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Is it True That Nine Out of 10 Retail Traders Lose Money?

By: Elite Legacy Education, September 16, 2016

Is it True That Nine Out of 10 Retail Traders Lose Money??


One of the most common statistics that you hear in stock investing is that “nine out of 10 retail traders lose money.”The number may not be exact but the general finding is that the majority of retail traders will not be profitable over the long term. This is proven by the numerous anecdotal testimonials of people who tried trading and failed in comparison to the few that succeeded.

A retail trader is an individual trader that buys and sells shares for their own personal account. They are entirely responsible for their successes or failures because they are the ones who end up making all of the important trading decisions.

In short, it is generally accepted that nine out of 10 retail traders will lose money trading in the market of their choice. This does not explain WHY this is the case. The harsh reality is that the market is one giant competition. Nine out of 10 traders must lose in order for the 10th trader to be successful. By its very nature, a market cannot exist in perpetuity if every single person wins.

After many years of observation and reflection, experts and successful traders have come up with general reasons for why people fail to become that 10th trader:


Many retail traders treat trading like gambling, where they make random decisions and hope that they will strike gold on a beautiful morning. Even if you are lucky enough to make a profit by making random and uninformed trading executions, you will quickly find that this strategy is not sustainable. People who are not consistent in their trade execution will quickly lose all of their hard-earned money.

No clear strategy

It takes an intensive amount of study and real-world experience to develop your own trading strategy that keeps you consistently profitable. The last thing you want to do is to copy someone else’s strategy because what works for them may not work for you. Trading is vastly complex and there are multiple ways to go about it.

Not setting any stop limits

Persistence can be your worst enemy when it comes to retail trading. Rather than accept a loss and call it a day, most retail traders will see a failing trade to the very bitter end in the hopes that it will rise again. This is how traders lose all of their money in the blink of an eye. By setting a stop limit beyond which you will sell shares and call it quits, you live to trade another day.

There are many more reasons why nine out of 10 retail traders lose money. However, these three are the most common amongst those who have failed.

Why else do you think nine out of 10 retail traders lose money? Is there another element that allows one out of 10 to succeed? Share your ideas on social!

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