The loser’s game

The news has been out from August 2018 that the European Securities and Management Agency (ESMA) has compelled all brokers (subject to its jurisdiction) to reveal their statistics on the percentages of losing trader accounts.

See informative article headed, “ESMA Regulations Reveal: Where CFDs Traders Lose the Most“. The reported percentage of losing accounts ranged between 63.7% and 86%, with an average of 76.3%. Previous estimates of 90% of losing accounts weren’t that far off the mark.

For the avoidance of any misunderstanding, my reporting on these figures is not with the intention of promoting any broker or set of brokers. 

So – now this brings objective reality right home. Financial trading – especially on leveraged accounts, is not easy and fraught with risk!

What does it mean for you as a new or seasoned trader? I couldn’t tell you. For me it means:

1. If I’m in what is a loser’s game, where approximately 80% of people lose, then I had better be good to get into that 20% of people who will break even or become consistently profitable.
2. Everybody is using a range of well tested methods of tackling the markets – but for sure everybody ain’t winning!
3. There is some other ‘thing’ that needs to happen to become consistently profitable.

I might have well been urinating into a high breeze, when on many occasions in the last few months I’ve been focusing well on the ‘elephant in the room’ which is ‘trader psychology’. Yes – methodology is fine but for sure not everybody who applies the same methodology (or strategy) is gonna make money.

So I assert that the big variable is ‘psychology’ – and I was clear that this is not what’s in the textbooks. I have said that this is about ‘your’ individual psychology i.e. how your mind works (or not).

What do you have to do? You guessed – ‘we don’t advise’ anybody. One may wish to explore what is a winning psychological framework. Even if we could advise, such a framework will not work for large numbers of people. Why? Because each individual has a different individual psychology.