So in this video, we are going to be going into the commonly quoted statistic that 90% of day traders fail and lose money. What this actually means, How it may be misleading and some of the actual flaws with the statistic and why using this as a justification for you to quit trading is really just you being lazy and making excuses at the end of the day. Folks, there's really no end to the amount of excuses that you can make that stop you from reaching forward and achieving your goals. And of course it is going to be required that you watch the entirety of this video in order for you to completely understand the statistic and what you can do to beat the statistic.

But of course folks, the only thing that I ask of you in return for this video and the countless hours of research that goes into making a video like this is that you hit that ravishing like button. Okay, so to start, the statistic on the number of traders that fail and lose money is different depending on who you ask. Some say it's 80 percent, some say it's 90% and some say it's 95 percent. There are also some that say it's 99 percent.

And the reason for the discrepancy is that people are quoting numbers that are based on a combination of popular opinion, anecdotal evidence, and unreliable studies. Three things that make for horrible statistics. For now, let's just go ahead and settle on the most commonly quoted statistic, which is that ninety percent of day traders ultimately fail should you quit If there's only a 10% chance of succeeding, Well, well, that is a very personal decision. The truth is that this is actually a very consistent level of success when adjusting for all other areas of accomplishment.

That is to say, when attempting to do something new, most people are going to fail. That's just the truth. To prove my point, let's go ahead and look into some other common levels of achievement that people search for. We'll start with income.

So in order to make just one hundred thousand dollars a year in the United States, your odds are less than one in ten. And this of course, isn't even a ton of money. If you live in the San Francisco Bay Area like I do, the poverty line is literally declared at a hundred and seventeen thousand a year for a small family. But obviously based on where you are in the country, this number may or may not be sizable, but your odds of achieving it are still one in ten overall.

But of course, this one in ten statistic doesn't account for things that are in your control because it just simply takes a blanket sample of all Americans. But what? What are some things that are in your control? Well, for example, someone who has a strong work ethic, a lot of discipline, who chose a high paid field, and who has a lot of experience in that field. They are going to have a much higher probability of making over that hundred thousand dollar level. and it's the picture.

Somebody who actually has a plan to get past that income level and all of a sudden the chances grow up dramatically. Your odds of success go up if you try using best practices that actually lead to those results, but getting away from income for a second. Another example of a similar statistic is that ninety percent of people who lose weight eventually regain it. So if 90% of people eventually regain it, maybe you shouldn't diet, maybe you shouldn't exercise.

who cares? The odds are just too stacked against you. And likewise, ninety percent of people who start going to the gym fail and quit within the first three months. Again, ninety percent why even try going to the gym as most people fail to continue doing so. Hey, even 90% of people who set out to learn guitar fail and quit within the first year.

And again. Do you see any patterns here? Anything that takes consistent effort and discipline over the long run to complete is going to have a low success rate because average folks have a hard time sticking to things. Does this mean that you shouldn't do them? Does this mean that you shouldn't strive to be better than the masses? That is really a personal decision. And of course, there's nothing wrong with being average, but the mindset that comes with this logic is quite quite toxic.

If you are using success rates to base your decisions on activities and goals that you partake in, you are very quickly going to X yourself out of everything worth having because anything worth having has a low success rate. So if you quit trading because 90% of traders fail, you're not going to want to play the guitar. You're not going to want to lose weight. You're not going to want to go to the gym.

You're not going to want to make six figures I Can go on with this forever. So please folks, if you're going to quit doing something, please do it for a good reason instead of just saying that the success rate is too low, because at the end of the day, you are the one that is responsible for bringing your success rate up. Since trading is a skill like any other, most people are going to quit before they ever gain any level of expertise. And that leads me to my next point.

Why is it that 90% of traders fail? What is it that actually leads to the statistic? Well, here are some statistics that have been laid out nicely by the fine folks over at Trade Xiety: I'm only going to go through a handful of these, but I'll put the link below for folks who want to read all of them. But number one, the first reason is that 80% of traders quit within two years. And you may say, but Charlie Well, two years. is quite a bit amount of time.

