term" because expect to earn $40 - enough to recover "long-term" fund + make money on active investment. Then you lose that also. Then with a strong desire to recover the "long-term" fund, you will take more risky and less reasonable bets thus magnifying your losses and faster depleting the overall fund.




True - not difficult to learn, but requires intelligence to implement correctly.

As for liquidity in the market - it's simply provided by market makers, and exchanges themselves on the coins they want to, that's why in most of the coins there's only minor liquidity. And you are correct - that research wasn't about crypto-trading, as the history of that is too short for now. But it was about all other markets. But I believe as the current crypto-traders are ex-FOREX, ex-stocks, etc. traders numbers won't be too different.




True - if you add time value of money, return will be way worse. However, most of the coins are without any utility or use - simply created for scamming people or for attracting traders. That's why it's gonna be hard to watch how the balance declines when the asset decline from $90 to $50, and you can't even sell that.





Great point! Yes, financial management, risk management are some parts which most of the people forget about and think that simply learning chart patterns will make them rich And the motivation is of course a great part - losses are unavoidable in the market, but being able to keep going despite of that is a valuable personal character.

I think these 1% of the trader are those who have a proper financial management, who knows the difference between their assets and liabilities, who can segregate savings from investment and those who do not afraid to take risk and willing to get rekt but they will move forward and will continue to learn even they failed sometimes, I admit there were times that I don't want to trade anymore I just want to continue working and save it not to invest anymore or trade anymore but then this is just a part of the process that I need to survive.

There is time value of money but if the coin is a well supported coin with good concept and utility there is no need to sell @$90 or $50. The best thing to do in this knd of the situation is to leave the investment and start a new one at the $50 price if have enough capital but if capital is an issue is better to sell @$90.

Its not that difficult to learn but it would really require some time for you to take grasp even on the most basic or simplest idea of it.You wont really be able to do this stuff if you dont have the slightest idea
on how its done.

I dont believe on that 1% traders are successful because we wont be seeing soo much liquidity into this market on daily basis if there are lots who do losses up in the market.

This might be only applicable on other markets when it comes to chances but not into this market.There are lots who do make money and of course loses are much more in quantity than to those
who do end up on making profits.

Important thing is that you do sustain yourself into this market in utilizing price movement for your profit making opportunity.

I would simply invest the $100 long-term and forget about it... then use additional fund held in stablecoin for gradually buying dips/lows, and probably selling high. This method usually turns out profitable especially on established crypto like Bitcoin... And it's not that difficult to learn.

That's not the best decision either I think. It's like you invested @ $100, then it turns to $90, you want to keep waiting, then it turns to $80 - you wait, $70, $60, ... and @ $50 (for example) your position gets liquidated for instance. But you could sell @ $90 and keep the cash or invest elsewhere. Plus, there's time value of money here too.

As I mentioned somewhere here earlier a joke that "every bad trade ends up being a long-term investment".

The only way to kbow you make a reasonable patient is when you wait till the market bullish is back and you are not selling at lost price but selling off quick to invest elsewhere is a habit of impatient and the 90% of traders with no sufficient portfolio management knowledge that make such decision are among the traders that later quit.
Meanwhile, it better to invest elsewhere using a new capital while you keep previous invest till it green again.

Yes, that's what it is and it because most newbies only read the success story of crypto investors without studying the thing they did before they are successful.

You are very correct, but I believe we are back to the initial point where I mentioned that knowledge can be fairly simply learned. And then there will be psychological biases, which can be eliminated via hedging or algo-trading.




Don't you think it can be also about the instruments which they use? I believe that might play the greatest role in the end.




You touched upon a great point about tools & tech analysis I wanted someone to bring it up, so I could point out that it's not the case With tech analysis it's known that it doesn't work at all (https://en.wikipedia.org/wiki/Efficient-market_hypothesis). But for the tools - that's my favourite point. I believe now as we live in the end of 2020, so many people are falsify believing that technical tools can help to profit from trading... however, my opinion is that it's false due to the currently overhyped "Tech" in every aspect... FinTech, MedTech, EdTech, AdTech, FoodTech, AgroTech, "You Name It"Tech... - just a "Tech" hysteria... But the financial elites and the top traders and investors are able to profit where you, me, and common people like us cannot profit, because they have better Financial Tools, not the Technological Tools. If I give you access to Bloomberg Terminal - you still will lose money if you trade the way you did before, and the things you used to trade. But on the contrary I can give you free Excel package, and allow trading in equity swaps, total return swaps, structured products, infrastructure assets, top VC deals, and you will see how much your returns will improve from there on

Well, there are too many factors to consider if a good trader will remain in the trading field. Perhaps they feel comfortable with their stable income through trading. As I can see here the possible reason are, they had a good experience, they had more time to research for any new update, and most of all, they had tools upon giving technical analysis when you execute in trading. Traders that experienced a massive gain will always repeat what they have done but those who experienced losses, will never come back and think of afraid of losing money.
In trading, there could be a winner or loser, not all become a winner, and not all become a loser. Because that is a kind of competition.

Generally those who have a lot of good experience about trading and are the 1% traders who earn through trading on behalf of large businesses and investors. There are many good skills about crypto market. They are very good at investing in both long term and short term. It is very easy to understand the rise and fall of tokens for profit. They have the opportunity to profit from all kinds of investments. All traders need to calm their minds and observe the trend of trading.

This is very true that huge number of people can't make them happy in trading and they continue. Though without this, it will be difficult for them to understand the situation when it should be done. Some people get triggered for losing money and then they again tried without proper knowledge and lost again. So proper knowledge is needed to be successful in trading.

But how would you know when you are reasonably patient, and when you are just falsely keeping the loosing position would you would better off sell quickly and invest elsewhere?


