How Many Traders Are Profitable?

A survey of day traders in Brazil's equities futures market, the world's third-largest, discovered that 97% of those who traded for more than 300 days lost money. According to the study, "only 1.1% gained more than the Brazilian minimum wage, and only 0.5% earned more than the initial wage of a bank teller — all with great risk."

Over a 12-month period, eToro discovered that 80% of its consumers lost money.

A study of Taiwanese day traders from 1992 to 2006 (during the dotcom era) found that 74% of all day trading activity is attributed to traders with no track record of success, and 97% of day traders lose money net of trading costs on any given day.

Risk management: Always know your risk-taking capacity and get into the platform accordingly. Trading with money more than a trader can afford to lose is the primary reason why they fail to make profits. Analyzing the ability with the available resources to manage or minimize the risk is the key to grow as a trader.

Technical analysis: The study of charts and patterns is known as technical analysis, but it can also involve parts of behavioral economics and risk management. There are various techniques and methods to analyze the trading charts and patterns that can be mastered through books, online courses, and regular practice.

Discipline: Trading requires a disciplined approach to consistently adhere to a well-defined strategy, manage risk effectively, follow a trading plan, and avoid making impulsive decisions that can lead to losses.

Emotional control: Emotions like fear and greed can cloud judgment and result in irrational decisions. Successful traders master emotional control, avoiding impulsive actions and making trading decisions based on thorough analysis rather than emotions.

Mindset adjustments: Maintaining a flexible mindset is crucial because market conditions can change rapidly. Traders should be willing to adapt their strategies in response to evolving market dynamics, and a growth mindset helps them learn from losses and incorporate new information into their approach.

Confidence: Confidence is important, but it should be balanced with a realistic understanding of a strategy's limitations. Traders should have faith in their chosen approach while recognizing that no strategy is foolproof.

Adaptability: Given the unpredictable nature of financial markets, successful traders excel by being adaptable, ready to adjust their strategies as market conditions change, and being open to switching strategies when necessary.

Continuous learning: The financial markets are constantly evolving. Traders who commit to ongoing education and stay informed about market news and trends are better equipped to make informed decisions and adapt to changing market environments.

Mental resilience: Trading can be emotionally challenging, particularly during losing streaks. Mental resilience is crucial for traders to bounce back from losses, maintain focus on their long-term goals, and avoid emotional reactions that can lead to further losses.

Self-awareness: Understanding your strengths and weaknesses as a trader is essential. Developing self-awareness enables you to leverage your strengths effectively and work on improving areas of weakness, ultimately enhancing your overall trading performance.

Continuous learning: Continuous education is the bedrock of successful trading. Staying up-to-date with market developments, economic indicators, and new trading strategies is vital. Markets evolve, and what worked yesterday may not work tomorrow.

Adaptation to market trends: Being aware of current market trends and news is essential. Traders who can interpret and react to these trends have an edge. Markets can shift swiftly, and those who adapt quickly are more likely to profit.

Psychological preparedness: Education isn't just about numbers; it's also about understanding the psychology of trading. Knowing how emotions can impact decisions and learning strategies to manage them is invaluable.