But folks, 40% of traders Yes, yes, 40% of traders quit within the first month the first month. So if your odds are 1 in 10 and 40% of people quit immediately, that means that by simply not quitting in the first month, your odds have just increased substantially. But again, why is it the most people quit in the first month? Well, the biggest reason is that they enter it thinking it's going to be easy and then they realize it's going to be a lot of work. Why is this so shocking to people? Literally, if you enter any industry, you're going to have a hard time doing well in it.

You need to put in work to be successful at it. Trading is like learning a new language. It's going to take time to be fluent in it. But the difference is when you're learning Spanish or Russian or German you're not saying to yourself, oh, I Guess this is just impossible.

But with trading people all of a sudden like oh, I guess you just can't trade. No one can trade because I can't learn to trade. But if you quit in the first month, you are really the only one to blame. A lot of people have this defeatist mentality when it comes to trading and I just don't get it.

And to be fair, if you decide to quit in the first month because you just don't like trading or you find it boring, that makes sense. But if you quit only because you haven't had any progress or you haven't seen any success, then that's just stupid. Trading isn't for everybody, but do not quit just because you find it hard. Oh, but Charlie I don't want the world People always message me asking me where they should enter an egg's in a position and then when I refer them politely to some traded tutorial videos or some different scanning technique videos that are all free on my channel.

They'll message me back and be like Charlie. Just tell me why are you making me do this work I Get these messages all the time. People don't want to put in work. they're like Oh work I Don't like work.

Okay, like all trading should be easy Charlie. Look, trading is not easy folks. then I don't want to sugarcoat it. but I Understand that there's a lot of sort of get-rich-quick marketing in this niche and there's a lot of sort of like five steps to earn a hundred dollars a day or five steps to earn a thousand dollars a day type marketing.

The truth is that it takes time to achieve these goals. A lot of people won't stick it out to achieve those results, but it motivates them to take action so it's worth it. But the truth is that marketing has never really mode in me because everybody has their own goals and incentives and you need to figure out what those incentives are for. You and some sick people like myself just love to play the game.

But the point is, never assume that results are going to come without work. And of course, another big catalyst for failure When it comes to the stock market and trading is treating your trading as if it was gambling we aren't in. Vegas Folks for example, when it comes to the stock market, obviously gamblers underperform non gamblers. This makes sense because randomly betting on stocks isn't a strategy, but a loser's game.

You need to have a plan. Folks always have a plan. I Say this all the time. Folks love to just buy in whenever it feels right, but you can't just buy in whatever it feels right.

That's not how the stock market works. You need to have a concrete plan, but a lot of folks treat trading as their gambling outlet. Taiwan They actually found that when a lottery was introduced, trading dropped by about a quarter. They also found that the large in the lottery, the less people were likely to trade in the stock market.

So the more money they could win in the lottery, the less likely they were to be incentivized to go trade in the stock market. They further found that the lower someone's income, the more likely they were to engage in risky stocks, which again, is similar to a lot of statistics. The lower income of somebody, the more likely they are to use that income to buy Lotto tickets. But even winners within the stock market have some failures.

Studies find that those who have a winning trade are more likely to associate a stock with good luck and thus buy it again. If you have a winning trade, you're more likely to buy that stock again. This is another gambler like tendency. if you go to the casino and you always bet on black, and for some reason, black always happens to win.

All of a sudden, you're like, hey, I'm gonna go bet on black again because that one's better that one has more Locker Something like that, you need to have a trading plan and a clear strategy, folks. Okay, so at this point, just by looking at a few a handful of these statistics, we could deduce three things. Or two things we could deduce two things. Number one: Do Not Quit.

Do Not Quit Within the first month, Do Not Quit Within the First six months And Do Not Quit Ever. The more you stick with it, the more likely you are to succeed I Know shocking or - Do Not Gamble Never tree trading as they gamble. You need to have a plan and you need to have a concrete reason for getting into and out of a position. If you're gambling, you're not going to learn anything because you're literally just putting money in randomly.

