Forex retail traders in a nutshell
99% of retail FX traders are scalpers or day gamblers or "swing" traders.
According to a paper on the BOJ website I'll link below, in 2015 a mindblowing 57% of retail clients were "scalpers".
86% were either scalpers (0 to 1 hour) or day gamblers (1 hour to 1 day).
They excluded those with positions held over 1 month, 1 week to 1 month was only about 5%, much much smaller than all the day gambling.
"Share of accounts by investment time horizon"
So it's not 86% of trades it's really 86% of accounts. For something very niche that no one does.
boj.or.jp/en/research/wps_rev/rev_2018/data/rev18e03.pdf
Can't blame the FX brokers for giving their clients, which are nearly all gamblers, what they want.
These gamblers looking for excitation and with get rich quick dreams. Success rate of 0% not even 1% not sure what's going on up there.
They're not even meant for this business at all.
Becoming a trader when you have risk & loss aversion facepalm. "It's ok I can work on my flaws and improve"
It is like if being an exterminator would pay a whole lot and so people with a phobia, terrified of rats would start getting into the business "Yes I'm scared to death of rats but I can make it work, for the money do not try to demoralize me". Or snakes & spiders maybe that's a better example, more people scared of wittle spiders.
Clearly ridiculous. "My whole lower body is paralysed but that won't stop me from running a marathon (on my hands?) and winning!".
Since Europe banned binary options (gosh what a scam), which was at least forcing day gamblers to have fixed losses, and with the exception of a few turbos, day gamblers really have their work cut out for them: At least with online casinos they have a fixed loss. Bet 1 coin lose 1 and that's it.
But when they day gamble Forex there is not "hard loss" so they can keep letting the loss get bigger and bigger (due to loss aversion).
Some regulators want to fight retail trading, and keep spreading FUD about it "99% lose".
What do you expect? Doesn't mean it's soooo hard, 99% lose but do not forget 99% are drunk gamblers!
Forex especially since the late 2000s and even more since 2013-2015 has very little trends, not much volatility, and not that much returns to offer, so it gets a more and more negative image but FX traders are allowed to look elsewhere when nothing happens.
Maybe really dumb regulators are going to ban it the moment it turns and becomes very profitable again.
They have all these mental flaws:
- Risk Aversion
- Loss Aversion
- Caring what others do and think
- Casino mentality
- Emotional behavior in general (FOMO, regret, confirmation bias, denial, etc many more)
About the casino mentality here are 2 articles about a recent comment by Charlie Munger:
nasdaq.com/articles/charlie-munger-warns-of-market-excesses-frowns-on-gambling-mentality-and-bitcoin-2021-02
investopedia.com/articles/investing/070815/casino-mentality-trading.asp
These day gamblers, at least they should pick the correct tools where they might have a chance.
The best one has to be the DAX (the Dow Jones might come close too):
Pros:
- Very small costs (house edge is the smallest)
- Lots of activity while it is open for 8 hours
- I think about 1/5 days are good trend days
- 90% of days have the top or bottom of the day in the first 90 minutes I think, or something like that
- There are other cool stats but I don't really remember
- AND many other day gamblers also bet on it! The money gamblers hope to win has to come from somewhere, well here it comes from other day gamblers.
So I'm guessing all the day gamblers just do the same thing? Buy the trend when there may be one, and what separates the winners from the losers is the ones with the biggest... personalities hold their winners and have what it takes to exit losers fast... And that's it... Zero intelligence...
I do not know or understand what gets the vast majority into this whole super short term game, broker propaganda? That's just how gambling mentality works?
99% can't just all be gamblers? Did people lie to them and tell them this is how you are supposed to trade? Why did I never hear about this lie myself?
Does it come from what they saw in some movies and tv? (I never watch tv).
According to a paper on the BOJ website I'll link below, in 2015 a mindblowing 57% of retail clients were "scalpers".
86% were either scalpers (0 to 1 hour) or day gamblers (1 hour to 1 day).
They excluded those with positions held over 1 month, 1 week to 1 month was only about 5%, much much smaller than all the day gambling.
"Share of accounts by investment time horizon"
So it's not 86% of trades it's really 86% of accounts. For something very niche that no one does.
boj.or.jp/en/research/wps_rev/rev_2018/data/rev18e03.pdf
Can't blame the FX brokers for giving their clients, which are nearly all gamblers, what they want.
These gamblers looking for excitation and with get rich quick dreams. Success rate of 0% not even 1% not sure what's going on up there.
They're not even meant for this business at all.
Becoming a trader when you have risk & loss aversion facepalm. "It's ok I can work on my flaws and improve"
It is like if being an exterminator would pay a whole lot and so people with a phobia, terrified of rats would start getting into the business "Yes I'm scared to death of rats but I can make it work, for the money do not try to demoralize me". Or snakes & spiders maybe that's a better example, more people scared of wittle spiders.
Clearly ridiculous. "My whole lower body is paralysed but that won't stop me from running a marathon (on my hands?) and winning!".
Since Europe banned binary options (gosh what a scam), which was at least forcing day gamblers to have fixed losses, and with the exception of a few turbos, day gamblers really have their work cut out for them: At least with online casinos they have a fixed loss. Bet 1 coin lose 1 and that's it.
But when they day gamble Forex there is not "hard loss" so they can keep letting the loss get bigger and bigger (due to loss aversion).
Some regulators want to fight retail trading, and keep spreading FUD about it "99% lose".
What do you expect? Doesn't mean it's soooo hard, 99% lose but do not forget 99% are drunk gamblers!
Forex especially since the late 2000s and even more since 2013-2015 has very little trends, not much volatility, and not that much returns to offer, so it gets a more and more negative image but FX traders are allowed to look elsewhere when nothing happens.
Maybe really dumb regulators are going to ban it the moment it turns and becomes very profitable again.
They have all these mental flaws:
- Risk Aversion
- Loss Aversion
- Caring what others do and think
- Casino mentality
- Emotional behavior in general (FOMO, regret, confirmation bias, denial, etc many more)
About the casino mentality here are 2 articles about a recent comment by Charlie Munger:
nasdaq.com/articles/charlie-munger-warns-of-market-excesses-frowns-on-gambling-mentality-and-bitcoin-2021-02
investopedia.com/articles/investing/070815/casino-mentality-trading.asp
These day gamblers, at least they should pick the correct tools where they might have a chance.
The best one has to be the DAX (the Dow Jones might come close too):
Pros:
- Very small costs (house edge is the smallest)
- Lots of activity while it is open for 8 hours
- I think about 1/5 days are good trend days
- 90% of days have the top or bottom of the day in the first 90 minutes I think, or something like that
- There are other cool stats but I don't really remember
- AND many other day gamblers also bet on it! The money gamblers hope to win has to come from somewhere, well here it comes from other day gamblers.
So I'm guessing all the day gamblers just do the same thing? Buy the trend when there may be one, and what separates the winners from the losers is the ones with the biggest... personalities hold their winners and have what it takes to exit losers fast... And that's it... Zero intelligence...
I do not know or understand what gets the vast majority into this whole super short term game, broker propaganda? That's just how gambling mentality works?
99% can't just all be gamblers? Did people lie to them and tell them this is how you are supposed to trade? Why did I never hear about this lie myself?
Does it come from what they saw in some movies and tv? (I never watch tv).
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