Topic: Who are the 1% of traders who earn with trading? - page 5. (Read 1038 times)

You also reefer to basically 3 things: 1) luck which we cannot control (even international banks can get unlucky), 2) skills & experience which can be learned, 3) initial capital - which doesn't mean anything actually. Like with Takashi Kotegawa who started with $13,600 and ended up with $1.65 million in 4 years (4Y CAGR 232%), and $153 millions 4 more years later (4Y CAGR 210%), having 8Y CAGR of 221%. The guy didn't start as a whale, nor he read anything different from what we all can just google and read too.




Yes, but how do you decide which side will be profitable? Again - experience & knowledge I think cannot be the only factor here, since it's ready available to anyone around the world.




Isn't that also about skills & experience which can be learned by you, me, or anyone else reading this? Besides, it's not only about crypto trading, but trading overall - equities, FX, crypto, derivatives, just anything.




Yes, loving what you do and being able to monetize it is probably the best thing in anyone's life. Yet, as those above researches have shown - some people continue trading for many many many years, but never earn anything They do love what they do, they do accumulate years of experience, they do learn a lot of things, but... still cannot earn anything.

Guys who have been asking for sources. I did post links to several research papers but it was removed by moderator. I assume it's not allowed here, so I will post just the references to research papers - feel free to google them all you can find them all.

The North American Securities Administration Association (1999): Report of the Day Trading Group
Barber, Lee, Odean (2010): Do Day Traders Rationally Learn About Their Ability?
Odean (1998): Volume, volatility, price, and profit when all traders are above average
Barber, & Odean (2000): Trading is hazardous to your wealth: The common stock investment performance of individual investors
Kumar: Who Gambles In The Stock Market?
Barber, Odean (2001): Boys will be boys: Gender, overconfidence, and common stock investment
Calvet, L. E., Campbell, J., & Sodini P. (2009). Fight or flight? Portfolio rebalancing by individual investors.
Barber, B. M., Lee, Y., Liu, Y., & Odean, T. (2009). Just how much do individual investors lose by trading?
Gao, X., & Lin, T. (2011). Do individual investors trade stocks as gambling? Evidence from repeated natural experiments




You might be missing that most of the times you lose to the exchange, not necessarily to other traders. Especially with the ones who allow you to use high leverage and always liquidate you (sometimes by manipulating price). That's not really same with "trading success".





Yes, for sure those are not simple, but they can be taught, right? Just a simple ratio of expected TP-to-SL of 3-to-1 would save a lot of people, but of course there are way more advanced methods. Still even the ones who mastered it, don't necessarily earn profits (with consideration of all fees, taxes, inflation, real rates, etc.)



True and no I think. You can skip most (not all) the hard-way learning path by learning from others what works and what doesn't, what worked before and what won't in the future. Just like with basics - yes, you can directly deposit $100 and start learning and after a year personally find out that there's head & shoulders pattern, there's overconfidence bias, etc. Or you can read it, learn it, see it, and you already skipped that 1 year of practice.




I don't think its about technical & fundamental analysis (I don't refer to pure crypto trading, but trading overall). Based on the proven EMH (Efficient Market Hypothesis) - technical analysis will not work, fundamental analysis might work but very very rarely under specific market circumstances.




Also possible, but if that is the case - knowledge can be learned. So the retail trader would accumulate enough knowledge and become a whale him/her/self. Thus others seeing that would repeat that many times and in large enough sample data, there will be too many whales who are continually earning good profits systematically (!) and persistently (!). But that's not the case at all... One among many other examples is LTCM (https://en.wikipedia.org/wiki/Long-Term_Capital_Management) - they got most money at a time, most talented people, they were definitely the whales but... 





Then here you refer to initial capital which you can waste on learning path. Then why wouldn't you start with $100 initial cap, and trade $0.01 deal sizes? Like this you get 10,000 chances to see how good you mastered trading.

