Why 95% of traders lose money! Astonishing!
It is estimated that 95% of cryptocurrency traders lose money — This stat applies to all major trading instruments including forex. But why do 95% of people trading bitcoin lose money? Bitcoin is certainly not resistant to the same market forces and human emotion.
Almost all traders are conscious of the widely publicized statistic that “95% of traders lose money.” Once you drill deeper, research implies that this number is probably going higher. The profession chews up and spits out aspiring traders at an astounding rate.So why are numerous intelligent people drawn to a profession with incredibly high odds of failure?
6 striking stats showing traders have it rough
There are the apparent reasons — the appeal of working for yourself, sitting in your underwear on your couch all day making millions. There’s the (false) promise of “easy money” and therefore the draw of independent wealth.
The truth is, day trading is extremely difficult, emotionally taxing, and much more likely to destroy your life than enrich it.
Let’s start with a couple of key statistics.
- 80% of all day traders quit within the first two years;
- Among all day traders, nearly 40% day trade for less than one month;
- Within three years, only 13% still day trade. After five years, only 7% remain;
- The average individual investor underperforms a market index by 1.5% per year;
- Active traders underperform by 6.5% annually;
- Traders with up to a ten years negative diary still trade.
The last point suggests that day traders even still trade once they receive a negative signal regarding their ability.
Astounding. Almost everyone loses, they lose fast, they underperform simple, mindless investments, and that they continue trading even after being proven unprofitable. Why?
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The truth is, most would-be traders are woefully underprepared for the challenge ahead and learn many hard lessons with their real money. They underestimate the psychological challenges of trading and fail to eliminate emotion from their trades.
They fail to trade with an outlined system. Once they have an outlined system, they often take trades outside of their own, established rules. These are all obvious reasons.