Who are the 1% of traders who earn with trading?

[ScamViruS]

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

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.

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[fishbonez11]

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.

[South Park]

There has been many research papers, and the statistics are mostly pretty sad:
•   100% of people start trading with the hope of getting rich
•   80% of all traders quit within the first two years
•   Among all traders, nearly 40% trade for only 1 month
•   Within 3 years, only 13% continue to trade
•   After 5 years, only 7% remain trading
•   The average individual investor underperforms a market index by 1.5% per year
•   Active traders underperform market by 6.5% annually
•   Only 1.6% of traders remain profitable net of fees in the long-run

Who are in your opinion these ∼1% of traders? Why they are able to remain profitable? Are you sure you are one of them, if you include taxes, fees, etc.?

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.

[Oilacris]

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

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.

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.

[posi]

Who are in your opinion these ∼1% of traders? Why they are able to remain profitable? Are you sure you are one of them, if you include taxes, fees, etc.?

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.

[Reid]

There has been many research papers, and the statistics are mostly pretty sad:
•   80% of all traders quit within the first two years

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.

[as.exchange]

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

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.

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.

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

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.

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".

If risk and money management were simple, they wouldn't be losing money. They lose money because they have problems, including risk and money management. It is extremely difficult, it is extremely difficult to balance it all. Not just in the long run. Because many strategies with risk and money management just break down at a distance.

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.)

Everything that you have listed makes only a theoretician out of a trader, not a practice. What's the use of these other people's books, research, when you have neither statistics nor experience?

People lose money because they think they read it, watch it, connect a couple of instruments and that's it, the path to victory. The path to victory will be only in the case of a large and long accumulation of statistics and refinement of the strategy based on historical data, analysis of all your trades, which should be at least 1000. And the one who finds the ideal pattern in all these actions will earn money.

The fact that you read all the books in the world of trading will not make you a trader even by 5%

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.

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.

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.

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

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.

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... 

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.

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.

[as.exchange]

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.

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.

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.

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.

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.

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.

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.

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.

[ScamViruS]

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

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.

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... 

Yeah this is what I know. Retail traders gradually became whale traders at one time. Because the retail traders who can make a profit from market, they make a profit by using their knowledge in the right way. So it is conceivable that these traders can guess at a much deeper market move, so they can take advantage and they express themselves as successful traders.

[bunglor]

I'm not quite sure where did you get those number but I don't think your statistics were right may I ask where did you get those information but if those were right i think those 1% are probably full time traders or probably whales.

[as.exchange]

Yeah this is what I know. Retail traders gradually became whale traders at one time. Because the retail traders who can make a profit from market, they make a profit by using their knowledge in the right way. So it is conceivable that these traders can guess at a much deeper market move, so they can take advantage and they express themselves as successful traders.

Yes, but not all, right? Again, I believe knowledge and skills can be learned by anyone any time with the current internet penetration, google, etc. I saw even some people learning trading from TikTok but having those skills, knowledge, experience, etc. Never guarantees that you will be in top 1%.

[as.exchange]

I'm not quite sure where did you get those number but I don't think your statistics were right may I ask where did you get those information but if those were right i think those 1% are probably full time traders or probably whales.

The numbers are from the collection of research papers which I noted above (see below also for your reference) - you can google them (because when I posted links to them my message was removed by moderators )

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

As for full-time traders and whales you can check the earlier discussion where I explained that it's very weak reason - those people are also humans like both of us, and lose as much as regular people. It's just happens to be that we hear only about success stories, not about failures so much - survivorship bias.

[Ridwan Fauzi]

Where did you get this analysis? I'll be happy if you put the source to convince me that the analysis is trully happen.

I mean, I never got this information because if I got it then I'll have many times before I decide to be full time trader.

I read a trading book and the author just called that trader is a cursed profession and I just thought that it is true because I've felt it.

A trader prediction only have 70% if he really sure about his prediction. They never have 100% a chance to get profit about his prediction. Also, trading is always hard, just a fool people who admitted that earning money in trading is easy.

[Maus0728]

There has been many research papers, and the statistics are mostly pretty sad:
~
Who are in your opinion these ∼1% of traders? Why they are able to remain profitable? Are you sure you are one of them, if you include taxes, fees, etc.?

Would you cite those research papers you've been referring to? Many statistics, especially in trading, often relies only on a small percentage of respondents and never reached a the vast number of whole day traders. Yes, it is accurate that it is only almost 2% whom earns in trading, even I myself still struggles with it despite of being knowledgeable enough in that field. Trading, in overall aspect, is profitable. It really just an intense gambling of risks whether or not you take a point in either buying or selling. And of course, some intermediate knowledge with reading charts as well and searching for news would be a huge aid, yet the most important would be one trader's risk appetite.

Just a little note, there are DAY traders and LONG-TERM traders, whilst there are also STOCK trading, FIAT trading, and CRYPTO trading. Your 'researches' might be accurate on one side, and could be the opposite on the other.

[posi]

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.

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, it is. The strategy I mentioned can be used to trade in other patterns of online trading or investment you mentioned but you can't compare them all to cryptocurrency because crypto is volatile, only traders that have already learn how to maximize their profit over the loss and also seize every opportunity presented by the market can trade crypto.

[Distinctin]

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.

