The common held belief in the trading world is that 90% of traders are not profitable long term. This was based off some old studies of brokerage accounts. I read the original source article long ago in a trading book that referenced it. Other more recent studies seem to have found that the failure rate could be as high as 95%. What causes the majority of profits to go to such a tiny minority of winners? I asked this question in my facebook trading group and  received these answers:

  1. Lack of homework on what works.
  2. Inability to manage stress.
  3. Allowing big losses in your trading account,
  4. Quitting when they learn trading isn’t easy money.
  5. Inability to trade volatile markets.
  6. Inability to emotionally  manage equity curves.
  7. Trading without a positive expectancy model.
  8. Never committing to one trading strategy.
  9. Changing trading systems.
  10. Trading based on opinions.
  11. Not managing position sizing.
  12. Not managing the risk of ruin.
  13. Searching for a Holy Grail instead of a winning system.
  14. Over thinking their trades.
  15. Reactive trading decisions based on internalizing emotions.
  16. Trying to pick tops and bottoms and miss the trends.
  17. Trading with leverage without understanding the risks.
  18. Trading on margin without understanding it.
  19. Over trading.
  20. Trading with an account too small.
  21. Trading without a plan.
  22. Trading without stop losses.
  23. Not understanding what it takes mentally to be a trader.
  24. Setting stops too tight.
  25. Setting stops in obvious places.
  26. Having only small winners.
  27. Buying what looks cheap.
  28. Selling short what looks expensive.
  29. A lack of discipline.
  30. Taking tips.
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By Steve Burns

After a lifelong fascination with financial markets, Steve began investing in 1993 and trading his accounts in 1995. It was love at first trade. After more than 30 successful years in the markets, Steve now dedicates his time to helping traders improve their psychology and profitability. New Trader U offers an extensive blog resource with more than 4,000 original articles, online courses, and best-selling books covering various topics.