What are the odds of being a successful Retail trader in the long run?

Discussion in 'Ask any question!' started by Curbdog, Dec 18, 2021.

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What are the odds of being a successful Retail trader in the long run?

  1. 100% chance - just keep at it

    25.0%
  2. 75% chance - maybe if you have a Finance background

    12.5%
  3. 50% chance - you will break even forever

    12.5%
  4. 25% chance - it really is rigged against the little guy

    0 vote(s)
    0.0%
  5. 5% change - just do it for fun if you like to but you will lose in the end

    37.5%
  6. 0%

    12.5%
  1. Curbdog

    Curbdog New Member

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    I have been trading for several years and do my best to always continually improve my techniques - but I am not very successful as a trader. I seem to lose money at this point. I keep wondering if I just keep learning for a few more years and keep at it that one day there will a light at the end of the tunnel and I am profitable and doing really well from trading alone.

    My background has nothing to do with Finance. I studied music. For trading I just learn from books and online and I keep learning diligently but I still wonder if it is even worth it. Often the whole system of the stock markets feels completely rigged against me.

    What are my chances of becoming successful and making enough money from trading to make it my way of life and not having another job? I have heard of people struggling the first several years and then they finally reach a point that they are profitable and have strong skills to weather any market.

    What are the odds??? Thank you!
     
  2. StockJock-e

    StockJock-e Brew Master
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    Over the long run most funds find it hard to beat the S&P.

    Its all about how long you are in the market.

    Sure, there will always be those traders that went all in one GME and TSLA calls, then walked away with millions, but what you don't hear about are the other 1000 that lost their ass trying to do the same thing.
     
    TomB16 likes this.
  3. anotherdevilsadvocate

    anotherdevilsadvocate Well-Known Member

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    Trade in trending markets.
     
  4. Sundance

    Sundance Member

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    Being consistent is the number 1 problem.
     
  5. TomB16

    TomB16 Well-Known Member

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    Trading versus investing, again.

    [Edit: I put this here because I can't find the thread it was intended to occupy and I am heading out for a Christmas event. I would hate to think I left someone unoffended, this holiday season. :D ]

    Exchanges have statistics on the profitability of short term trades. A little time with Google will enlighten and upset you.

    The Market

    The odds of the market being up tomorrow are just slightly over 50%. Better than even odds, but just barely.

    The parasitic load of front running and commission are extremely low due to the number of transactions being near zero and what little overhead there is goes to zero over time.

    The thing is, those odds compound over time. The odds of the market being up 10 years from now are very near to 100%.


    Trading

    The odds of your selected company being up later today or tomorrow are about 50%. The odds of the trade making money are less than 50%, because of front runners and commissions. If you don't think your brokerage is making money off you, how do you think they stay in business? Where does the money for their office in the glass skyscraper come from?

    Still, nearly half of ultra-short term trades do make money.

    The thing is, the odds of any given trade yielding a profit are less than even and they compound over time. That means, the more you trade the lower the chance of making money.

    The odds of making money by aggressively trading for the next 10 years are very near to 0%.


    The point

    The thing is, you could be selected by God to be a miraculous trader. I know a lot of people who tell me they are God's gift to trading. At least, for a while. At some point, they get bored and stop doing it.

    I have read countless stories of people who could make $4000 per day using day trading techniques. All of them have stopped. They all cite the same reason: "It was a lot of work". None of them are particularly wealthy.

    I would blow a goat for $4000 per day. These stories don't seem plausible to me.

    If you go to a retirement community, check out how many of them have retired based on stock trading. You are extremely unlikely to find any. Next, look for couples who simply invested their nest egg in an S&P 500 mutual fund or ETF. You will find quite a few.

    The majority of people in a retirement community will have some sort of pension fund that undoubtedly grossly under performed the market but still trickled some money to them in retirement.

    Vegas is full of people who have "the touch", trying to get rick quickly and the vast majority of them will tell you they are succeeding but very few people leave Vegas with much money.

    Do you know anyone who quit their job because of Vegas winnings? Do you know anyone who quit their job because of trading? Do you know anyone who quit their job because of long term investing.... I mean, other than me... ?
     
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  6. Curbdog

    Curbdog New Member

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    What exactly are you people trying to say exactly....

    Are you saying that the market is rigged against the little guy? Even if they have 5 years experience trading from home? Even with 10 years experience do you think most people still wind up losing?

    I mean, what is the magic combination then? Who is winning?

    Is everyone lying about their winnings?
     
  7. Dupangel

    Dupangel New Member

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    There are times when stock markets are easier to invest. 2020 and 2021 were easy because of the injection of liquidity from the Fed. 2022 and 2023 won't be easy.
    By simply choosing easier periods to start investing gives you better chances.
    Being outside of the market when markets are complicated and waiting patiently for a good price gives you better chances.
    Narrowing the list of stocks to choose by choosing stocks already bought by a fund like berkshire hathaway gives you better chances.
    Diminishing the number of trades done gives you better chances.
    Choosing stocks which are in a bull trend gives you better chances.
    Analyzing your mistakes gives you better chances.
    At the end, adding all these small edges help you make money.
    Is it enough to make a living ? It depends. How much money are you able to invest?
     
  8. TomB16

    TomB16 Well-Known Member

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    Rigged against the little guy? Yes

    Even if they have experience? Yes

    Magic combination? The whole point is: there is no magic combination

    Is everyone lying about their winnings? Yes. Mostly, to themselves.

    Front runners and commissions make the odds of a short term trade making money at a bit less than 50/50. Inflation and growth approach zero as the trade time window is reduced.

    Over time, the influence of front runners and commissions approach zero. Also over time, inflation and growth approach their natural value, making the odds of making money, long term, nearly 100%.

    I do my best to believe the people extolling high trade returns are not lying. I try to believe they lack self awareness, as most people do.

    As evidence, look at trading claims in any "investing" forum. The returns are extreme. Now, look at the tracked returns of any fantasy trading game. You will find, they are not nearly so glamorous.

    Look at the Stockaholics 2020 trading contest. From memory, the winner yielded something like 16%. He was happy and encouraged to continue trading. The thing is, anyone who bought VOO on Jan 1 and sold it on Dec 31 made nearly double the return.

    It is mathematically possible to make very large returns with trading techniques. Over time, the odds go down to infinitesimal levels.

    Having said that, there are people who have beaten the market consistently for years. Warren Buffett comes to mind. He hasn't beaten the market over the last decade but the first several decades of his life show wild returns. There are others but these people are extremely rare. Going by forum return citations, everyone has pulled the sword from the stone. Going by exchange statistics, almost no one has pulled the sword from the stone.
     
  9. Dupangel

    Dupangel New Member

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    Investing is a very hard game and most professionals can't do better than S&P500 over the long term. If you have 1 Million to invest, you can make a living. But it's a job. Thinking that you can do more than 20% each year over the long term is crazy (except if you are exceptional). Are you exceptional ? (I'm not)

    If you don't have enough money to invest and are not good enough, you won't make a living.
     

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