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, it is. The strategy I mentioned can be used to trade in other patterns of online trading or investment you mentioned but you can't compare them all to cryptocurrency because crypto is volatile, only traders that have already learn how to maximize their profit over the loss and also seize every opportunity presented by the market can trade crypto.

In trading, it's good to always seize every opportunity that the crypto market has to offer but expect that not all opportunities will give you profits because sometimes, it's there to give you lessons to learn. If you chose to be more patient and always control your emotions when trading, then you can be those 1% who remain to trade successfully after long years in trading. I guess the reason why some traders don't last in this trading activity because of their thought that trading gives you quick profits and make you a millionaire in just a short period of time which is definitely not true.

[as.exchange]

Where did you get this analysis? I'll be happy if you put the source to convince me that the analysis is trully happen.

I mean, I never got this information because if I got it then I'll have many times before I decide to be full time trader.

I read a trading book and the author just called that trader is a cursed profession and I just thought that it is true because I've felt it.

A trader prediction only have 70% if he really sure about his prediction. They never have 100% a chance to get profit about his prediction. Also, trading is always hard, just a fool people who admitted that earning money in trading is easy.

The sources for the numbers are just above your message.

Would you cite those research papers you've been referring to? Many statistics, especially in trading, often relies only on a small percentage of respondents and never reached a the vast number of whole day traders. Yes, it is accurate that it is only almost 2% whom earns in trading, even I myself still struggles with it despite of being knowledgeable enough in that field. Trading, in overall aspect, is profitable. It really just an intense gambling of risks whether or not you take a point in either buying or selling. And of course, some intermediate knowledge with reading charts as well and searching for news would be a huge aid, yet the most important would be one trader's risk appetite.

Just a little note, there are DAY traders and LONG-TERM traders, whilst there are also STOCK trading, FIAT trading, and CRYPTO trading. Your 'researches' might be accurate on one side, and could be the opposite on the other.

The sources for the numbers are just two messages above. You also forgot to mention SWING traders, ALGO traders, ARBITRAGE traders, BOND traders, COMMODITY traders, DERIVATIVE traders, OPTIONS traders, SHORT-TERM traders, BOT traders, whom else you wanna include?

Since trading is one of the most difficult professions and very long in terms of formation, the issue of learning in percentage is the same as that of successful traders. You can prepare theoretically, but practically hardly. Here psychology is also important, psychotype, approach and so on. This cannot be taught.

It will not work like that, having studied other people's mistakes you will only understand superficially, but the best understanding for a trader comes through his own series of trial and error. This is best stored in the head. That is, your negative experience will push you to find the right solution faster than someone else's. Until you make a mistake yourself, you will not understand. So it will never be possible to analyze other people's mistakes and completely avoid them. All traders have always lost their money at least once. And so it will continue. You have to go through this.

I believe you are correct. But if that's the case that would mean someone could automate all those things and avoid "personal experience" & psychological factors. Yet, algos also don't always produce positive return with consideration to all related expenses.

Yes, it is. The strategy I mentioned can be used to trade in other patterns of online trading or investment you mentioned but you can't compare them all to cryptocurrency because crypto is volatile, only traders that have already learn how to maximize their profit over the loss and also seize every opportunity presented by the market can trade crypto.

Maximizing opportunity to possible loss is fairly easy I think, by just following TP @ 3 and SL @ 1 (3-to-1 ratio) would produce "decent" results and would make sure you don't lose all money too quickly.

In trading, it's good to always seize every opportunity that the crypto market has to offer but expect that not all opportunities will give you profits because sometimes, it's there to give you lessons to learn. If you chose to be more patient and always control your emotions when trading, then you can be those 1% who remain to trade successfully after long years in trading. I guess the reason why some traders don't last in this trading activity because of their thought that trading gives you quick profits and make you a millionaire in just a short period of time which is definitely not true.

In fact if you try to seize every opportunity around you are likely to get distorted and get your capital spread on too many deals which you cannot track well because of natural human limitations. If you try to play statistics by using "law of large numbers" and take every chance with the hope that eventually 51% of opportunities will be profitable and 49% will be not - you will very quickly find out that your capital is not sufficient to try that law in real life.

[pixie85]

•   Within 3 years, only 13% continue to trade
•   After 5 years, only 7% remain trading
•   The average individual investor underperforms a market index by 1.5% per year
•   Active traders underperform market by 6.5% annually

I find this to be true when I think of myself and many people I know.

Only 7% remain after 5 years because trading is exhausting physically and mentally. Most people can't live in stress for years.

People underperform the market because they are impatient. They see it going up and sell when they reach their target but their target often is not the market's target.

[militiariko]

I am not sure where you got your statistics from but more than 50% of traders earn with trading. When we mention trading you need to understand that it involves you and me and everyone in the crypto space; Taking profits and earning from trading has nothing to do with passion but determination, good and perfected trading skill as well as an accurate decision making skill too.

when it involves trading, do not involve emotions. Always do your own research.

[abel1337]

Is this only for the crypto market? I think 1% is too low, I really don't think that only 1% survives trading that earned a profit in the long run. I think those other than the 6.5% active traders are mostly traders who come and go when they see an opportunity and don't actively trade.

Can you provide us some context of this research results on how is this conducted, where does the resulting base, and what kind of platform does this research base?