That's why the first statistic is that "100% of people start trading with the hope of getting rich"




Isn't knowledge when to exit the market is the part of skill / knowledge? While in regard to whales, in the earlier comments here I provided a link to Japanese trader who started same with us but soon ended up trading millions of dollars portfolio - thus from "non-whale" to "top-whale" and that was for stocks... there the "whale" categorization is more strict as opposed to crypto where anyone with $200-500k can be considered as "baby whale".




After checking the links I believe they didn't mention anything what wasn't mentioned by the community members in the current thread - psychology, exit points, systems, strategy, patience, etc. Please correct me if I missed something?




Nope, it refers to traders overall - both institutional and retail. In fact institutional traders also don't earn that crazy lot of mony as commonly believed. Very few of them do in fact - that's survival bias - you know only the success cases. And the psychology element is easily eliminated with algo-trading (I don't mean those "make money easily FOREX/crypto-bots", but professional hedge fund algorythms).





But knowledge can be learned, and "sticking to your trading strategy" element can be automated. In these days, it doesn't take too much knowledge to develop algo-trading bot based on the parameters you want to use - there are solutions even for people with 0 programming experience.




You mentioned great point, but the conclusion is not the same with what I would make Those people who transform their trading knowledge into Advisor EA, bots, courses, signals, groups, etc. - they don't earn from trading though... they earn from those fees people pay them to access these things. That's a common thing actually called "if you cannot earn money with making own business, teach others how to make business" - same with trading, investing, etc. But very few people understand that and thats why keep paying for those people, who call themselves traders and do earn money, but actually their profit source is from what they sell, not from what they trade.




Why people keep asking me for research papers and sources after I provided them several times before in the same thread? But okay, here it is again for everyone's reference:


And I believe you made a great point which nobody made before about "they see wall street type of people getting very rich and they want to do the same but they forget that those people deal in billions and they make very low sums of profit but do it for decades instead of few months". That's very very true!




Well that's why trading and investment are different by definition But nope, the research papers which I quoted above do analyze long-term traders as well. But again - traders, not investors. There's a joke actually "every failed trade becomes long term investment"




Oh, you forget the biggest part of traders - people who need to hedge their risks. That's especially the majority in derivatives and in capital markets (not in crypto yet, I believe). They don't trade for profit, but just to get rid of risks and to lock in desired prices / interest rates / etc. they want to lock in, and they don't intend to make any profit (but they do occasionally sometimes). But yes, these statistics not about them at all, since it's completely different category of entities engaging in those.





Actually if you check the research papers you will see that too many people believe in this and continue to trade while remaining in negative profitability. Because they think that one day their efforts will pay off. But for some people they never do, and we don't know who will be that unlucky person.




I didn't calculate any single number I mentioned here I took them all from research papers which you can see above - those people who conducted their research explain in great details who, how, and when they calculated those stats. And I assumed since it's trading discussion section, here should be a lot of traders, both successful and unsuccessful, and someone could share their useful experiences. Was I wrong?

I am pretty sure that none of the member here in the forum doesn't know who is this 1% traders who got earned a lot with trading.
However, how did you know that it was 80% of the traders gave up their trading activity here anyway? what is your basis anyway for this matter?
Then, you calculated already that 5 years from now only 7%  will remain in trading? Just asking dude.

A successful trader - as lenient as it sounds but it carries a lot of warfare to get to this spotlight. Everyone expects to trade even if they can, but can't operate. One has to have a lot of patience, prudence, and adaptability to trade.1%  of traders are those who overwhelm all obstructions, survive and prolong trading.

Those 1% could be some big investors that throw hundred of thousand dollars into trading. For them, just 5% rise is a good profit and they have been able to consistently trade with this huge money with confidence of making profit particularly on less volatile coin such as bitcoin compare to altcoin. I still do not believe anybody will enter into trading crypto without mindset of making profit. So honestly think 100% of people that trade have intention of making profit. If you wanna trade for fun or for the love of trading chart, Demo account is there for trading  . Unfortunately a lot of people that quilt early are traders that enter with little capital and set so much bogus expectations for themselves so when they try for some weeks and failed, they abandon the project "get rich quickly"

Those numbers are probably based on short-term traders stats and not mid/long-term traders/investors.

Because I know a good number of people that usually look for a project with a decent or above fundamental and instead of trying to trade it they will just buy and hold it for a while and it's more like an investment to them and most of the time it works for them too in the long-term and almost all of them are in positive profit.

That's the issue with short-term trades, you just usually buy whatever suggested or shilled somewhere without having any information on them without even doing any kind of TA on it, and after a while if they go down you just get impatient and sell in a loss and you do the same thing with the next one until you just get lucky and buy something that will go up after you bought it thinking you're getting good at it or you're improving, not knowing at that point it's just pure luck and it's not good sustainable strategy in the long run and it will fail you miserably down the road.

I would love to see these researches honestly. I do not believe that only 1.6% of traders make a profit, I think there must be a lot more people who make a profit from trading. After sharing something like this, it is obviously important to provide the stats data and where you found this information.

If you could provide the information from the research that shows that only 1.6% traders make a profit, I would have to say the reason is probably only 1.6% of traders keep trading with any emotions after a long period, many people trade because they want to get rich, and they see wall street type of people getting very rich and they want to do the same but they forget that those people deal in billions and they make very low sums of profit but do it for decades instead of few months.

To ease this mental and physical stress enabled a lot of traders to transform their strategies to bot in cryptos trading and Expert Advisor EA in forex, spot and indices trading, to automate their trading so as to reduce the stressful nature of trading a lot of them are making profits consistently I believed there are many of this set of traders that isn't capture by the statistics I believed the overall profitable traders should be more 1% IMHO.