The average trader fails at trading...better than 80%

I just read an older post from Dr. Brett Steenbarger's blog site concerning the failure rate of average traders.

It boils down to what I have said all along, that a high number of traders fail. I have been using 93% as my benchmark, perhaps that may be a little high. It is nice to see that there is actually a study that did some decent number crunching to confirm this.

So, in Dr. Steenbarger's post he poses the question "So what keeps new traders coming to an arena in which far fewer than 20% of participants are profitable after costs?"

In answer he suggests that "...individual day traders may place too much confidence in their ability to read market patterns out of the gate."

OK. I consider myself confident enough in my ability to learn how to read and understand chart patterns, market forces and a host of other market variables in order to create an edge in my trading to end up producing profits to justify my time spent in this learning process. That is probably the key, spending the time studying. I did start out a little over confident and had a number of wake up trades, both large winners and large losers, to realize that it was not as easy as it looked.

I would suppose that I am a little farther than "out of the gate" now and, seeing that I have been trading for well over a year and have not blown my account up, I suppose I have demonstrated my ability to manage risk where I can be fairly confident in not blowing it up in future. I have have not firmly set myself in profit mode as I recognize that I still need some tweaking in my trade management. Once I can get things down and I see some consistency, which is slowly getting there now, then I will start to ramp things up and review my capitalization levels.

I know that I have gone off half cocked a few times in my blog about being there already, when I sit back and ponder my situation I usually see the light and pull my horns in a bit. Some of my previous plans would have worked out nicely but did not suit my style. They may be tweaked in future once I have a consistent trading base to work from.

Jeff.