Success Rate For Day Traders Estimated at 10% – Don’t Put Yourself at the Mercy of These Odds:
The closest estimates confirm that around 90% of short-term traders fail, which puts the success rate around 10%. Personally, this immediately gets me thinking: “why is the success rate so low?” My initial reaction is because most novices treat trading like gambling, attempt to get-rich-quick, avoid structure in their approach, constantly give into impulses, and have unrealistic expectations. In essence, consistent trading success boils down to developing the proper mindset. Nine out of ten traders, however, fail to adapt.
Society as a whole has made trading out to be a massive gamble where 10% of people get lucky. But that’s not how consistent profitability in the market is achieved. The 10% of traders that succeed have done it through growth and self-transformation. Consequently, the group you end up in is really your choice. It’s not left up to sheer luck or chance. If you make a decision to grow, develop, and refine the two core components of trading success, then you’ll be in the 10%. But if you resist or refuse to change, then you’ll be in the 90%. By focusing on the right things, you don’t have to put yourself at the mercy of these terrible odds.
Biggest Mistake New Traders Make – Focusing on “Foolproof Systems” and “Hot Stock Picks”:
Typically when people decide to start trading, they perform an online search to figure out where to get started. Unfortunately, this is where the vast majority of people get sucked into the false promises, profit proclamations, and clever marketing tactics of various newsletters and programs. This is where naive traders often get trapped. They fall for the seemingly easy route. An approach where they can just be spoon-fed hot picks and capture explosive profits without any effort. This sounds amazing in theory, but the only problem is that it doesn’t work. All it does is make the path to consistent trading success harder and longer. Trust me, I’ve been there.
These programs strongly market their explosive returns, making the process of making money in the market seem so easy. In addition to that, people simply don’t buy things that sound hard. As a result, these programs offering short-cuts to trading success are extremely popular. After subscribing, however, people quickly find out that the program’s trading profits are distorted and they can’t come close to achieving that same level of success. In fact, subscribers usually don’t have any profits to speak of at all. They get deceived by the marketing promises, and in the process, give up personal responsibility and control over their trading operations.
I’m not saying that these day and swing trading programs are all bad because some do offer a solid amount of educational content in the form of watch lists, video lessons, webinars, etc. The main issue is that subscribers become overly dependent on buy and sell alerts. They’re not really concerned about educating themselves, developing their skills, and becoming self-sufficient. Over 75% of subscribers to programs like this probably don’t even take the time to watch the video lessons. In the end, the mix of advertising gimmicks from these services combined with human nature of wanting the easiest path, leads to a massive amount of disastrous trading results.
It’s fine to learn from and copy pieces of strategies and systems from various programs, but blindly mirroring them is dangerous.
1 Undeniable Change That Has to Be Made – Align Your Mindset With Market Characteristics:
90% of traders fight the market, while the other 10% are in harmony with it – guess which ones fail and which ones succeed. The reality is that you have certain characteristics and the market has certain characteristics. There’s no doubt that many of the characteristics that you currently have are in conflict with the market, resulting in emotional and financial pain. Since you can’t control the market then that means it’s you that has to change. The ball is in your court to accept the realities of the market and align with them.
To put it simply, the nature of the market environment is dynamic, uncertain, limitless, and impersonal. These are the characteristics that you must adapt your mindset with if you want your trading operations to be empowering and enjoyable rather than disempowering and afflictive. The potential emotional ramifications of these market characteristics are innumerable, which is why it’s so critical to evolve into a more mindful, balanced, calm, patient, and objective trader. Without the appropriate structure in place in the form of the proper mindset (attitudes, beliefs, perspectives, etc.) and a validated system (strategies, trade plans, rules, etc.), then the market will ruthlessly dictate your results. The message is clear: take back your control with the proper mental and tactical frameworks.
Make the Genuine Connection Between Your Mindset and Your Trading Results:
Most traders think they know what determines success: the ability to read candlestick charts, understand financial statements, make accurate predictions, and the list goes on-and-on. But what’s typically neglected or left off the list entirely is mindset. Even though it’s one of the main pillars of consistent success in the market, it gets ignored. This is a major reason why the success rate in trading is so disturbingly low. Leaving out one of the main ingredients for success is an obvious recipe for disaster. Even the best market analysts consistently fall victim to self-sabotaging and destructive behaviors, and it all stems from an inadequate mindset.
It all starts with your thoughts: “the market is scary”, “this environment is confusing”, or “my prediction better not be wrong”. Then you have emotions paired with those thoughts: anxiety, doubt, overwhelm, fear, etc. Then those emotions lead to impulsive, random, and irrational behaviors. Those behaviors lead to inconsistent and negative results. This is the ineffective pattern losing traders find themselves in, perpetually blaming outside forces for their struggles. Successful traders, on the other hand, take complete responsibility and control by developing a mental framework that actually aligns with market characteristics. They’re relaxed, confident, and objective, which leads to rational, structured, and controlled actions, therefore producing consistent and positive results.
The shocking reality is that most traders try to attack the market each day with their current attitudes, beliefs, and perspectives. But their current mindset isn’t compatible with long-term, consistent trading success. They must evolve to achieve the desired result.
The Day Trading Success Rate is So Low For One Main Reason – Ineffective Mindsets:
For short-term day and swing traders, the market can be an incredible feedback mechanism. You have thoughts and emotions, make decisions based off those thoughts and emotions, and receive feedback from the market quickly with a winning or losing trade. But don’t solely focus on the end result for feedback (profits/losses). Make sure you take inventory of your thoughts and emotions while actively in trades as well. Any pain or suffering is a signal that your mindset is out of alignment with market characteristics.
Sadly, society has taught us how to ineffectively deal with mistakes, problems, and failure. We’ve mainly learned how to suppress and deny instead of accept and grow. This approach, however, handcuffs us from developing into great traders, or anything else we want to be for that matter. If we choose to change our perspective on loss and failure, it can teach us extremely valuable lessons. Failures aren’t circumstances that we should allow to defeat us. They’re challenges and opportunities for continuous self-improvement. The market environment is the ultimate feedback mechanism for traders. Gain conscious awareness and listen for what it’s trying to tell you.
The market is a mirror that reflects your own perspectives and behaviors. Your emotions/behaviors become your results/feedback.
Learn More in the Trading Success Framework Course
Written by Matt Thomas (@MattThomasTP)
- What is the Cheapest Way to Trade Stocks? Avoid Learning the Hard Way
- Can People Make Money Day Trading? It Starts With Self-Awareness
- What is Day Trading Psychology? The Foundation of Day Trading Success
- Top 20 Quotes From The Disciplined Trader By Mark Douglas
- What is Trading Composure? Acquire a Heightened Level of Trading Insight
I didn’t know the day trading success rate was so low. And in my opinion, it’s because of lack of knowledge. More importantly, most day traders don’t implement strong money management rules, such as stop-loss and position sizing to ensure they minimize their risk and maximize profits. It’s quite a sad story.