I understand this part.
Why? It becomes boring as time goes by.
Even if you are making profits, you start to wonder if that is it. Are you stuck with that routine?
This is also the reason why I don't do it every day. I felt it before and I am still feeling it now just 1 hour looking at the movements in one exchange.

I really envy those who can still continue up until now. That means they really love what they are doing.

In my opinion, the 1% traders that remain profitable are traders  who are passionate about trading crypto, who always learn from their previous mistake, control their emotions, never panic sell, have a reasonable stop loss strategy, never follow hype and know how to select good coins.

Is that 1% a little bit too low for us to presume when it comes to those successful traders? Yes, whales are on the main list since they do have always the advantage in the market
due to fund capacity or capability.

I do still believe that there were still few retail traders are sustainable into this market with just going with the flow and this is where experience and skills will
vary into each trader.

Profitability will depend on how you do deal with the market and just make it sure that you would make yourself included into those profitable side.

It's not really difficult to know who they are, a portion of those traders are whales, people that can move the market on their own and that can perform moves that the average person cannot do, others are simply lucky and despite their lack of knowledge they have obtained profits simply out of luck, and the remaining group consists of the few traders that actually take the time to understand the markets and think about it and that develop a strategy that gives them profits over the long term and then follow that strategy no matter what.

That 1% might possibly be the whales who holds big volume enough for the to manipulate the price. People can really profit from trading since the track is just based on human behaviour. And behaviour can easily be studied since there is pattern that can be used to determine the next price.

Becoming good on trading takes a lot of experience, a lot of loss because experience is costly. Doing trading for longer period of time means you have finally get the whole idea of trading, but because along the way there is a big lost happening only those who can sustain remain.

Maybe. However, there are many traders who are experienced enough to get an idea of ​​the next movement in the market. And I think they are also the 1% traders who can earn by trading. Whale traders dominate the market and make a profit through their huge funds. And the retailer who makes a profit from the market earns by trading using his knowledge.

So according to those small experienced traders are also among these 1% successful traders.

I don't know who the 1% successful traders mean...
everyone ever profits and losses in trading but there is a hidden group *maybe whales which are compact selling when it must to selling and buying when it must to buying. *maybe the whale's group which is 1% successful in the trade

Pretty good statistics and data sharing are reported. Although the rate of traders who earned a net profit margin in the long-term period is too low for me, I do not think that this ratio will be too high under any circumstances. On the other hand, in response to your question, it is possible to say that patient investors who perform technical and fundamental analysis in a correct, successful and definite way include that percentage. Of course, there will be traders who will win without any detailed analysis, although rarely, but I don't think the number of such people will exceed the number of fingers of a hand. That is why the answer to your question will be the traders who make accurate technical-fundamental analysis succinctly.

From where did you take these statistics? I wouldn't say that only 1% of traders make money but without doubt, the actual number shouldn't be higher than 10 percent. Some people like me would say that trading is unprofitable, at least any statistics would prove that only a small percentage of traders actually make profit but on another hand, remember that if someone profits, it's because you lose! So, in this case it means that trading is very, very profitable if you belong to those number of people who profit from it because a lot of people lose a lot of money and a small number of people get them.

How I see that is both institutional and retail traders / investors usually have:
1) luck: you cannot control it
2) skills (incl. strategies, etc.): you can learn it easily or hire someone who already got this skill
3) insights: usually illegal, but can make you super rich

and

4) instruments

With all the tech-hype, people might have misunderstood that "tech instruments" (fancier charts, AI, neural networks, prediction models, automatic SL/TP & risk management, etc.) will help them with profitability... Yet, I think (doesn't mean true or correct, that's why we are having discussion ), it's about "financial instruments". That can imply access to the top VC deal directly (you as regular person cannot get in), ability to trade various types of swaps (you cannot also mostly), ability to invest in RSAs (revenue sharing agreements) / infrastructure projects (hard to default, provide stable and ultra-long term return), exotic derivatives, different types of structured products, and many many others. All those fancy software can be googled and bought fairly quickly, but for financial instruments - you just cannot

I also agree with you. Yet with psychology & strategy & money management - there are many books, researches on this and now softwares that help with that. But people still keep loosing

Well yes, in short-term the number can be very large, but thats not representative of actual situation. I think there was a study also that had proven that a monkey (literally) can trade better than Wall Street trader, sometimes even outperforming him. But I doubt you would call a monkey to be a successful trader To be in that 1.6% a trader needs to have persistent positive stable, net of all fees and expenses, returns. Risk management + money management is fairly simple and nowadays can be well automated, but even those people loose money. And hedge funds and instituions also actually - not all of them is able to earn decent returns (when they earn).