Okay, so in this last part of the video I Want to actually dive into how concrete and how reliable this 90% statistic is? Where does it actually come from? So like I said earlier, depending on who you ask, the statistic is going to be different. But the most commonly quoted incited study comes from a famous late 1990s Taiwan study on day traders. This study took a hundred and thirty thousand active traders follow them and then came up with statistics on how many of them were profitable. They found that many heavy and experienced day traders earned gross profits, but their profits weren't nearly enough to cover the extremely costly transaction costs such as commissions in late 1990s high-speed Internet.

Of course, these two big transaction costs have largely been diminished to law, cheaper to buy fast internet, and of course, mostly across the board. there's no commissions. However, digging deeper into the study, while they found that eight out of ten day traders lose money, they also found a persistent ability of a relatively small amount of day traders to be consistent. Now, this makes sense: Traders that take the time to learn the skills and apply that to the market through trial and error are more likely to succeed, are more likely do have better performance, develop better practices, and then consistently apply those practices.

And likewise, the study found that traders with strong past performance tender earn stronger future returns, and in fact, the top500 day traders were found to earn net abnormal returns of between 14 and 38 basis points per day, and did so consistently over the periods of the study. However, and this isn't shocking, the vast majority did not. and this is why everyone says trading is stupid, because most day traders don't break even. Most traders lose money, But again, this isn't shocking.

There's a huge learning curve when it comes to training, and most people quit before ever getting anywhere on this learning curve. So in summary, this study found that after all expenses such as huge commissions and transaction costs, only two and ten make money and fewer do consistently. And this is no surprise. After watching this video, you should know that this is pretty consistent with all the other numbers that we've covered.

Well, let's go ahead and discuss the elephant in the Room or the Elefante if you will. While this is perhaps the most quoted study when it comes to day trading, there are some major issues with it. First off, it was completed in the late 1990s in a completely different market condition. a completely different market, completely different fee structure, and with a completely different set of technology.

The idea that you could apply success rates of Taiwanese traders in the late 1990s to largely based US traders in 2019 is really laughable. There's just so many different factors are different. Today we have much better access to information, we have much faster internet connections, we have much lower fees and costs of business, and we have a much wider market in the US as compared to Taiwan. That of course, is not to say that people are more successful today.

If anything, the rate probably went down because more people have access to trading and trading information, and because the average person doesn't like to put any work. In all of a sudden, the rate goes down. All I'm saying is that for those who remote evaded, there's a much lower barrier of entry today than there was in the 1990s in Taiwan. But another problem with the study is that by nature, it's very difficult to find and track the top performers.

And if you have a top performing trader, that doesn't mean he'll be a top performing trader forever. So you have to have a wider time span in order to really track profitability, long term, and or lack of it. And how do you actually find top performing traders? You could say, well, we could have a broker disclose their top trades their top trade accounts, but a lot of traders have multiple accounts and getting a very profitable trader to reveal how profitably is could be a liability issue for that trader. So why would they submit to it? And how would you even locate these traders? How do you track their profitability long term? Well, Anyways, folks.

I Hope that this video is eye-opening for you and I hope that you look more into these statistics before making your decision on whether or not you should continue trading at the end of the day. Success rates are going to be low across any field in any niche. Remember, your success rate at the end of the day is going to be determined by things that are in your control, the experience that you gained, the time you take to educate yourself, the amount of trial and error you apply to the market, and of course the amount of times that you hit that ravishing like button. Anyways, folks, trading is a skill and the best way to ensure that you're going to be in that top 10% that ends up making money and being profitable as a trader is by putting in the work.

Anyways, folks, if you have any questions, feel free to reach out to us below or join our free Zip trader Circle Facebook Group We post lantee watch lists and a ton of other things to help you grow as a trader. We also have Zip Trader You which is our premium course for folks who are struggling to grow their account and need some expert guidance. Have a great day and I'll see you in the next video.