Why “X% of Traders Lose” Stats Aren’t the Full Picture

The Truth Behind Trader Success Rates

You know, the stats aren’t as bad as they seem…
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Those mandatory statistics we always see on brokers’ marketing material.
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​“X% of traders lose money with this broker.”
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​It’s the law, updated every quarter, and typically fluctuates between 60-80%.
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But is that number really a true reflection of retail traders’ performance?
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Let’s have a closer look…

SIZE MATTERS

Statistically speaking, the smaller your deposit, the more likely you are to lose money.
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Why?
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Well, traders who throw in, say a grand are usually looking to double, triple, or quadruple their account as fast as possible.
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They see an ad, open an account, throw some cash in, and quite literally punt away until it’s gone…
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Now, of course, there’s no problem with trading small to begin with, in fact, it should be encouraged.
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​But you should treat your £1k like it’s £100k.
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Small risk per trade, get experience, and refine your strategy.
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​The objective is not to make meaningful money in the beginning… it’s to get your process dialled in.
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​Then, at the end of the year, if you’re up say £900 with a limited drawdown and a steady equity curve, then you might consider adding more funds.
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But of course, your average new trader is not interested in that! Too boring…
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They want to turn that £1k into £10k quickly, and to do that they need to take big risk.
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​Big risk + inexperience = high probability of blow up.

EXPERIENCE MATTERS

Ok, so if you’re reading this, I already know you’re not the get-rich-quick gambler type…

Regardless of whether you are trading with £1,000 or £1,000,000

If you’re taking the time to improve your trading craft, you’re already in the top 50% of traders.

Most can’t be bothered…

So, that “75% of traders lose” stat has to include everyone, gamblers and all, making the number look worse than it really is.

Alright, and then we come to experience.

Experience is proportional to profitability.

Not always of course, but in general terms, the longer you’ve been at this game the more likely you are to be profitable.

Even if you’re a slow learner, sticking your hand in the fire time after time you start to realise not to do that…

Most traders are out of the game within a year.

So if you can stick it out more than that, you’re already above average.

Two Markers of Success

  1. Good risk control and a sensible approach to account growth
  2. Longevity and experience

If we strip out the gamblers and the inexperienced traders from that stat, the numbers start to look a lot more encouraging.

Sure – the game is not easy.

But sometimes I look at those stats and I think how demoralising they must be for traders…

And whilst they might be technically accurate, once you dig into the details, they’re not quite as bad as they seem.