Why Most Traders Lose Money – 24 Surprising Statistics

“95% of all traders fail” is the most commonly used trading-related statistics on the Internet. However, there is no research paper that will prove this number correctly. Research suggests that the actual numbers are much higher and much higher. In the following article, we present 24 extremely astounding statistical economies scientists discovered by analyzing actual broker data and trader performance. It explains very well why most traders lose money.

1. 80% of traders throughout the day quit within the first two years. ¹
2. Nearly 40% of all day traders trade for only a month. Within three years, only 13% have continued their day-trip trade. Five years later, only 7% remains. ¹
3. Traders sell winners at a rate of 50% higher than the losers. 60% of sales are winners and 40% of sales are losers.²
4. The average individual investor is below the market index of 1.5% per year. Active traders are short of 6.5% per year. ³
5. Day traders with strong performances in the past will continue to earn strong returns in the future. However, only about 1% of daily traders can earn net profits on the fee. ¹
6. Traders with a negative track record of up to 10 years continue to trade. This even suggests that day traders continue trading when they receive a negative signal about their capabilities. ¹
7. Profitable day traders make up a small percentage of all traders. The average year is 1.6%. However, these day traders are very active, accounting for 12% of all day trading activities. ¹
8. Of all traders, profitable traders trade more than non-employed day traders. ¹
   
9. Poor people tend to spend most of their income on lottery purchases, and lottery demand increases with declining income. ⁴
10. Investors with a large difference between existing economic conditions and aspiration levels hold high-risk stocks in their portfolios. ⁴
11. Men exchange more than women. Unmarried men trade more than married men. ⁵
12. Poor young men who live in urban areas and belong to certain minority groups are investing more in stocks with lottery-type features. ⁵
13. Within each income group, gamblers reduce the performance of non-gamblers. ⁴
14. Investors tend to sell winning investments while maintaining lost investments. ⁶
15. When lottery tickets were introduced in April 2002, trading in Taiwan fell by about 25%. ⁷
16. Individual investors’ trading will decline during periods of unusually large lottery jackpots. ⁸
17. Investors are more likely to buy back stocks that were previously sold for profit than those previously sold for losses. ⁹
18. Increased search frequency [in a specific instrument] Predict higher returns over the next two weeks. ¹⁰
19. Individual investors trade more aggressively when the latest deal is successful.¹¹
20. Traders do not learn about trading. “Trades to learn” are less reasonable or profitable than playing roulette to learn for an individual investor.¹
21. The average day trader loses money at a significant margin after adjusting for trading costs.
22. [In Taiwan] Individual investors’ losses amount to around 2% of GDP.
23. Investors are overweight in the industry they are employed.
24. Traders with high IQ tend to hold more mutual funds and more stocks. Therefore, we will benefit more from the effects of diversification.

Conclusion: It’s no surprise anymore why most traders lose their money

After examining these 24 statistics, it is very clear to know why traders fail. In many cases, trading decisions are based not on sound research, tested trading methods, or their trading journals, but on emotions, the need for entertainment, and the hope of quickly creating wealth.

What traders always forget is that trading is a profession and requires skills that need to be developed over the years. Therefore, be aware of your trading decisions and views on trading. Don’t expect to become a billionaire by the end of the year. However, remember the possibility of online trading.

We built it in trade Edgewonk Trading Journal It is a trading tool that allows traders to track and analyze trades to improve trading performance. Trading Journals are the perfect way to become a professional trader and start taking trading seriously.

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– ¹Barber, Lee, Odean (2010): Do day traders learn reasonably about their abilities?
– ²Odean (1998): Volume, volatility, price, profit if all traders are above average
– ³Barber, & Odean (2000): Trading is dangerous to your wealth: Common Equity Investment Performance of Individual Investments
– ⁴ Kumar: Who is the stock market gambling?
– ⁵ Barber, Odean (2001): Boys become boys: Gender, overconfidence, common stock investment
– ⁶Calvet, Le, Campbell, J. , and Sodini, P. (2009). Fighting or flying? Rebalance of portfolios by individual investors.
–⁷Barber, B.M., Lee, Y., Liu, Y. , &Odean, T. (2009). How much will individual investors be lost through trading?
– ⁸Gao, X. , and Lin, T. (2011). Do individual investors trade stocks for gambling? Evidence from repeated natural experiments
– ⁹Strahilevitz, M., Odean, T. , and Barber, B. (2011). Once burned, then twice shy: how naive learning, counterfactuals, regrets affect previous SOLS repurchases.
– ¹⁰Da, Z., Engelberg, J. , and Gao, P. (2011). Seeking attention
– ¹¹De, S., Gondhi, Nr & Pochiraju, B. (2010). Is signs more important than size? Investigating the source of investor overconfidence