I don't really agree with all. Yes, you said correctly that the more money you have - the more money you can make (not always though, look at Lehman Brothers among others), and those whales, etc. as I showed above actually underperformed retail traders.

Margin, futures, options, structured products, derivatives - actually very good source of alpha. I personally know people who got very rich by trading options. Yet not too many people can really understand behind the simple "call is a right to buy asset in the future". There are so much more into that. That's why there's less competition in that area I guess.

As for long-term in trading - very right. Can never get rich overnight with anything.

1.6% of the winning traders are whales and whale followers.  Yes, im not kidding, this is true of any financial market.  That is why there is a very good saying in the financial markets, that the more money people have, the richer they are.

Margin trading, Futures, BO are all gambling;  The market and rich institutions are the bookmakers so your chances of winning are very low.
- I just want to tell the truth and hope the new traders here must be very focused when trading and never be subjective.  Getting rich by trading is a long project and you have to sacrifice a lot to become professional.  Trust me guys

That is really interesting.
Do you have a link or study to backup these numbers?

But I do agree with this point - the main reason why so many people eventually lose.



Yes, I totally agree. So what in your opinion makes those 1.6% different? - it can be either institutionals or retail traders like everyone here.



Lol, yeah good point - as there was a quote in Chinese, about you don't need to join a battle to win - wait and see how your enemies kill each other and themselves




But skills can be learned, aren't they? I know that many people are too stupid or too lazy to actually sit and learn something, but I think it's greater than 1.6% of those who actually learned / mastered the skill, but still keep losing?



What you refer to is the small sample of history for cryptos. And you might be correct with the current market - it's too new, too small, thus too many arbitrage opportunities (like few years ago even some technical analysis would make you decent money - like with stocks many years ago). But once you increase the sample, more people enter the market, more people try new / old strategies - the numbers will average themselves to 1-2% same with other markets, be it FOREX, stocks or other assets.




Yeah valid point also, but just "keep trying and you will succeed" might not be very feasible for everyone due to personal capital limitations. I believe if you have $1m ready to go wasted, and you keep trying with $100 only, eventually you will master the skill (if it's about that). But those who succeed rarely waste so much money on just trial-and-error experiments. There must bee some other factor?




You refer to market timing strategies - they are well documented also and well researched. No need to invent new things there, just study quant approaches to market timing and you will get what you aim for with "right entry" points. But that's also not for everyone I guess, and not that sustainable. Once every guy around the corner knows how to time the market based on advanced strategies, - it will stop working.




Once you find the amazing winning strategy - there's short period of time you have to make money, because advanced funds track inconsistencies and other funds, and can analyze what you do differently and quickly replicate your strategy. So eventually this strategy will be known to everyone and will stop making money.



That's the common misconception about traders. We are all special and extraordinary in own ways. What can be done by one human - can be done by another human also with enough patience, time and efforts. I believe it's not just about skills or being extraordinary.

Not at all actually. All the big guys and whales are just regular humans like all of us - in fact recently they OUTPERFORM the common retain traders You can see the data below:

they were definitely extraordinary people. It is even possible that a token maker or a person who is able to launch his own token is able to make all long-term tax payments in his trading. And I feel that maybe I'm not included in that part because I'm still a very beginner in trading.

Probably people who have successful or profitable trading strategies. Better to develop or use something that works consistently for you. If you find a strategy that works for you most time , you automatically become part of the few successful traders. I think they are few people who are consistently profitable in trading but am not really sure about the percentage