Saturday, 25 February 2012

• Survey on Traders with Interesting Results

  A survey was taken on over 700 traders to try and find some correlations with their trading goals, level of experience, and overall performance in the field.

  The survey cut across of types of traders - forex, equities, futures, commodities, etc..., as well as all capital levels- from $100 to over $50K. That's good in that the results will reflect a good general picture instead of a specific niche of traders or trading products.

  One of the results was expected - only a small percentage of traders were consistently making larger profits with the majority experiencing varying levels of losses, from small to large.

  Here's a result that seemed surprising:

  The amount of time trading and overall trading experience is not directly linked to being successful:

  

  Looking at the chart above, there seems to be a magic number of around 5% that are consistently seeing large profits no matter if they have just a few months of experience to over five years of time in the trading field.

  At first glance this seems strange as you would think the more time you spend in trading would be directly proportional to the success rate level. But based on my own trading experience the results make sense.

  The reasoning is as follows:

  Trading successfully means in addition to discipline in money and risk management, you have to understand the market to the degree where you can develop a repeatable, reliable strategy to generate profits. Truly understanding the market doesn't happen gradually over time, and is more like an "I get it!" event. It's like those blurry pictures you have to look at long enough until you can see the hidden image.

  This data presents both good news and bad news. The good news is successful trading is not bound to time, meaning it doesn't have to take years to be successful. The bad news is one may not "get it" and be successful in trading no matter how long they stay in the field.

  I think time does play a big factor, but the key is "quality time" vs just logging in unproductive hours. Quality time is carefully planning all trades and taking good notes on what worked and what didn't, and constantly trying to map general market behavior to repeatable events you can take advantage of. In addition, it also includes reading all the trading & trading psychology books that you can get hold of to expand one's mind about different strategies and techniques.

  I guess one can take a short cut with training under someone experienced, but in that case, it's still more of trying to repeat what someone else is doing rather than developing one's own unique method/edge.

   

  Here are the links to the full survey:

   

  Trader Survey Analysis Charts

  http://www.traderinterviews.com/content/TraderSurveyResults.pdf

   

  Interview that accompanies the charts:

  http://www.traderinterviews.com/wimpy_mp3_php/myWimpy_SingleFree.php?file_to_play=2011-02-01_Trader-Survey-Results

   

  Got all this from this site: http://daytradingfool.blogspot.com/

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