BarroMetrics Views: Learning To Succeed
The oft repeated statement is 80% to 90% of retail traders fail. How true is this? There is some evidence (see e.g. Interbank FX Reveal Most Traders Lose Money).
The question why this is so has bedeviled me for sometime.
Part of the reason is because many, perhaps too many, come to the markets with unrealistic expectations: coming in undercapitalised, expecting to become rich without knowledge or effort. It doesn’t help that much of what passes for education panders to these unrealistic expectations.
But, I don’t believe this is the whole story.
I have met many who diligently seek an education, apply the teachings and struggle to make the grade. The advances in neurology have now provided an answer to this vexing question.
Let’s take a gander at the usual training a dedicated retail trader acquires. He’ll read books, go to seminars, perhaps try a chat room or two, and learn through a process of trial and error. In the East we are more fortunate than US traders in that we have access to CFDs and can reduce our position sizing so as to reduce our learning risk.
Unfortunately, it is this process of education that is partially responsible for the high failure rate. As a result of the process, only a very few manage to succeed despite the herculean efforts of many.
Thanks to advances in learning theory, we have now know the educational process needed to raise the level of success. While the process will not help those unwilling to commit to their own success (there will always be the dabblers who seek to win without the necessary effort), there is at least ray of sunshine for those who have done the work and are still struggling.
Next week I’ll look at this topic in detail.