How much do traders lose before becoming winners?
October 23, 2009
The following was posted by a trader on a forum recently. It’s a question which comes up fairly regularly, if not in print then certainly in the minds of new traders wondering at their prospects for success.
I heard a lot of people said 90% of forex traders lose money. I wonder how long and roughly how much the trader lose become they become the remaining 10% winners.
Of course there is no one answer to this question. How long it takes someone to reach consistent profitability has a lot to do with how much time an effort one puts into it. The more dedication to the task the faster it will tend to happen.
The important part of this question, though, is the how much you have to suffer before you get things moving in the right direction. It all starts with what should be Rule #1 for all traders:
Make sure you don’t ever risk being kicked out of the game!
If you lose so much money you either don’t have enough to continue or you are so emotionally damaged you can’t go on any longer, then you will never make that 10%. New and developing traders make lots of mistakes. Definitely do everything you can to learn from the mistakes of others, but realize you are going to make a bunch of them along the way as well. Some will be foolish errors that could have been avoided. Others will be from lack of understanding and/or experience.
The trick to staying in the game is making sure none of your mistakes hurts you very badly. That means trading small. Knowing that the costly errors are pretty much inevitable, it’s only good sense to make sure the cost of them won’t be high. So trade as small as you can reasonably do until you reach a level of consistent success. You can always add money later. It’s a lot harder to make make money you lose.
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