It’s a very popular quoted fact that 90 to 95% of traders who try their luck in the foreign exchange markets, end up losing their money. And, the majority of those traders give up within 6 months of starting. That’s really not unlike any business activity when you think about it … a lot of people at some time in their life try something, often many different things – but never stick with them long enough to make a success out of them – so they end up failing.
Well then, who’s making all the money? Obviously, in the forex market – it’s that 5-10% of traders who have stuck with it, learnt from their mistakes, and have developed an edge over the majority of traders to make consistent profits.
Forex Market Turnover - by counterparty
The majority of this 5% aren’t individual traders like you and me. We’re just the little orange guys in the chart on the left. The banks, institutions and other big reporting entities make up the rest of the traders. The big institutions don’t trade 20-30% of all their funds each year on the forex market for nothing! They know they can outwit the try-hards and gamblers out there to suck in decent profits month after month. These banks typically make 40-60% of all their profits through foreign exchange trading – they must be doing something right! The reason they can do this is because that is their profession. The majority of wannabe-traders are chasing pipe dreams, the lure of fast money, without realizing that it actually takes effort, focus, skill, determination and plenty of dedication to succeed in this business … and it is just that, a business.
It would be interesting to get some feedback from some genuinely successful traders, as to how much time and effort they have dedicated to becoming what they are today. I know for me, it’s measured in years, not days, weeks or months. Once you have the knowledge, skills and systems in place – I believe you can make consistent profits with limited time each day – so long as you stick with what you know, stick to your plan, and stick with your trading systems.
If you’re just starting out, don’t be fooled into thinking you can just take a quick forex course and be making some good money in a matter of weeks … it doesn’t work that way. Those that do think that way will become part of the 95% statistic mentioned above.
Good luck and trade seriously!
Tags: facts, forex trading
